Markets can be relied on if the risks are low and the value created is private. Value then gets captured through trades facilitated by money and competitive pricing.  The growth of the PC industry in this way created huge reforms involving multiple institutions.

 Financing gets harder, however, when the risks grow large and the value isn't readily captured by the innovator. Most of the early funds for canals, trains, air travel, and computer networking were not raised through internal investments by individual firms. Risk-absorbing financiers and governments had a big role to play.

 That's a basic principle: Big risks typically require some form of collective action. When the risks are large, the community may be the only unit big enough to absorb them. Thus government becomes a logical entity to support the early work required to reduce the risks for those that come later. That's an essential rationale for government funding of fundamental R&D. A similar logic applies for strategically essential investments like those of DARPA. (We should all remember where the work that generated TCP/IP came from.) Most large organizations fund strategic R&D as an organizational overhead, NOT by expecting their operating units to do it ("in addition to your other duties").

 In this context, why not support early investments in cross-boundary networking through funds allocated from a level high enough to absorb the risks and capture the benefits? But what governments are organized financially for this? When the federal Quicksilver projects identified cross-boundary projects, funding was described to me as not even the tip of the federal funding iceberg, but rather as merely a snowball on the tip of the tip.

 Granted, some state and local governments have created funds for cross-boundary initiatives. Minnesota established a technology R&D fund under Governor Perpich, but it was disbanded once Perpich left office. I can find other fledgling examples, but nothing that seems like a movement.  

 What do you see out there? How can we get traction on this problem? Where are the cross-boundary development funds? We'd love to hear about what's working.

 We will be exploring these, and related ideas, at our upcoming workshop on the "Leadership and Politics of Cross-Boundary Reform: Governance and Finance of IT-Driven Initiatives." To check out the agenda, and learn how to register, please visit: http://www.3ecompass.net/public/governance_and_finance/