Kesh Narayanan is a perfect example of what has, in the past, made the U.S. a force in the world of innovation. He came to this country from India in 1974 as a science and engineering Ph.D. student at Carnegie Mellon, stayed, and eventually became head of research and development at the Norton Co., an industrial firm.

Today, he is the director of industrial innovation at the National Science Foundation. Narayanan doles out $100 million to researchers whose work is past the pure research phase, but too early for a venture capitalist to fund. As such, he's deeply involved in efforts to ensure the U.S. continues to innovate.

CIO Insight: Is the U.S. losing its innovative edge, or are other countries just getting better?

Narayanan: The culture for entrepreneurship is probably equal in India to that in the U.S. It has always existed there. The small businesses, the classic so-called mom-and-pop shops, the same economy exists there as here. The difference in India was that 20, 30, 40 years ago, you had a closed society. India had to gain a degree of internal wealth creation and to be in a position to invest in itself.

Does India's status as a democracy that leans heavily toward socialism present any particular barriers to innovation?

Socialism does affect innovation in India in the sense that whatever capital is available goes for very large projects. India's major area of strength is IT, which doesn't require a lot of capital. So innovation and capital have to go together. And that is the tremendous strength of the U.S.

Any other bright spots for the U.S.?

The culture has a lot of strengths—entrepreneurship, a willingness to take risks—and you don't get the same negative marks for failing here as you do someplace else.

What concerns you about the U.S.'s future as an innovator?

Getting respect for engineering as a profession. Students in the K-12 years need to get excited about engineering as an alternative to becoming doctors and lawyers. Bright people need to get into the engineering pool. And that's not under our control. It requires a huge cultural shift. That cultural issue is a much bigger concern if we as a country want to take a route of self-sufficiency versus importing engineering students.

Do we need a federal innovation policy?

Various countries have an innovation policy and a way to channel resources. We have managed not to have one and still have been very successful. The real question is: Can we continue along that line? We didn't need to have an innovation policy when we had a free flow of scientists and engineers into the country. But if you don't have that, you need an innovation policy.

It seems like the U.S. has had concerns like this before and still managed to prosper. How alarmed should we be?

It's hard to predict whether this will blow away. The history of technology shows there's always something interesting coming up. I would say, on behalf of the position I hold, the alarm is warranted. Something has to happen—you can't do nothing and expect to be OK. As an engineer, the lack of a call to action is what worries me.

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