The only game in town

Michael Mandel, chief economist at Business Week believes that innovation is "the only game in town."  In this time of financial meltdown and economic crisis, he believes that the only way we can pull out of this mess is for innovation to prevail in our culture.  

I agree with his intention, but most of his suggestions left me scratching my head.  Michael suggests that we need new economic policies (tax incentives, etc) to encourage companies to be more innovative.  He also suggests prizes, and encourages new technology development.  While these policies can't hurt, I find that a lack of incentives or ideas is not the problem.  While his suggestions won't hurt, and may help, I don't think they will have the deep, meaninful impact that is needed. 

In my experience, the problem lies in the fact that most companies don't know what to do to be more innovative.  They know that in order to grow or be more profitable they will need to innovate.  That is a great incentive.  There are also more than enough ideas to go around.  What is lacking is that most companies do not know how to guide innovation efforts in a way that will be valuable in the market.  They also have a difficult time managing innovation efforts within cultures that need to manage predictable processes and outcomes.  To be more innovative, companies need to find ways to reward behaviors that encourage innovation, without discouraging the maintenance of business.  To be more innovative, companies need to be encouraged to take on projects whose outcomes cannot be defined before the project is started.  To be more innovative, companies need to learn to identify problems before they search for technologies.  Otherwise we end up with solutions in search of problems.  These are difficult behaviors for organizations to manage from within organizations who need to reward reliable delivery of products and services.  

We are a community of innovators.  What would you suggest to Michael to answer the question:  What is necessary for America to become more innovative in the future?  How can we help him?