"Put my training wheels back on," Sophia said in a stern tone, "Or I'm not going to ride my bike!" She had just turned four that day and wanted to learn to ride a bike like her older sister. Now she wasn't so sure.

After a lot of encouraging and a little stubbornness of my own, she was willing to try. We agreed to practice 15 minutes a day until she got it.

A couple of days later we weren't getting anywhere. It's not that she wasn't trying, it's just that she didn't seem to be able to get her balance on her own.

Then it dawned on me: I was getting in the way. I didn't want my baby girl to get hurt. And I was afraid if she fell she would give up trying completely. So as soon as she tipped to one side — even a little — I caught her.

In other words, Sophia still had training wheels on her bike: me. If I wanted her to learn, I had to let go — figuratively and actually. It's not that I planned to let her fall to the ground, it's just that I had to let her fall closer to the ground. So she had the opportunity to catch herself.

Learning to ride a bike — learning anything actually — isn't about doing it right. It's about doing it wrong and then adjusting. It's not about being in balance, it's about recovering balance. And you can't recover balance if someone keeps you from losing balance in the first place.

So my job got a lot harder. I had to use more refined judgment. Was Sophia falling to the left? Should I reach out before she hit the pavement? Or was she just leaning? Could she steer in the other direction and recover? I had to time my catch just right.

That challenge — timing the catch just right — is the central challenge we face as managers. It's the sweet spot between micromanagement and neglect. Allowing for failure, while ensuring the safety of our employees and our companies.

If an employee comes to you with a presentation that doesn't meet your expectations, what do you do? Take it, fix it, and present it yourself? Tell them what he's done wrong and ask him to fix it? Allow him to present it without making changes and let him face the consequences? Each choice is legitimate in the right circumstances.

Our job is to gauge the circumstances correctly. What's the risk? The consequences of failure? Is time critical? Will mistakes destroy the person's reputation forever? Or will it be an effective learning experience?

As a friend of mine is fond of saying, if you keep catching the vase, everyone is going to think the shelf is sturdy.

Once we gauge the circumstances, we can adapt, changing our response to help the employee learn to recover, stay upright, and keep pedaling.

That adaptation is more difficult than it sounds. It means resisting, or at least questioning, our natural tendencies. Because we all have a favorite response when our expectations aren't met. What do you do when you've given direction to an employee and she doesn't follow it?

Maybe you tell her even more clearly what you expect from them and require that she try again. Maybe you ask her what she was thinking and how she plans to approach it next time. Maybe you sit down and do it with her. Maybe you do it yourself. The question is, if you're going to choose a different response, how do you choose?

Here's one way: Ask yourself what it will take for the employee to recover herself.

How close is she to the ground? Is she falling or simply leaning? What will help her regain her balance? What can you do that will give her that opportunity?

When I was first teaching Sophia to ride her bike I made all sorts of excuses for her. She's only four; her sister was six when she learned to ride. I wondered if I was pushing her too hard. So my natural tendency was to rescue her.

What I eventually realized is that I was really making excuses for myself. I was afraid of her skinned knee and bruised confidence, so I didn't give her the opportunity to fail. Which meant I didn't give her the opportunity to succeed.

As soon as I changed my approach to teaching Sophia — on the third day of our routine — she learned to balance herself while pedaling. The next day she managed to stop by herself, and the day after that she learned to get herself going from a standstill. By the end of the sixth day she could turn in a figure eight. No training wheels necessary.

The federal government can and should play a much bigger role in helping American companies regain the lead in manufacturing. We need to invest a commensurate amount of federal R&D dollars in advanced manufacturing technologies as we do in other areas of science, technology, and engineering.

The last administration created an assistant secretary for manufacturing in the Commerce Department, but that position really didn't come with any significant resources, and that's still true. There is some government investment in manufacturing R&D. For example, the National Institute of Standards and Technology has some manufacturing research centers. But most of the NIST programs are focused on remedial programs for small manufacturers and not developing game-changing technologies and getting them embedded in our whole supply chain.

By game-changing technologies, I mean new process tools like high-performance supercomputing technology for modeling and simulation, laser-based tools, and ultra-sophisticated smart materials that can self-assemble. These technologies are being pioneered by the Department of Energy's national laboratories, in partnership with companies such as Boeing, DreamWorks, Pixar, Pratt & Whitney, Ford, and Procter & Gamble. They have the potential to transform the competitiveness of America's manufacturing sector by radically reducing costs and increasing productivity and turbo-charging innovation.

The DOE labs and university supercomputing centers represent unique assets that no other country in the world can duplicate. But we've got to get these technologies in the hands of entrepreneurial firms and small manufacturing businesses — and embed advanced processes throughout the supply chain. We've got to have more public-private collaborations to enable U.S. companies to take advantage of these technologies and capabilities. And we have to invest more in the underlying computational science and software systems that enable continuous improvement and widespread deployment of these capabilities.

Ray Orbach, the DOE's undersecretary for science in the Bush administration, was trying to do this, and Steve Chu, the current energy secretary, has indicated that he, too, wants to expand industry's access to these facilities.

Washington also can make the U.S. a more attractive place for manufacturers by doing the following:

Taxes and regulation. The U.S. has the second-highest corporate tax rate in the world, which is a deterrent to where companies choose to manufacture. Complex regulations are also an issue. We have to strike a balance between having good regulations for product safety and making regulations so onerous and manipulative that they become a feeding trough for trial lawyers. We're spending 2% of GDP on tort payoff; there's no advanced industrial economy in the world that's anywhere close to that.

Workforce training. The Labor Department is spending billions of dollars on workforce development, and a lot of those resources are being used to train people for the jobs that are being commoditized. Instead, the funds should be devoted to training people for the jobs of the future.

Education. In the 21st century, talent is the equivalent of oil in the 20th century. Ensuring that more American kids are proficient throughout their lives in math and science is one piece of it. The other is recognizing that our entrepreneurial culture and a lot of our talent and creativity depend on an educational system that fuses math, science, and engineering with the arts, social sciences, and humanities. The Naval Academy's curriculum is a model. Such training will provide the American workforce with the technical and people skills &#8212l with the judgment and insights — they'll need to operate the factories of the future.

The U.S. economy is approaching a critical juncture with long-term implications for our future prosperity. Without public-private sector collaboration and a dramatic shift in how we approach manufacturing, the United States is in danger of conceding its leadership position in the global economy.

Deborah L. Wince-Smith
President
Council on Competitiveness

Recently I delivered a talk a the Council on Foreign Relations titled "Managing the New Trajectory of Global Innovation" explaining why and how multinationals must revamp their Western-centric innovation strategy in order to effectively leverage global ideas, talent, and markets.

In our increasingly multi-polar world characterized by the inexorable rise of emerging markets like Brazil, China, and India, I believe multinationals (MNCs) must abandon their ethnocentric innovation model — which concentrated all their R&D resources in the West. Instead, MNCs must embrace a "polycentric" innovation model in which R&D capabilities are distributed globally to swiftly seize regional opportunities and yet are integrated into a loosely-coupled global innovation network to drive creative synergies on an international scale.

This polycentric, networked innovation model is vital for MNCs if they wish to succeed in emerging markets like India. Why? Because as Shiv Shivakumar, CEO of Nokia-India points out: "Merely thinking of growth happening in emerging markets won't help a MNC grow in those regions." Translation: these markets won't emerge out of nowhere. The onus is on MNCs to first shape emerging markets before they could profitably serve them.

The best way for an MNC to shape (and lead) a market is by building up more local R&D capabilities and cultivating a vibrant local partner ecosystem so it can systematically design and market locally-relevant offerings. But that requires shifting MNCs' center of R&D gravity from the West to the East.

But polycentric innovation isn't just about scaling up your R&D operations in countries like India and China only for the sake of serving local markets. The next step after that is to import frugal innovations like mobile banking services first deployed in emerging markets into home markets in Western nations where consumers — still reeling under the recession — are clamoring for affordable yet high-value goodies. As such, I see an MNC that adopts the polycentric innovation model evolving through four successive stages of maturity:

• Stage 0: At this stage, the MNC's R&D operations are mostly concentrated in the West. While the MNC operates in emerging markets, their local units are primarily sales and marketing functions.
• Stage 1: Here the MNC starts shifting some of its R&D work to low-cost countries like India that offer plenty of high-quality scientists and engineers. However, this local talent is primarily used to design and develop solutions for Western markets. The Indian IT outsourcing phenomenon epitomizes Stage 1.
• Stage 2: The MNC recognizes the massive potential of emerging markets and delegates more responsibilities to local units in emerging markets which initiate and manage their own R&D projects to cater to local needs. But the P&L responsibilities for new product lines launched in emerging markets remain held by senior execs located in Western headquarters.
• Stage 3: The MNC starts networking R&D activities in emerging markets with the rest of their global network in order to cross-pollinate ideas for new products and business models across multiple regions. The P&L responsibilities for new product lines gradually shift to emerging markets.
• Stage 4: At this ultimate stage, the R&D hubs in emerging markets are given a global remit as they now own the P&L responsibilities for the global design and rollout of new products. Senior execs physically located in India and China are now in charge of global business units and entire divisions.

Having closely studied the innovation models of several multinationals in recent months, I would say that 30% of Fortune 500 firms are still 'stuck' in Stage 0, while 40% have already leaped into Stage 1, while 20% have braved their way into Stage 2. As such, I believe that only 9% of multinationals are at Stage 3, whereas merely 1% or less has made it all the way to Stage 4. I would peg Microsoft to Stage 2 and IBM to Stage 3, while Cisco and Nokia are comfortably sitting in Stage 4.

Where's your firm on this continuum?

Speaking of the shift of (R&D) gravity from West to East, I will be attending the World Economic Forum's India Economic Summit in New Delhi on November 8-10. This Summit, which marks the 25th year of the World Economic Forum's engagement in India, is themed "India's Next Generation of Growth." During those three days I will be blogging daily on his site about the exciting business and socio-cultural trends that are reshaping India in the 21st century. Hope to see you here!