"Nothing is more important than innovation. The minute we stop innovating, we die," said an executive interviewed for a recently released report by the Boston Consulting Group and National Association of Manufacturers, titled The Innovative Imperative in Manufacturing: How the United States Can Restore Its Image. The report ranked the U.S. eight among innovative-friendly countries. Singapore made the top spot.
The report cited ways the U.S. is disadvantaged when it comes to innovation, including work force quality, and economic, immigration and infrastructure policies. The U.S. government can help foster innovation by "boosting" the payback on innovation, supporting innovation activities, and improving the innovation environment.
Research and development (R&D) tax credits are important. The American Recovery and Reinvestment Act (ARRA), signed into law by President Obama in February, provides tax credits for R&D. Government grants are just as important, and the ARRA provides them for "green" projects such as renewable energy and energy efficiency.
Four ways companies can succeed in innovation
American companies know they are behind in innovation. Less than half of the executives interviewed for the report said they were satisfied with their companies innovation performance. The report suggests four ways companies can succeed in innovation: idea generation, structured processes, leadership, and skilled workers.
Idea generation. The report states simply, "Ideas matter." They do indeed matter and companies are smart to invest in innovation. Understanding customers is key, as is establishing a "company culture that supports innovation." Another key to succeeding in innovation is working with suppliers. Suppliers can be a valuable source in developing innovative products.
Structured processes. According to the report, the most innovative companies in their index are ones that excel at "generating and benefiting from new ideas." Companies need to create processes for generating ideas.
Leadership. The differentiating factor for companies that succeed at innovation is "strong, focused leadership."
Skilled workers. The most critical element to succeeding in innovation is acquiring a skilled workforce.
Partnership between government and companies needed
Action in all the areas mentioned in the report, and highlighted in this article, are in the "mutual interest of companies and government." In a depressed economy, fostering innovation becomes very important. In the words of the report, all government levels need to make innovation a "top priority and prove their commitment with concrete action."