A crisis is precisely the time for governments to boost spending on innovation, not cut it. Otherwise, nations will find themselves playing catch-up.

The Austrian economist Josef Schumpeter once declared that economic downturns are "a good cold shower for the economic system." Economic downturns can have positive effects; they force companies to increase their efficiency, cut waste, and strive to do things in smarter ways.

The Threat of an Inward Focus
Back in the U.S., I met with leaders from the retail, consumer goods, automotive, and financial services industries. All of these sectors are feeling the pinch from the sub-prime mortgage crisis and the resulting credit crunch. Not surprisingly, they are trying to shore up their domestic business with customer incentives, new product and pricing approaches, and cost management strategies. One of the dangers of the current situation, however, is the potential that the fixation on inward-looking strategies is distracting Corporate America just when it needs to be most focused on global opportunities and threats.

Breakthrough Innovation
When the goal is to develop a breakthrough, it is important to focus on what motivates a consumer to engage in specific behaviors that help them to accomplish their goals. Knowing how consumers decide what to do in different situations is the key to understanding these motivations, and criteria for success will ensure that the consumer will perceive your new offering as necessary to their success.