The BCG/NAM/MI International Innovation Index is part of a research study that looked at both the business outcomes of innovation and government’s ability to encourage and support innovation through public policy. The study comprised a survey of more than 1,000 senior executives from NAM member companies across all industries; in-depth interviews with 30 of the executives; and a comparison of the “innovation friendliness” of 110 countries and all 50 U.S. states. The findings are published in a new report titled “The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge.”
The report discusses not only country performance but also what companies are doing and should be doing to spur innovation. It looks at a host of new policy indicators for innovation, including tax incentives and policies for immigration, education and intellectual property.
“America needs a bold innovation strategy,” said NAM President and Chief Executive Officer John Engler. “U.S. manufacturing innovation leadership is at risk. We’ve fallen behind countries in East Asia and Europe. America cannot afford to lose its manufacturing innovation edge and the wealth and jobs that it generates throughout our economy.”
Six states scored above average in both their innovation policy environment and performance: California, Connecticut, Delaware, Massachusetts, New York and Washington. Overall, however, the study found the states are quite similar with respect to innovation. The key reasons are that federal policy is the same across all states, and the United States has an “American culture” that affects the overall business climate, overriding the wide variety of geographies, industries and demographics.
To rank the countries and states, the study measured both innovation inputs and outputs. Innovation inputs included government and fiscal policy, education policy and the innovation environment. Outputs included patents, technology transfer and other research and development results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth.
The report names four critical factors that lead to innovation success-idea generation, structured processes, leadership and skilled workers-and stresses that government must support these efforts through effective policies. The report also suggests six concrete actions that states and countries can take to help drive forward innovation in manufacturing:
- Strengthen the workforce
- Maintain a strong manufacturing base
- Lead by example
- Make innovation easier
- Improve the payback
- Be consistent with policies