Rather than undertaking rearguard actions to protect 'business as usual' as some have called for, U.S. firms, large and small, must move full speed ahead to the rapidly flowering, high value conceptual or innovative economy. The most important competition now - one that delivers high wealth - is being fought in the arena of ideas, learning, and delivering new kinds of value to the marketplace. There are seven things the U.S. firms must do to succeed in this innovation-driven economy:

• First, we must lead in transforming industries and entire product segments. As an example, Apple's iPOD, iTunes, and video iPOD are transforming the distribution of music, broadcasting, and movies.
• Second, now that the factors of production are global and mobile, our competitiveness will be determined by how we leverage the 'world toolbox' of assets and ideas. Isolationism makes no sense whatsoever when we can tap expertise, ideas, creativity, markets, suppliers, and technology from around the world and put it to work for us.
• Third, we must stay on the leading edge of science and technology, creating new products and bringing new value to old products. An example is California-based Nano-Tex, which has developed nano-materials that can make a wide variety of textile products resistant to stains and tearing.
• Fourth, innovative companies are creating new value by wrapping manufactured products up with services, and offering tools to co-create products with their customers. For example, a global supplier of specialty food flavors has built a tool kit that enables customers, like Nestle, to create their own flavors.
• Fifth, in the innovation economy, companies must identify the leading edge of markets, and get inside the head and the life of the consumer. With a growing set of choices in nearly every product and service line, the power in the marketplace has shifted to customers. Companies cannot expect to be competitive with a top down, product-push strategy anymore.
• Sixth, the United States should not give up on manufacturing, but rather prepare for a profound revolution in manufacturing through the development and use of transformational technologies such as biotechnology, and nano-scale materials and devices.
• Seventh, mass customization, market fragmentation, and need for speed in identifying and meeting customer needs place enormous importance on forming and managing supply chains. Value delivery networks that span the globe must be quickly assembled like tinker toys, then reassembled or modified to serve the next emerging opportunity.