What Does “Out-Innovate the World” Mean Today?

2/15/11

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providing incentives for enterprise not seniority. Unions can partner with management in abandoning the security of relying on seniority-based incentives for the productivity of enterprise-based incentives.

What can the U.S. government do to win the race to innovation? U.S. universities currently attract top talent from around the world and train and incentivize them to be innovators. While these graduates would love to stay on and work in the U.S., tight immigration quotas make this tough. The government needs to immediately increase the retention of this wealth creating talent.

For example, Silicon Valley is the envy of the world in being a highly innovative cluster that has created enormous wealth in the last 40 years. Yet, reportedly half of all startup founders today in Silicon Valley are of foreign birth. In the same time period, Israel has become a highly innovative country on several metrics. An important driver of this innovativeness was the immigration of trained scientists and mathematicians from Eastern Europe and Russia. Thus, the U.S. should make a concerted effort to ensure that talent comes to the U.S. to create innovations here rather than abroad where they compete with U.S. products.

Governments must also realize that jobs do not guarantee innovations, but innovations create jobs. For example, Intel, Google, and Facebook grew and are growing to be major employers on the basis of radical innovations. Thus, tax incentives for research and development and the commercialization of innovations are likely to yield higher returns in terms of innovation, wealth creation, and global competitiveness than job programs designed to immediately employ people.

U.S. schools lag their counterparts in developed countries in terms of science and math scores. However, U.S. schools foster more questioning, independence, and initiative in students than schools in other parts of the world. Indeed, this attitude may be one of the principal drivers of innovation in the U.S. Governments need to realize the huge role such traits play in developing innovations and foster them. For this purpose, inter-school innovation fairs and competitions would probably do more than training for rote test taking in math and science.

Today innovation is an imperative, not an option. It improves the standard of living, rewards individuals handsomely, and creates national wealth. Millions the world over are hungry to create the next big innovation. The U.S. must attract and develop and retain within the country this global talent in order to stay at the frontier of innovation. Firms for their part need to consider the global marketplace as the grounds for their innovation and develop a culture of relentless innovation to win this race.

Gerard Tellis is the Jerry and Nancy Neely Chair in American Enterprise and Professor of Marketing at the USC Marshall School of Business. Follow @

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