August 20, 2012
Staff Picks: Innovation Economics
Success for any organization, whether a company or a nation, depends first and foremost on an ability to challenge status quo thinking, for "groupthink" leads individuals to believe that they know what the problem is (or worse, that there is no problem in the first place). As Henry Ford once said, "Thinking is the hardest work there is, which is probably the reason why so few engage in it." For any nation to win the race for innovation advantage, it has to start with thinking and, when necessary, challenging the prevailing thinking.Atkinson and Ezell begin by discussing the underlying causes of the housing bubble and Great Recession, and paralleling the story of American decline with that of the United Kingdom a decade ago, showing the striking similarities between the nature and causes of each decline. They lay out twenty major causes at work, demonstrating that industrial decline is not a mystery and certainly doesn't have to occur. They then tackle the "myths, nostrums, and dogmas that all too often pass for reasoned economic analysis" before clearly defining what innovation is and how it has become the determining force of every nation's economic success. They follow this by discussing the need for good innovation policy and show us just how poorly most countries are doing in this regard, relying on outdated economic policy thinking and "innovation mercantilism," and "making the global economy less prosperous and more fragile in the process."
Challenging prevailing, out-of-date thinking is innovation in its own right, but innovation is more than that. ... While organizations (and entrepreneurial individuals) drive innovation, it is nations that enable, support, and spur it on, or restrict, hinder, and retard it. Because of that, innovation policy—the constellation of government policies from tax, to trade, to talent, to technology that support a nation's innovation ecosystyem—has become the single most important factor nations need to get right if they are to thrive in the globally competitive economy.
The authors then lay out in sharp detail something missing from the national debate at the moment—solutions. These are the Innovation Policy "I's" of Inspiration, Intention, Insight, Incentives, Institutional Innovation, Investment, and Information Technology. Each is discussed in detail, and illustrated with real-world examples. Hopefully policy makers will take note.