The Innovation Imperative in Manufacturing: How the United States Can Restore Its Edge Boston Consulting Group, Inc.BCG_be4259b7-e4f2-11e3-8c23-fab7913a63b5James P. AndrewCo-Author -- James P. Andrew is a senior partner and managing director in the Chicago office of The Boston Consulting Group and the leader of BCG’s global innovation activities. Andrew TaylorCo-Author -- Andrew Taylor is a partner and managing director in BCG’s Chicago office. The Manufacturing InstituteTMI_be4259b8-e4f2-11e3-8c23-fab7913a63b5Emily Stover DeRoccoCo-Author -- Emily Stover DeRocco is president of The Manufacturing Institute and a senior vice president of the National Association of Manufacturers. _be4259b9-e4f2-11e3-8c23-fab7913a63b5To assess the state of innovation at U.S. companies and how the United States ranks as an innovation leader relative to other countries_be4259ba-e4f2-11e3-8c23-fab7913a63b5InnovationOnce narrowly defined as simply the development of new products, innovation is now understood to apply to all aspects of a business. One executive we interviewed summed up this evolving definition: “We’ve expanded our thinking on innovation. We used to focus on new-product development, but now we see that products are only one aspect. We look upstream and downstream for other applications, including the business model, enterprise structure, value chain, proprietary processes, channels, service, brand, and customer experience.” Tangible OutcomesNew products, knowledge, formulas, designs, and expertise that are easily quantified and can be legally protected through patents or other intellectual-property vehicles.Intangible OutcomesNew processes or ways of doing business that lead to a competitive advantage, such as a new companywide production process that results in higher quality and greater productivity. Intangible outcomes aren’t themselves easily quantified but can have a major impact on quantifiable results, such as overall business performance. They generally cannot be legally protected.InputsAnalyze the impact on innovation performance of inputs such as government and fiscal policy, education policy, and the innovation environment. _be4259bb-e4f2-11e3-8c23-fab7913a63b51R&D Tax Credit_be4259bc-e4f2-11e3-8c23-fab7913a63b5Fiscal Policy1Taxation Level_be4259bd-e4f2-11e3-8c23-fab7913a63b5Fiscal Policy 2Fiscal PolicyGovernment R&D Funding_be4259be-e4f2-11e3-8c23-fab7913a63b5Fiscal Policy 3Fiscal PolicyEducation Policy_be4259bf-e4f2-11e3-8c23-fab7913a63b5Other Policy 1Trade Policy_be4259c0-e4f2-11e3-8c23-fab7913a63b5Other Policy 2Regulation_be4259c1-e4f2-11e3-8c23-fab7913a63b5Other Policy 3Intellectual Property Policy_be4259c2-e4f2-11e3-8c23-fab7913a63b5Other Policy 4Immigration Policy_be4259c3-e4f2-11e3-8c23-fab7913a63b5Other Policy 5Infrastructure_be4259c4-e4f2-11e3-8c23-fab7913a63b5Other Policy 6State of Education_be4259c5-e4f2-11e3-8c23-fab7913a63b5Innovation Environment 1Work Force Quality_be4259c6-e4f2-11e3-8c23-fab7913a63b5Innovation Environment 2Infrastructure Quality_be4259c7-e4f2-11e3-8c23-fab7913a63b5Innovation Environment 3Business Surroundings_be4259c8-e4f2-11e3-8c23-fab7913a63b5Innovation Environment 4OutputsEvaluate innovation performance._be4259c9-e4f2-11e3-8c23-fab7913a63b52Measure outputs such as patents, technology transfer, and other R&D results; business performance, such as labor productivity and total shareholder returns; and the broader public impact of innovation on business migration and economic growth. R&D Investments_be4259ca-e4f2-11e3-8c23-fab7913a63b5R&D Results 1Intellectual Property Generation_be4259cb-e4f2-11e3-8c23-fab7913a63b5R&D Results 2Publication & Knowledge Transfer_be4259cc-e4f2-11e3-8c23-fab7913a63b5R&D Results 3Commercialization of Innovation_be4259cd-e4f2-11e3-8c23-fab7913a63b5R&D Results 4High-Tech Exports _be4259ce-e4f2-11e3-8c23-fab7913a63b5Business Performance 1Labor Productivity _be4259cf-e4f2-11e3-8c23-fab7913a63b5Business Performance 2Market Capitalization of Listed Companies_be427aa4-e4f2-11e3-8c23-fab7913a63b5Business Performance 3Employment Growth_be427ac2-e4f2-11e3-8c23-fab7913a63b5Public Impact of Innovation 1Investment_be427ac3-e4f2-11e3-8c23-fab7913a63b5Public Impact of Innovation 2Business Migration _be427ac4-e4f2-11e3-8c23-fab7913a63b5Public Impact of Innovation 3Economic Growth_be427ac5-e4f2-11e3-8c23-fab7913a63b5Public Impact of Innovation 42009-03-312014-05-26http://www.themanufacturinginstitute.org/~/media/6731673D21A64259B081AC8E083AE091.ashxOwenAmburOwen.Ambur@verizon.net