The United States is in a state of innovation complacency, concludes Judy Estrin, author of a new book titled Closing The Innovation Gap: Reigniting The Spark Of Creativity in a Global Economy.
In an ECT News Network interview, Estrin lays out her take on the state of innovation in the U.S. and her prescription for curing our innovation blues.
As Estrin explains it, innovation is simply the process of creating something new, whether it be a new product, service or business model.
Podcast: Listen to the entire interview (15:10 minutes).
The U.S. still holds the lead in new products and discoveries, but in the last decade, the world has started catching up. In the meantime, the U.S. has become risk averse, and thus has lost its innovation swagger, Estrin says.
Estrin offers three events as the primary culprits for this decade-long aversion to risk: The bursting of the Internet bubble, massive corporate scandals (e.g., Enron, Worldcom … etc.) and the 9-11 attacks.
So how to get that innovation swagger back? Here’s Estrin’s, prescription:
- Realize that we lost the innovation edge
- Keep in mind the five core values of innovation that she lays out in the book (Questioning, Risk, Openness, Patience and Trust)
- Balance investments between research, development and application
- Rebuild the education system
- Invest for the future rather than simply focusing on the flip-and-trade mentality prevalent on Wall Street.
Here are some excerpts of the interview:
E-Commerce Times: I’d just like to start out this conversation with the very basic definition of innovation. How would you describe innovation?
At the very basic level, innovation is doing something new. It may be a new product, it may be a new service, it may be a new business model, a different business process, but I like to think in terms of not just innovation but sustainable innovation. What I mean by that is a culture — whether it’s in a company, an individual, a country or the world — where you have innovation building on other innovation, and a good foundation for innovation so that you have a continuous flow of new ideas, new services, new products, new processes. Because that is what we really need to drive the economy and improve the quality of our life and address the major challenges that we face.
ECT: Given that definition of innovation, where do you think we stand right now, with the state of innovation in the United States?
On one hand, I still believe that we lead in innovation, in terms of overall new products and new discoveries, and I actually believe that the fundamentals of the country in terms of our culture, in terms of the freedom that we have here in terms of the historic nature of the country, which was founded on innovation, puts us in a leadership position still today. However, and the reason I wrote the book, I think that that leadership position is very much threatened. And I think that over the last couple of decades but specifically the last decade, we have begun to both undermine the foundations in terms of our culture shifting to a more short-term focus, short sighted, more risk averse, less open, less questioning in nature. But also if you look at what we’re producing, there’s a lot of innovation going on but it tends to be more incremental innovation, more short-term focused, and we’re not investing in the future in the way that we have.
One thing that is evident from the economic crisis that we’re now facing is that the business community over the last decade or more has tended to value what I call “trading and flipping,” or short-term results, short term trading over placing value in investing in long-term shareholder growth and long-term creation that ends up leading to jobs. So the culture has shifted toward a focus on trading, which has caused a lot of the problems on Wall Street and not valuing those companies that are really creating and building.