Council on Competitiveness

Challenge to America: Innovate or fall behind

Innovation will be the single most important factor in determining America's success through the 21st century, according to a report issued this month as part of the Council on Competitiveness' National Innovation Initiative (NII).

President Mary Sue Coleman serves on the council of top business, university and labor leaders. Its report, "Innovate America: Thriving in a World of Challenge and Change," encourages America to unleash its innovation capacity to drive productivity, standard of living and leadership in global markets.

"We must decide now whether we will do what is necessary to remain the world leader in innovation," Coleman says. "Our investment in innovation and discovery is not a luxury. It is up to all of us—policymakers, business leaders and educators—to work more closely together to ensure that future generations can continue to enjoy the dividends of America's zeal for discovery and entrepreneurial spirit."

The report states that the legacy America bequeaths to its children will depend on the creativity and commitment of the nation to lead a new era of prosperity at home and abroad. For the past 25 years, the United States has optimized its organizations for efficiency and quality, the report states. "Over the next quarter century, we must optimize our entire society for innovation."

The numbers back up the report's urgency: China overtook the United States in 2003 as the top global recipient of foreign direct investment; only six of the world's 25 most competitive information technology companies are based in the United States—14 are based in Asia; and Asia now spends as much as nanotechnology as the United States.

"While we remain the world's leader, the capacity for innovation is going global—and we must pick up the pace," the report states. Sustaining competitive advantage will require moving beyond efficiency and quality toward creating new markets, increasing choice and value to customers, and innovating continuously on a global basis."

The council organized its recommendations into three broad categories: talent, investment and infrastructure. The NII report is available at http://www.compete.org.

The agenda calls for building a national innovation education strategy for a diverse, innovative and technically trained workforce; catalyzing the next generation of American innovators and empowering workers to succeed in the global economy. It also recommends revitalizing frontier and multidisciplinary research; energizing the entrepreneurial economy; and reinforcing risk-taking and long-term investment.

"The State of Michigan is fourth in the nation in total investment in research and development (R&D) as a percent of gross state product, and together our research universities bring more than a billion dollars of federal research funding into the state each year," Coleman notes.

Nationally, however, the report states that foreign-owned companies and investors account for nearly half of all U.S. patents, and that Sweden, Finland, Israel, Japan and South Korea spend more on R&D as a share of gross domestic product than the United States.

"The time to correct this problem is now, while we still maintain a substantial lead in total research development," Coleman says.

According to the report, infrastructure changes should include creating national consensus for innovation growth strategies; creating a 21st century intellectual property regime; strengthening America's manufacturing capacity; and building 21st century innovation infrastructures.

The report suggests the creation of 5,000 new portable graduate fellowships funded by federal R&D agencies, and the stimulation of creative thinking and innovation skills through problem-based learning in grades K-12, community colleges and universities.

"We need a bold new educational strategy in order to encourage American students to pursue science as a career," Coleman says. "The U.S. also is losing ground among foreign competitors in the proportion of students earning science and engineering degrees. We must take deliberate steps to expand the pool of technical talent in Michigan and nationally."