For all the discussions of "green shoots" in housing or consumer spending over the past few months, too little attention has been paid to a classic American economic advantage: innovation. If cash flow is the blood of the global economy and spending and investment are its main arteries, then innovation is the heart that does the pumping.

Over the long term, innovation is what drives cost reduction, higher employment, spending, health care, investment and ultimately, better living standards. Many business owners see it as their No. 1 priority. When consulting group McKinsey asked executives in February where the government should direct the majority of its stimulus spending, 59 percent of respondents said on "fostering innovation and potential new industries," putting it in the top spot, even before potential solutions such as "helping workers who have been laid off" or "helping existing companies."

Venture investors are still keeping a tight grip on their capital in the wake of the world’s financial meltdown, making the third quarter of 2009 look about as anemic as the first two quarters of the year.

According to data from industry tracker Dow Jones VentureSource, VCs put $5.07 billion into 616 deals in the third quarter, which marks a 6% drop from the $5.42 billion put into 595 deals in the second quarter of the year.

On September 9, the giant data storage hardware and software company EMC announced it would spend $1.5 billion to further develop its R&D capabilities in India. A new research facility will employ 2,000 engineers and scientists with the potential for an additional 1,500. A day earlier, EMC announced a R&D alliance with the Indian Institute of Information Technology-Bangalore, one of a constellation of Indian research universities equivalent to the Massachusetts Institute of Technology, albeit with harder admissions requirements.

Such announcements are usually met with despair and anger. The decision to domicile those jobs in India nails yet another in the coffin for U.S. industry and R&D, goes the old saw. The naysayers bray that EMC's decision is more evidence that America makes and designs less and less, and has become a soft-bellied country of marketers, PR people, and lawyers—make-nothings, in other words. Even President Barack Obama has joined this chorus, calling for more engineers and a return to a country of people who make things.

Haiti Innovation was founded five years ago by four Peace Corps Volunteers who served in Haiti. We wanted to do this because we felt Haiti had given us more than we were able to give back during our two and a half years of service. This website has been a way for us to repay a debt - to Haitian colleagues, friends, and family who we learned from and have not forgotten. Haitians like to say that their country has teeth - it bites on to you and it doesn't let you go. Haiti has changed, we've changed, and the website has changed. But five years and 527 blogs later, Haiti still hasn't let go.

Here’s the latest from VentureBeat’s Entrepreneur Corner:

How to make friends and influence people (and convert them) – Social media can be a good marketing tool for your company, but if you’re able to become a trusted resource for people via Facebook or Twitter, then you’re really on to something special, notes YoungEntrepreneur.com co-founder Adam Toren.

Is your product a “must have” or “nice to have”? - Many entrepreneurs are too close to their topic to realize where they really are on the user adoption curve. Are they building something essential or just something people would like. Lunsford Group vice president Bernard Moon describes the differences.

Peter Drucker said:

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Yet, time after time we see companies trot out responses to competition that aren’t much different than the competition. Witness the box like car pioneered by the Scion Xb, then the Honda Element, and now the Nissan Cube. Honda misjudged the primary market so badly for the Element- thinking young hipsters would be the primary market- and it ended up being a car for the practical geriatric set (don’t worry, Chrysler had the same experience with the PT Cruiser).

Venture capital fund-raising, the rocket fuel for the nation’s entrepreneurial economy, slid to its lowest level in 15 years in the third quarter, when just 17 venture firms raised $1.5 billion, according to data released yesterday by the Thomson Reuters research firm.

By comparison, 63 venture capital firms raised $8.5 billion in the third quarter of last year, while 27 firms raised $1.9 billion in the second quarter of this year, the firm’s data showed.

The Rochester region has many assets to foster econmic growth and could benefit by having one person - an "innovation intermediary"- who makes it easier for the region to bring innovation to the marketplace.

That's the message of Richard Bendis, keynote speaker and one fo the scheduled panelists at next Friday's annual Eyes on the Future, a regional economic summit, at St. John Fisher College.

Weekly Update from Build A Stronger America - Issue 1 - October 14, 2009

Manufacturing Business Owner, Bill Wydra, Shares His Story

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COLUMBUS, Ohio, Oct. 14 /PRNewswire/ -- Ohio's increase in venture capital investment - the only state that has not experienced a decline - is on display Oct. 14-15 at the Ohio Early Stage Summit V, an education and networking event for entrepreneurs and investors from across the country. According to the Ohio Business Development Coalition, the nonprofit organization that markets the state for capital investment, state funding supporting early stage venture capital investment through public-private partnerships has been key to Ohio's proactive strategy for business climate success that is beating the odds in the current VC environment.

I had the great opportunity to take in the first Intelligent Communities Forum (ICF) Summit, in Moncton.

I thank the City of Moncton for making the investment and taking such a proactive lead to bring a high calibre conference focusing on broadband and the Internet to increase regional, economic and social development to the city.

Communities that invest in broadband are investing in their companies and their citizen's work-life balance. What was so inspiring about this conference was it was not about technology but about how the Internet supports personal and business connections in ways that we never imagined. It was about the people and how easy we make it for them.

As Richard Bendis, CEO of Innovation America, puts it: change is inevitable with the fast paced power of the web. If you're hesitating as an owner or senior manager, you are creating liability for your firm's longevity. Listening and collaborating with your target market users can significantly increase your unique value proposition -- which is how your relevant use of the web can help your long-term success.

The city's Economic Development Corp. and the New York City Investment Fund have teamed up on an initiative to fund biomedical research that has advanced beyond academic institutions, but is not yet ready to attract private funding.

The $5 million Translational Research Fund is designed to give researchers with ideas that could result in companies being formed in the city the added kick they need to propel their work out of what's come to be known in the industry as the “valley of death.”

MASON CITY — National Association for Community College Entrepreneurship (NACCE) and Accelper Consulting awarded the North Iowa Area Community College John Pappajohn Entrepreneurial Center (JPEC) its highest national honor.

The Innovation Award recognition was presented Monday at the NACCE conference in Chicago.

“NIACC’s efforts through the JPEC have made a significant impact on our region, and we are proud that those efforts are being recognized with this award,” said NIACC President Dr. Deb Derr.

Business innovation has had a lot of buzz created in the last few years. The difficulty with innovation is that we all have an intuitive understanding of the topic and we aspire to be innovative, but struggle to make it real and tangible. This challenge is further complicated when we see "others," - companies, communities and countries – innovate and yet we are not able to repeat those successes. This is especially true for emerging countries as they try to keep pace with innovation that is coming from the developed world.

To address the innovation challenge, Indonesia, the world's fourth largest country by population, has come up with a bold and innovative (what else!) approach. In 2008 the Ministry of Research and Technology established a Business Innovation Center (BIC) with the vision to "become the leading Business-Innovation intermediary, in order to promote Indonesia's economic and business competitiveness."

Back in August, Connect CEO Duane Roth outlined an initiative to address a dearth of venture capital investment by seeking to develop alternative funding sources for San Diego’s early-stage technology companies. A key part of the non-profit group’s initiative is to pursue additional federal support—and now that effort is facing its first major test as Congress takes up a bill that would provide funding through the Small Business Administration for equity investments in certain types of technology startups.

A House bill dubbed “The Small Business Early Stage Investment Act of 2009” would basically make the federal government a limited partner in qualified investment firms that make venture capital investments in early-stage companies in targeted industries. Roth tells me the bill, which was introduced by Democratic Rep. Glenn Nye of Virginia, fits his initiative “perfectly.”

The third annual event, sponsored by the Small Business Council of Rochester and Greater Rochester Enterprise, was intended to stir enthusiasm for the region as a place to do business.

The event was headlined by Richard A. Bendis, founder and CEO of Innovation America in Philadelphia, who warned the audience that financing for new ventures is at its lowest point in 12 years.

BusinessWeek has assembled a number of articles related to innovation. Check them all out!

GROWTH THROUGH INNOVATION

PLYMOUTH, MICHIGAN—U.S. Commerce Secretary Gary Locke opened the department’s first one-stop shop today in Plymouth, Mich., bringing together under one roof all the agency’s services to make it easier for local businesses and entrepreneurs to access them. Locke announced the opening of the new facility, named CommerceConnect, at the Midwestern Governors Association Jobs and Energy Forum this morning and later held a ribbon cutting ceremony at the Michigan Manufacturing Technology Center. Today’s event marked the secretary’s fifth trip to Michigan since becoming Commerce secretary.

“The Commerce Department offers tremendous resources for businesses, but too few businesses take advantage of these and other government services because there is no GPS for navigating the bureaucracy,” Locke said. “CommerceConnect will provide a single point of contact where businesses can access the full array of Commerce programs available to them.”

Venture capital funding plummeted more than 80 percent in the third quarter, as investors clung to their cash during the recession.

U.S. firms raised just $1.6 billion during the period, the lowest amount since the first quarter of 2003, according to a joint report by Thomson Reuters and the National Venture Capital Association on Monday.

That's an 81 percent drop from a year ago, when 63 firms raised nearly $8.5 billion. It was also a decline from the preceding quarter, when 27 funds raised almost $2 billion.

Most angel investors dream of home-run exits, funneling seed capital into young start-ups with hopes they’ll turn into Google, YouTube or even Mint.com. But the Band of Angels, an angel group flush with its third fund, believes there’s mighty value in later-stage companies and smaller acquisition prices.

“Sure, everyone is talking about the sale of Mint.com,” said Ian Sobieski, a founder and managing director of Band of Angels, referring to Mint Software Inc.’s recent $170 million sale to Intuit Inc. “But if my buddy can sell his company for $12 million, $15 million without too much dilution, that’s pretty good.”