Crisis Innovation: Historical Evidence, Insights, and Open Questions.

• Author: Gross, Daniel P.

The COVID-19 pandemic has brought into focus the potential value of innovation in a crisis: big, new, urgent problems may demand novel solutions. Early on in the pandemic, there were calls from both scientists and policymakers for a focused R&D effort to combat the disease, many invoking past R&D efforts like the Manhattan Project as strategic metaphors for a wartime approach to the pandemic response. (1)

Over the past several years, we have been immersed in studying crisis innovation, primarily through the lens of World War II, when the United States mobilized the country's fledgling innovation system to tackle dozens of urgent wartime R&D needs, resulting in outputs as varied as radar, mass-produced penicillin, malaria treatments, and atomic fission. This effort was primarily organized and led by a new government agency, the Office of Scientific Research and Development (OSRD), which identified military research priorities and contracted with firms and universities across the country to perform the necessary research, prototyping, and early-stage manufacturing before new technologies could be produced at scale. In addition to supporting research and development, OSRD actively promoted diffusion. The OSRD-sponsored effort was a watershed moment in innovation policy, marking the federal government's first significant investment in research and supporting advances that were instrumental to the Allied victory and transformed civilian life after the war ended.

As perhaps the largest single shock in the history of the US innovation system and the most expansive crisis R&D effort, we were drawn to studying it more closely. The long historical lens, together with rich detail from primary records from the National Archives present an opportunity to examine the nature of crisis R&D problems, organizational and policy approaches to crisis innovation, and the short- and long-run impacts of crisis R&D investments. Our research complements other studies of large, government-directed R&D projects like the Apollo program (2) and of other settings in which innovation may be valuable, such as environmental catastrophes. (3)

Mobilizing Research for War

To gain a deeper understanding of crisis R&D problems, we first analyze the wartime research effort. (4) Initially formed in June 1940 as the National Defense Research Committee, proposed by and led throughout the war by Vannevar Bush, OSRD grew from an eight-person nucleus to a 1,500-person, multibillion-dollar research funding agency enlisting and coordinating civilian science to address wartime R&D problems. Even before the US formally entered the war, it operated with urgency, but what began as a steady grind turned into a sprint after the bombing of Pearl Harbor.

Lacking precedent for an operation of this scale, OSRD improvised much of its structure and procedures as it evolved. The apparatus that emerged had several notable features. Its organizational form and routines balanced structure with flexibility. It had an explicitly applied focus, working closely with military partners to identify research priorities and contractors--primarily universities and privately owned companies--to work on them. It devised novel incentive mechanisms around patent policy and indirect cost recovery to encourage contractors' participation, and where necessary set up new research centers. Urgency also led OSRD to take on a major role in coordinating research efforts, hand-offs to manufacturing, and diffusion. As Bush deputy James Conant wrote, "The basic problem of mobilizing science during World War II was the problem of setting up rapidly...organizations which would connect effectively the laboratory, the pilot plant, and the factory with each other and with the battlefront." (5)

Under this end-to-end approach, OSRD and its partners produced major advances in dozens of areas. These included foundational progress in radar, electrical communication and computing, jet propulsion, and atomic energy; antibiotics and...