Innovate Better, Better Innovate

Innovate Better by Fareed Zakaria (Time Magazine, June 13th, 2011) is a compelling collection of facts and case history with the conclusion that we Americans are losing the innovation war. His reasons are concise, clear and supported. I won’t restate them here, but in his essay, one key reason for American failure is missing. This reason also suggests a solution to the American innovation deficit.

Leaders in large American businesses sit on substantial cash reserves (over $4 trillion). These reserves are passed to the financial institutions to reinvest around the world, rather than in the home companies. This investment strategy suggests that today’s corporate leaders, today’s board of directors included, have more faith in the ability of others to produce value than in their own companies and country. I would suggest that this lack of confidence indicates that these people may not be the best ones to guide us back to a higher stature in innovation. These reserves should be the resource reinvested at home to leave a legacy of discovery in technology, business model and market exploration.

Greg Wahl, of Wahl Clipper, has his clippers in almost every salon and barber shop in the United States, Europe, Asia and beyond. For over twenty years, of the company’s 90-year history, it has invested and worked to match design and manufacturing capacity to their market.  Plants in Sterling, IL, the U.K., Germany, China, India and Hungary all work to serve their special market, as well as the globe, with the plant’s special capability. The result is a continuous flow of innovation in design and function, targeted for a market and specific brand, but intriguing, even somewhat exotic, to the rest of the world.  It is hard to see how he could fail to leave a legacy of potential for his successors. This is true wealth; true stewardship.

Sitting on a bag of money feels pretty good as a board member. I have worked hard to build reserves during my tenure on institutional boards. Trust me; a bag of money is more comfortable than the most expensive executive chair. But was I elected to those boards to be comfortable and hoard cash, or was I brought on to aggressively pursue the mission?

Zakaria asks how American innovation is to be funded. I suggest the answer is clear. The money is there. It is not a specter of financial poverty that our business leaders experience; it is a poverty of innovative vision.

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