No matter how President Obama pushes the idea of “innovation economics,” the truth is that America is currently ill-equipped to compete globally. China is out-innovating and out-maneuvering us, and has been for years now. And all our politicians can do is endlessly debate and bicker over the same old economic issues: cutting spending, and raising or lowering taxes. These economic shell games are not the answer. If Americans are going to have any shot at economic survival, we need to evolve.

Project Socrates was developed specifically to address the problem of America’s declining competitiveness, back during the Reagan administration. I don’t know if Socrates is still alive today (Sekora, its creator, took it into the private sector after Bush abolished it in the White House), but America’s current leaders would certainly do well to follow its lead.

Interesting article, and it couldn’t have come at a more pivotal time in our nation’s struggle for economic competitiveness. Not only are we fighting a critical battle against countries poised to overtake us (namely, China), but we have been slowly losing the battle for the past 25 or more years. Up until the end of WWII, the United States was utilizing technology-based planning to build itself into a world superpower. The fatal flaw occurred, however, when the US switched to economic-based planning after WWII, and decades later, we’re finally having to fully face and deal with the extensive consequences of this slow but sure loss of competitiveness.

Yet here’s the irony: back in the 1980s, President Reagan already recognized the problem of America’s declining competitiveness, and called for the creation of a classified program within the US Intelligence Community to address it and develop a solution. The program was called Project Socrates, and had it been allowed to reach its full potential as supported by President Reagan (it was abolished when President Bush took office), we as a nation would not be facing the stark competitiveness gap—and undeniable downward spiral—that presently threatens to bring about the end of the United States’ reign as a world power.

I have seen the inner workings of a good number of American companies and what I see is a disorganized wreck. There is no greater understanding of the capabilities of the company by upper management beyond the economic abstraction. They tend to have no idea what their various departments are capable of and as a result, work is duplicated and outside suppliers are used for things that could be internally acquired.

I feel the same thing is happening at a national level. Sure, we may have cutting-edge technology and capable workers, but what are we doing with these assets? For the most part I think we are ignoring them: occasionally, one asset is propped up and then most of the sectors that can benefit from it look into it and begin to use it, but this is not the case nearly as often as it should be.

We need companies in the US to understand what is available in this country and what their companies are actually capable of producing. Not too long ago while discussing this, I was pointed to some old articles about Project Socrates, which was part of the US Defense Intelligence Agency during the 1980s. Bringing something like that back and expanding it so resources are more readily available to US corporations would go a long way in helping us use the innovation and technology we already have.

The issue of innovation for competitiveness in the US—that would include public/private collaboration—was addressed by a classified US-intelligence-community program under the Reagan administration. The program, called Project Socrates, developed the means to accomplish three critical functions.

First, Socrates developed the means to enable US private and public organizations to acquire, develop, and utilize technology with unprecedented speed, efficiency, and agility.

Second, the means developed would enable the exploitation of technology to serve as the foundation for all decision making throughout all types and sizes of private and public organizations.

And lastly, Project Socrates developed the means that would enable all private and public organizations throughout the US to work symbiotically in their exploitation of technology. The result of the symbiotic exploitation of technology would be that technology throughout the US would be exploited in a highly coherent but flexible and independent way, further increasing the competitive advantage acquired by the US private and public organizations. In addition, because technology exploitation is the foundation of all competitive advantage when it's exploited coherently, the result is that all resources (e.g., manpower, funds, natural resources) are also exploited in a highly coherent but flexible and independent manner.

President Reagan had an executive order drafted mandating the results from Project Socrates be implemented fully throughout the country. For political reasons President Bush abolished the initiative and all its results. If Project Socrates would have come to fruition and completed the mission that President Reagan mandated, the strength of the US economy would have been ensured for many generations.

Global competition is healthy and is expected to continuously increase at a fast rate, so US businesses need to devise strategies to get around the competition and protect their market market share and profitability. One way to limit competition is to differentiate and move ahead; to be able to do this consistently and regularly, the quality of company infrastructure and human resources are very critical.

In particular, the US has the advantage of a mature market, which is huge on an absolute basis even if its growth rate may be less than that of many other countries. The same is true for the quality of infrastructure in the US with respect to other major economies.

Having the right people in the right places would improve the quality of US work and decision making around innovation. Instead of looking broadly at improving the quality of education, there should be a strategy to develop specific talents required for each type of industry wherein major improvements precede competitiveness in the open market. One such effort could be a partnership between companies and educational institutions, which whill jointly select and develop students for the specific competencies required for the industries’ necessary developmental activities. Students will be better trained and thus better candidates to contribute to these companies. These specific competencies are not only technical skills but also managerial, entrepreneurial, and decision making skills.

Another major factor related to employees is their emotional connection with work, and their dedication to seeing the company excel, which could stand to improve in the US. Here there are some important cultural differences when you compare economies: in some of the emerging economies, people have an emotional attachment with the company they work for and vice versa. This leads to a bond between the employee and the management, which most of the time motivates the employee to do a better job and inculcates a feeling of ownership within the employee.

The industrial culture of patents, and the structure of Washington lobbies, may be the most important obstacles for the first world to do battle in the jungles of emerging economies. This may explain why the pharmaceutical industry struggles to forge market niches for proprietary brands in even poor economies, even as the lucrative generic opportunities on their home turf is gleefully swallowed up by relatively poorly resourced firms from the BRIC block. Similarly, all the efforts to peddle atomic energy for peaceful purposes by Washington to subjugate allies would probably pay off much better if someone in the US would do more to market technologies such as coal sequestering, hydrogen fuel cells, and farm productivity to the world.

Coming from Europe and now being in Silicon Valley, I have to admit that I am shocked about the low quality of infrastructures—telecommunications, power, roads—in what is commonly known as the heart of the high-tech industry.

Despite the shortcomings, Silicon Valley continues to be different than other parts of the US. It’s the spirit of the people who live and work there that really makes the difference. This is not easily copied and transferred, and I believe that the Silicon Valley still has a bright future.

Many thanks for this thoughtful article. The notion that a “rise in the number of patents filed by foreign inventors” is a cause for alarm is not clear. The disconnect may be that pessimists and pundits point to such trends without fully appreciating what patent inventorship data may reflect.

Some observations:

1. The US has a history of welcoming the patent applications of foreign inventors such as the Canadian, Alexander Graham Bell, and Germans such as Otto, Wankel, Diesel, and others. The industries associated with cutting-edge technologies and patent disclosures have historically grown first in the US (think of social networks today). We should all want foreign inventors to come and apply for patents here to grow the US employment base and correspondent competitiveness.

2. The fact that foreign inventors choose to file US patents (which are expensive) reflects positively on the quality of the US ecosystem for innovation relative to that of other countries. Briefly, the markets for ideas in the US are more active than they are elsewhere (for example, the high valuation of LinkedIn). In a world with a growing share of non-US engineering graduates, it is positive that inventors choose to pursue their patent rights in the US: note that inventors have more than 100 countries in the Patent Cooperation Treaty to choose from when considering where to file. Apparently, many elect to pursue those issued by the United States Patent and Trademark Office and enforced in the legal infrastructures of the US Judiciary and/or International Trade Commission forums. Even with the considerable current imperfections of these institutions, the global inventor customer comes to the US to pursue the right. To this end, we should be alarmed when foreign inventors choose to file for a patent outside rather than inside the US.

3. The absolute rate of US patenting over time has gradually increased. As such, one would expect that the number of non-US inventors filing patents should also increase.

4. The premise that US-resident inventors should dominate US patenting activity is odd. For the past 50 years, the US has been educating the best and the brightest of many other countries, especially in science and engineering. We should hope that these products of US universities that choose to repatriate would continue to invent, encourage invention in their own countries, and, when they are ready to go to market, apply for a US patent.

5. The numbers referenced with respect to non-US engineering graduates suggest that the global capacity to invent should increase over time.

Considering the above, it is not clear that a rising number of patents filed by foreign inventors is a problem. It may, in fact, reflect part of the solution to increasing the economic competitiveness of the US.

With respect to federal tax policy, the US should dramatically increase the tax on short-term capital gains while lowering them on longer-term gains. This would reduce the focus on day trading and return stocks to being more reflective of long-term value, and would turn CEOs and their teams into longer-term investors in their companies’ growth.

Past years of prosperity and the constantly changing economic scenario has probably made Americans a little lazy and less risk-taking as individuals, simply because they are not sure they can get the same, high rate of returns as they are used to, given the current state of depreciated capital. It is very common human behavior to glorify and benchmark the past. In the future, the US has to embark on an entirely new stage of economic growth, as the authors suggest, if it is to maintain its leadership with a fresh mind-set.

Washington seems like it is contributing more to increased risk aversion rather than a better understanding and implementation of innovation. As we move closer toward a true global economy, it is difficult to think that US companies will remain forever dominant. The real innovators are already on their way to being global.

Another issue we see is an increasing percentage of companies dominated by financial objectives rather than by technical and market objectives—so,let’s make big money quickly rather than build a great company. These companies tend to overhype their capabilities, pay little attention to building the foundation of their technology or services, produce products or services that are unreliable or failure-prone, and do little to develop their personnel or contribute to their industries.

For these economic trends to have a rapid impact on the behavior of major US companies and thus strengthen innovation, companies will have to calculate the total costs of offshoring their manufacturing. Unfortunately, most companies’ calculations are rudimentary, rather than complete, and mainly compare prices. As a result, companies have offshored more work than is in their own interest.

I think you make a great point about the United States’ capacity to innovate and the need to revitalize it with the measures you mention. There’s one more point to make in this analysis, in my opinion: that the US spends twice as much on litigation as it does on R&D.

Our regulated market is great for protecting patents and inventions. But while executives in other not-so-regulated markets can assume more risks, and thus empower more innovation in traditional organizations, ours are afraid of doing so because there are lawyers in each corner, ready to file a class action for issues that, in other markets, are not even mentioned. So, our judicial system needs to change as well.

Leadership in the 21st century is a critical American issue on the battlefield and in boardrooms. The past command-and-control leadership design, decision-making processes, and financial strategies are ending. We are entering a new epoch where globalization driven by liberal monetized capital is resulting in breakthroughs by knowledge workers who are competing for attention. The future is about reorienting our attention toward customers who now have global choices to meet a human or business concern. Large, corporate-performance engines either need to learn and adopt innovative, collaborative, and cooperative practices or they will be replaced. American governance in this new epoch is crucial, not only as a national issue but also for the future of cooperative collaboration around the world.

I think these multinational, performance-engine companies face perilous uncertainty, especially when you consider the emergent, cutthroat hedge funds that operate quickly and stimulate new visions of service, product, or practice; they have the potential to bury a global enterprise or country overnight. Breakdowns can arise in an environmental crisis or a politically chaotic event, and no one in corporate or governmental leadership is fully prepared for the uncertain predatory chaos that’s occurring in the current system of globalization. Two recent examples are the environmental crisis in Japan, which will impact global acceptance of nuclear power, and the revolutions in Egypt that have spurred critical decision making in the Middle East beyond competitive intelligence.

These events reveal blind spots in leadership and also offer the opportunity for businesses to design a global, collaborative “risk-management network.” In my opinion, America has been the leader in innovating after large crises and has made history rather than suffering through it. It’s time to change the mood of resignation among governance and business, and handle the breakdowns with an entrepreneurial American spirit. Vision is what leadership is all about and we have long-term, deep-rooted transformations happening.

To serve future generations, the key will be returning autonomous control to knowledge workers as trusted stakeholders in designing a future world. It’s time to listen to the disrupters as innovative contributors and valued partners. I contend that person-to-person human commitments are at the heart of 21st-century business-process innovation.

Two elements here deserve mention. First, that our public education system is an integral part of our infrastructure and requires systemic investment and reform, from pre-kindergarten (yes, pre-kindergarten) through post-secondary education. Second, as long as the financial industry continues to offer bloated salaries and undeserved bonuses, our best and brightest will make the walk to Wall Street rather than entering manufacturing or education, where real value is created.

Skilled immigrants are one of America’s greatest competitive advantages. The United States has the unique advantage of having among its citizenry people from all parts of the globe. This “integrated diversity” is not yet fully utilized by corporations to its full potential. No other country operating in the global arena has this advantage. You may not find a Fijian or an Icelander in China or India, but you very well could in the US, and that’s a strength that needs to be leveraged.

Let us celebrate the “integrated diversity” of the US and the pursuit of the “American dream,” both of which contribute to the continued growth and prosperity of the US in a global economy.