Harvard Business Publishing

Dear Mr. President-elect:

Congratulations on winning a hard-fought, well-deserved presidential election!

Unfortunately, you won't enjoy a long honeymoon period as the US desperately needs your visionary leadership to pull itself out of the economic quagmire it is being dragged into. Just last week, US unemployment reached a 14-year high of 6.5% and the stock market shed 929 points within two days.

The only way we can reboot the ailing US economy is through increased innovation. You seem to agree. Your electoral platform calls for doubling federal funding for basic research and making the current R&D tax credit permanent. You also want to invest $150 billion over 10 years to develop green technologies and create jobs.

But here is some bad news: merely cutting R&D taxes and pumping more dollars into big national research projects just won't make America more competitive. Actually, the very notion of linking innovation and national competitiveness is an outdated mental model that harks back to the Cold War, when the US embarked on an innovation arms race with its then-rival USSR, galvanized by the Soviet Union's launch of Sputnik in 1957.

Unfortunately, you will be entering into the White House in 2009, not in 1959. Back in the 50s, America dominated the world economy, and the US could afford to rely exclusively on local R&D talent to innovate for a relatively-insular US market. But today, the share of the US in the global tech economy is shrinking, with emerging nations like Brazil, India, and China expected to contribute more than 50% of the global economic growth in coming decades. Welcome to the post-American world, as Newsweek editor Fareed Zakaria calls it.

Unlike the 50s when the world was divided by the Manichean Cold War mindset, this post-American world will be economically more integrated and culturally more interconnected. Need evidence? Just check your kids' Facebook buddy list: I bet their online friends are spread out across all continents! The operative word today and in the future will and should be "cooperation," not competition. Your innovation agenda for the US should reflect this huge mindset shift.

As a multicultural person, you are keenly aware that in today's interdependent world, there is nothing "exceptional' about US issues that require innovative solutions to be developed by America on its own. The US energy problem is the same as the Chinese energy problem; we have one global energy problem to overcome. There is no separate US healthcare issue and Indian healthcare issue; we have one global healthcare issue to overcome. In the post-American world, the US needs allies worldwide, especially India and China, to tackle the pressing socio-economic issues that affect both Americans and citizens worldwide.

How can you imbue this spirit of "inclusive exceptionalism" in the US innovation agenda? By first getting American policy-makers and citizens to recognize that in the nascent multi-polar world order, (national) knowledge no longer confers power, but (global) knowledge-networking is the new source of power. Let me elaborate a bit...

The consuming middle-class and low-cost producing talent in international players -- especially Brazil, Russia, India, and China -- are propelling the US companies into a new global ecosystem called Global Innovation Networks. In this emerging collaborative market structure, global demand for innovation will fluidly match worldwide -- not just US -- supply. The blossoming Global Innovation Network model hinges on what Warren Buffet calls "true trade": not just exporting products and services but also importing ideas and talent.

To ensure that America runs a surplus in the true trade of Global Innovation Networks, you need to promulgate an innovation agenda that expands US' ability to successfully cast the four Global Innovation Network roles:

1) Inventor. You must recommend efforts to expand the US talent base to support not just product invention but also the creation of new business processes, services, and even business models. Imagine how Six-Sigma-trained physicians can improve patient scheduling processes in hospitals -- or how teachers with financial skills can devise an innovative model to attract private capital into rural educational programs. And while building these local capabilities, US workers must also learn to collaborate with inventors worldwide.

2) Transformer. You propose to set up a fund for innovative manufacturing firms. But US manufacturers' real success will hinge on their ability to transform globally sourced inventions into final products -- and transform these products into successful sales. With services now accounting for nearly 80% of the US GDP, US manufacturers and retailers need to be trained on how to drive "service innovation" in order to acquire and retain their customers both in the US and international markets. Position the post-industrial US society for success in the global services economy by shifting some of your planned hard sciences research funding into the emerging field of "service science."

3) Financier. Promote the global deployment of US capital into the four specialized Innovation Network roles -- and attract foreign capital into the same roles played by US firms. This explicitly means shifting the financing by VCs and mutual funds away from just focusing on startups and vertically integrated invention-to-innovation firms. For instance, you should finance the training of US-based Inventors and Transformers in the ways of development economics so they can devise creative schemes like microfinance to tie the poorer consumers in Africa and Latin America into Global Innovation Networks - which is exactly what Microsoft is doing in India.

4) Broker. You should call for the establishment of Brokers: organizations that facilitate and accelerate the invention-to-innovation cycles by linking Inventors, Transformers, and Financiers worldwide. These Brokers could even be co-located with -- and form the core of -- existing innovation clusters like Silicon Valley and the North Carolina Research Triangle. One example of a Broker is The Indus Entrepreneurs (TiE), which connects VC firms in Silicon Valley with Indian startups.

Global Innovation Networks represent the rising tide that lifts all boats, bringing benefits to all companies and regions involved. Let me pick one country, India, to illustrate this point. IBM employs hundreds of inventive PhDs in Bangalore who work jointly with its US-based consultants to co-invent and co-transform innovative solutions for IBM clients worldwide. Similarly, Indian IT outsourcer TCS finances and brokers inventive R&D projects at MIT and in Silicon Valley, which are transformed into client value by TCS's American consultants. If only you could strengthen the budding US-India Innovation Networks, the world's largest and the world's oldest democracies can jointly innovate solutions for major global issues such as water scarcity, healthcare, and oil shortage.

Now, let's talk policy. As the next US president, how can you bootstrap these Innovation Networks? Unfortunately, you just can't legislate their adoption by passing a law in the US Congress. Like democracy, innovation needs to be cultivated at the grassroots level. I encourage you to work with state and local governments to adopt globally-minded innovation-led economic development policies. They can learn from California, which has a head start on that front. Indeed, under the guidance of the Bay Area Council Economic Institute, Californian lawmakers are contemplating ways to recast Silicon Valley as a broker of Global Innovation Networks - by facilitating linkages between inventive Bay Area startups and universities and global Financiers and Transformers.

Rather than promoting a "national" innovation agenda, or setting up a fancy but useless National Innovation Foundation, you should facilitate US states' bottom-up integration into Global Innovation Networks by: a) improving immigration law to allow unrestrained "brain circulation" between the US and partner countries, and b) signing science and technology cooperation deals with talent-rich countries like Brazil, China, and India. That way, ship-builders in Maine will be able to team up with MIT nanomaterials scientists and resourceful Chinese logistics providers to invent energy-efficient cargo ships. And creative startups in the Midwest can link up with Brazilian bio-fuel experts to transform ethanol into a sustainable energy source for America.

I am proud of your desire to emulate Mahatma Gandhi, who was committed to creating positive change in the world by bringing people together peacefully. Gandhi famously said: "Interdependence is and ought to be as much the ideal of man as self-sufficiency." I am confident that, under your presidency, you will infuse America with that new spirit of interdependence by solidly anchoring the US in emerging Global Innovation Networks.

Sincerely,
Navi Radjou