How the U.S. can win the innovation game

Very large companies need to find ways to work with the very small startups and small and medium-sized businesses that often carry new and disruptive innovations to new markets. For example, the tremendous success of Apple, which is now the second most valuable company by market value in the U.S., rests in part on the more than 200,000 apps that have been created by others for its iPhones and iPads.

We also need to focus ourselves on innovation that can sustain prosperity over time. It will not be enough to restore manufacturing to the U.S., if by “manufacturing” we mean bending metal and producing objects. Instead, we will need to innovate manufacturing itself, so that it also encompasses the provision of a variety of complementary services that wrap around the products to solve customers’ needs. Manufacturing must incorporate external ideas and technologies, and allow others to contribute their ideas and inspirations alongside, and on top of, the products that emerge from our factories. Service must become central to manufacturing, rather than a step-child that is regarded as being of little importance in a product-driven world. 

Addressing the innovation challenge also will require us to go far beyond our factories. As a country, we cannot – and should not – try to win the innovation game on our own. There are too many good ideas, and too many talented people around the world, for us to try to do this on our own. What we need is the ability to attract the best and the brightest, and those willing to work their hardest, and enlist them in the quest to create even better ways to address the many opportunities and unmet needs in the global market. We also need to go outside our own shores and engage actively in promoting and selling our products around the world. It is a reality of our times that most of the growth in the global economy in the next ten to twenty years will arise outside the U.S. We need to be there, competing, learning, and serving the growing purchasing power of the rising economies.

This means that we need to further open up ourselves as a society if we are to realize our innovative potential. We need to send more students overseas, particularly to the rising economies in places like China, India, Brazil, Turkey and Indonesia. We need to teach our children a second language, both to enhance our ability to communicate with others but also to alert us to the ways that other cultures think about life, so that we can innovate better solutions for them and learn how to collaborate with them. We need to promote exchanges that bring more foreign students to the U.S. in high school, to share our open society and culture with them, and build ties of friendship that can lead to later ties of mutual benefit that are the basis of all enduring business relationships.

This can indeed be our moment, if we are open to the innovation possibilities in front of us, and if we open ourselves to become innovative partners and collaborators in a growing global economy.

Henry Chesbrough is a professor at the Haas Business School at the University of California-Berkeley, and author of “Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era.” Follow him on Twitter at @OpenInno.