What Do We Mean When We Assert That Our Economic Salvation Is 'Innovation?'

'Innovation' is commonly cited as an American economic strength. At the same time, there is disturbingly powerful evidence that too many Americans lack a clear understanding of the innovation process. Although in America there has been a remarkable confluence of innovation and industrial economic growth, the process itself is in no way haphazard. Today, the American model of industrial innovation is being deployed very effectively in Europe and Asia, just as the system atrophies in the U.S. I know this to be true first hand as a corporate manager for a Fortune 500 U.S. company, a doctoral researcher for a university in Sweden, and someone competing largely against Asian researchers in my study of discontinuous innovation. Sweden is second only to Israel in its public funding of R&D per capita, and China has doubled its investment in its university system over the past ten years while at the same time, the U.S. has declined in both measures. I see firsthand how innovation is stimulated by a necessary set of interactive factors, and that it is simply not possible to specialize in R&D.

It is misguided for anyone to believe that America can position itself as the world's expert and specialist in R&D for the global economy; there is no historical evidence to justify this viewpoint for any nation. Instead, America's industrial domination was built upon a model that tightly linked R&D and production, in the public and private sectors. After World War II, research was linked between the public sector (government and academic institutions) who were largely responsible for pure science , and the private sector that was often responsible for the applications effort that we often define today as 'research and development'. Pure science is often misunderstood, but is a most critical initiative, leading to radical or discontinuous innovation - true drivers of economic growth. After World War II, noted scientists as Vannevar Bush helped to establish a model linking the usefulness of science to socioeconomic progress through the consortium of private firm, academic, and government institutions. One of Bush's students, Frederick Terman, is largely credited for being the Father of Silicon Valley, an example of the benefits of linking the private sector, government, and academia in the development of innovation.

Today, this American innovation model has been repackaged and is now being called the triple helix model of innovation. Lack of American understanding of this triple helix approach is illustrated by the dot-com boom of the late 1990's. While most Americans would associate the free market heyday as an illustration of American innovation, most of us would struggle in believing that it was collaboration between government, academia, and the private sector that actually originated it. I believe this is due to our generalization that anything related to the private sector can lead to innovation, even the outsourcing of production and R&D, while anything associated with the government and/or academic institutions cannot. As a result, America's unbalanced model of R&D and production is actually moving us away from innovation instead of closer to it. With academic research finding that it takes 3,000 raw ideas, 100 exploratory projects, 10 well funded projects, and 2 product launches to create one successful innovation, few corporations will put itself through this process due to a lack of positive return on investment. However, it's in the best interest of the public sector enable private sector research within its national boundaries to become a possible engine of economic growth. Countries such as Sweden, Norway, and Denmark are utilizing this model of innovation successfully, while Americans commonly consider these countries to be less innovative. Asian economies are beginning to understand this public - private approach as well - the old American innovation process, not the new.

Through outsourcing production and ignoring the role of the public sector in the innovation process, America is misappropriating something of its own invention. The evidence is overwhelming that America is heading in the wrong direction: our history tells us we are misguided, and the rest of the world is following a different course. I see this first-hand in conducting innovation research in Europe and in competition with increasingly competent Asian researchers. Politics aside, failing to see that the rest of the world has adopted an approach that American pioneered, and from which we have veered, will without question reduce the likelihood of the next Silicon Valley being in California rather than Stockholm, Bangalore or Shanghai. In my mind, there is no more critical issue facing the U.S. economy than the need to fix our approach to innovation.