Fail Often, Fail Fast: "Are We Behind On Innovation That Matters?"

The first part of the headline was advice from a mentor. The second half is a question that reflective V.C.'s ask when they get honest with themselves.
From Infectious Greed:

In his latest essay, Michael Cembalest at J.P. Morgan closes with the following sobering stuff:

Lastly, I know I’m opening a can of worms here, but there’s a lot of uncertainty about what the world has in store 10-20 years from now. Many people have great hopes for renewable energy, carbon sequestration to render 100 years of U.S., Russian, Chinese and Indian coal reserves more usable, advancements in lithium ion battery technology, etc. Technological achievements of the last 50 years suggest they can be done given the right public-private sector partnerships. But on a timeline of progress, the world is behind on each one right now.

In the future, the world could be a more unstable place, given energy concerns, Iran-Iraq, the possible end of the dollar’s reign as the world’s sole reserve currency, and the seismic increase in public debt at a time of severe U.S. partisanship and polarization, the worst since post-Civil War Reconstruction.

Are we behind the curve on innovations that matter most? It feels like that in many ways, I think, to most of us, but is it true? Certainly there is lots going on in information technology – from mobile, to social networks, etc. – but how about in energy, where some of the deepest-rooted and toughest problems lie. It’s an interesting question.

Here's a piece that Jeff Nolan first put out on his blog, Venture Chronicles a couple years ago.
Although it has a narrower focus, software, than the subject that Cembalest and Kedrosky are addressing, the question is just as much a J'accuse as Kedrosky's headline.
From SandHill.com:

Incrementalism and "The New New Thing"
With all the venture capital moving around in the Silicon Valley, where is the real innovation?

...Today's venture capitalists are funneling a lot of money into businesses which are only incremental improvements over what the current market offers. The situation may leave the technology industry in another downward spiral if none of the "incremental" ventures hit it big and no other genuine innovation appears soon....

...What's frightening is the inability to answer the basic question "What's next?" The Valley thrives on "The New New Thing" (possibly one of the most poignantly titled books ever) and with every turn of a generation, there is an awkward moment where we're just figuring out where we've been but have yet to see where we are going… Right now is that moment....MORE

Last June BusinessWeek had a cover story with a couple articles on the subject:

The Failed Promise of Innovation in the U.S.
During the past decade, innovation has stumbled. And that may help explain America's economic woes

"We live in an era of rapid innovation." I'm sure you've heard that phrase, or some variant, over and over again. The evidence appears to be all around us: Google (GOOG), Facebook, Twitter, smartphones, flat-screen televisions, the Internet itself.

But what if the conventional wisdom is wrong? What if outside of a few high-profile areas, the past decade has seen far too few commercial innovations that can transform lives and move the economy forward? What if, rather than being an era of rapid innovation, this has been an era of innovation interrupted? And if that's true, is there any reason to expect the next decade to be any better?

These are not comfortable questions in the U.S. Pride in America's innovative spirit is one of the few things that both Democrats and Republicans—from Bill Clinton to George W. Bush to Barack Obama—share.

But there's growing evidence that the innovation shortfall of the past decade is not only real but may also have contributed to today's financial crisis. Think back to 1998, the early days of the dot-com bubble. At the time, the news was filled with reports of startling breakthroughs in science and medicine, from new cancer treatments and gene therapies that promised to cure intractable diseases to high-speed satellite Internet, cars powered by fuel cells, micromachines on chips, and even cloning. These technologies seemed to be commercializing at "Internet speed," creating companies and drawing in enormous investments from profit-seeking venture capitalists—and ordinarily cautious corporate giants. Federal Reserve Chairman Alan Greenspan summed it up in a 2000 speech: "We appear to be in the midst of a period of rapid innovation that is bringing with it substantial and lasting benefits to our economy."

Where are the new products?

With the hindsight of a decade, one thing is abundantly clear: The commercial impact of most of those breakthroughs fell far short of expectations—not just in the U.S. but around the world. No gene therapy has yet been approved for sale in the U.S. Rural dwellers can get satellite Internet, but it's far slower, with longer lag times, than the ambitious satellite services that were being developed a decade ago. The economics of alternative energy haven't changed much. And while the biotech industry has continued to grow and produce important drugs—such as Avastin and Gleevec, which are used to fight cancer—the gains in health as a whole have been disappointing, given the enormous sums invested in research. As Gary P. Pisano, a Harvard Business School expert on the biotech business, observes: "It was a much harder road commercially than anyone believed.">>>MUCH MORE