Council: Innovation Key to Economic Growth

Call to Action Part of Comprehensive National Innovation Initiative Weighing Outlook for Nation's Future

Businesses, academia, labor and government must do more to harness innovation-based strategies or risk ceding America's historic leadership as the world's economic power, warned the Council on Competitiveness in a new report issued today entitled "Innovate America: Thriving in a World of Challenge and Change."

The Council's National Innovation Initiative (NII) report and recommendations address the need for new forms of collaboration, governance and measurement that enable America's workers to succeed, not merely survive, in the global economy. Simultaneously, the NII findings - based on the work of more than 400 leaders and scholars from universities and colleges, corporations, professional societies, industry associations and government agencies over the past 15 months - present a new sense of purpose and mission that restore America's uniquely positive culture of risk and reward, and that create new mechanisms to drive the pace and quality of the national innovation enterprise. As F. Duane Ackerman, chairman and CEO, BellSouth Corporation and chairman of the Council on Competitiveness noted, "The NII epitomizes the changing nature of innovation itself - a dynamic process of collaboration and competition, of open and proprietary exploration, and a unique fusion of talents and cultures for co-creation."

"The importance of innovation lies less in the competitive victory of one country over others than in building a better world for everyone. America can be an engine of change and a driver of prosperity," said Samuel J. Palmisano, chairman and CEO, IBM Corporation and co-chair of the National Innovation Initiative. "The challenge and opportunity to the United States is to respond to the historic shifts of our age by optimizing American society for innovation. At this critical time recommendations from the National Innovation Initiative can be a catalyst for positive change."

An innovation economy that drives economic growth and job creation will be fueled by new ideas - and those will start from curiosity-based research, and then move to application and finally to commercial exploitation. America must certainly retain and enhance its research at the frontiers, but it must also improve the processes that evolve these ideas into better products, services and ultimately solutions to pressing societal problems.

"Innovation has been the hallmark of the American economy long before the Industrial Revolution, but today innovation belongs to no single country. Today we can take nothing for granted," said G. Wayne Clough, president, Georgia Institute of Technology and co-chair of the National Innovation Initiative. "Delivering on the agenda set out in this report will have a substantial and immediate impact today while laying the groundwork for future generations to prosper."

The study proposes actionable recommendations in three key categories: talent, investment and infrastructure. Those sweeping proposals include:

Talent: Educate the next generation of innovators by pioneering an extensive portable graduate fellowship program to give control of educational choices back to students; align federal and state skills needs more closely with training resources while fostering stronger ties and partnerships between academic institutions, industry and government to serve regional interests; establish tax-advantaged lifelong learning accounts for employees to promote continuous learning and new skills; improve health and pension portability; offer tax credits for skill-based learning; and reform immigration policies to attract the best and the brightest S&E students and graduates.

Investment: Stimulate radical innovation by reallocating three percent of all federal agency R&D budgets toward "Innovation Acceleration" grants that invest in novel, high-risk and exploratory research; energize the entrepreneurial economy by establishing 10 Innovation Hot Spots at regional locations across the United States over the next five years; reduce the cost of tort litigation from 2 percent to 1 percent of GDP; create safe-harbor provisions to promote voluntary disclosure of intangible assets while aligning private-sector compensations and incentives to reward long-term value creation; and boost seed capital to energize the entrepreneurial economy.

Infrastructure: Develop new metrics to understand innovation performance and aggregate into a biannual national innovation scorecard; build quality into all phases of the patent process; transform the patent database into a searchable tool to mine the landscape of ideas; strengthen America's manufacturing capacity by establishing advanced centers for production excellence, including shared facilities and consortia that incorporate 'best practices' standards; and build a 21st century network infrastructure with healthcare as the test bed.

Innovation generates the productivity that economists estimate has accounted for half of U.S. GDP growth over the past 50 years. Innovation gives rise to new industries and markets, fuels wealth creation and profits and generates high-value, higher-paying jobs. In a world in which many nations have embraced market economies and can compete on traditional cost and quality terms, it is this ability to create new value that will confer a competitive edge in the 21st century.

"Although 'Innovate America' represents a conclusion of sorts for our intensive research and analysis over the past 15 months, it also marks the start of our efforts to reshape the way America thinks about and promotes innovation," said Deborah L. Wince-Smith, president, Council on Competitiveness. "The National Innovation Initiative will now focus on making these recommendations real to spur job creation, improve our standard of living and increase our productivity."

"Innovate America" is available as a free download from

About The Council on Competitiveness
An organization of the top business, university and labor leaders in the United States, the Council on Competitiveness is responsible for influencing the course of American competitiveness on regional, national and global scales. The Council stands unique in its ability to anticipate and respond to changing economic conditions through a series of comprehensive programs to maintain competitiveness and security, support innovation, benchmark national competitiveness and shape public policy. The Council is available on the Web at


Thomas Ford
Racepoint Group

Bill Booher
Council on Competitiveness