The competitive landscape inside the States: How dire the picture?

BUSINESS: "Innovation in America: A gathering storm? Confronted by Asia's technological rise and the financial crisis, corporate America is losing its self-confidence. It should not." The Economist, 22 November 2008.

Growing consensus says America's technological lead is shrinking and once gone, we'll be sunk.

Counterview from Amar Bhide of Columbia's B School in new book, The Venturesome Economy.

Our continuing advantages?

1) obsessing over PhD stats is useless, because "even if China spends a fortune to train more scientists, it cannot prevent America from capitalizing on their inventions with better business models."

2) the commercialization, diffusion and use of inventions is more valuable to companies and economies than the original act of invention (hmm, I believe we call that the "Microsoft effect"), so more MBAs than PhDs

3) "the extraordinary willingness of its consumers to try new things"--aka "venturesome consumption" (vilified right now)

Example: Jeffrey Immelt says GE is not great at invention but is great at "turning $50m businesses into billion-dollar businesses."

Having worked for a start-up-growing-into-something-bigger for the past three-plus years, taking it abroad the past couple of years, I guess I would agree with this positive assessment.

Upshot? Blow off the dire predictions of "techno-nationalism."

Notice how we always talk about America losing all its technology to the world but then assume that rising New Core powers like India and China will somehow be able to hoard theirs?

Bottom line: innovation is the most globalized part of globalization.

Booz & Company rank global companies by innovation every year and their data shows no correlation between spending on R&D and better financial performance. The key, the company finds, is that multinationals that do best are the ones that take a global approach to accessing research vice concentrating such spending and effort in their home market.

This is the exact opposite of what many experts argue in the national security realm, but it's been my argument for years: America can't have the best defense in the world twenty years from now if we pretend that concentrating such R&D here and preventing such "proliferation" is the answer. Defense R&D went global a long time ago, because the market--along with globalization--went global a long time ago.