Innovation is an imperative for every company doing business in the global marketplace. How well are U.S. companies doing at innovation? The results of the third annual Leading Innovations Competition, conducted by strategy+business Booz Allen Hamilton (Tysons Corner, VA) suggest that U.S. companies are doing quite well.

Innovation is an imperative for every company doing business in the global marketplace. How well are U.S. companies doing at innovation? The results of the third annual Leading Innovations Competition, conducted by strategy+business Booz Allen Hamilton (Tysons Corner, VA) suggest that U.S. companies are doing quite well. The firm selected 10 of the most impressive new ideas to come out of its global practice and visitors to the competition web site cast ballots to select the four they felt were best.

After a decade or more of obsessive attention to costs, most companies are now looking to innovation for a competitive edge. According to a recent survey, also by Booz Allen, 90 percent of executives consider innovation crucial to growth, and say they plan to improve innovation performance by 30 percent. So it's no surprise that two of the winning ideas focus on getting the most out of investments in innovation.

One of these, Design to Value, shows how to create more value at lower cost through cross-functional collaboration in the critical early stages of design, where 80 percent of the cost and value are locked into a product or service. Manufacturing engineers everywhere have been championing this concept for decades, so it's nice to see it get some recognition in such a prestigious venue!

Cost-cutting and control in some R&D departments have been carried to the point that they are stifling creativity. The other winner that zeroed in on squeezing more innovation from every dollar invested, Intelligent Innovation, defines four sources of intelligent innovation-customer insight, global networks, future foresight and an innovative corporate organization-and shows how companies can combine them to win the innovation competition.

A recent report from the National Association of Manufacturers (Washington) points to five warning signs that threaten U.S. manufacturing innovation leadership. Manufacturing output has only grown 15 percent since the last recession; half the average pace in other recoveries. Manufacturing capacity remains underutilized, and the U.S. share of global trade has dropped from 13 percent in the 1990s to 10 percent in 2004. The widespread perception that manufacturing employment is unstable discourages new workers, contributing to a growing shortage of skilled workers. In addition, growth in R&D spending has averaged only 1 percent per year in real terms since 2000.

None of these are insurmountable, but they should inspire a call to action. As Dr. Joel Popkin, economist and author of the report points out, "Though the United States accounts for 40 percent of all R&D spending in the industrial world, we can not become complacent about this leadership position."

Clearly it behooves American manufacturing companies to continue investing in R&D, lest complacency undermine the productivity gains they've made in recent years. Especially in view of the growing shortage of skilled workers-jobs banks notwithstanding-we must continue to regard manufacturing innovation as a top national priority.