Growing businesses know that innovation is key to success. But innovation impacts more than just the innovating business itself; it is key to the health of the economy as a whole.

As James Surowiecki writes in the April 11, 2005 issue of The New Yorker, innovation has fallen almost entirely upon the shoulders of small businesses; big companies can't manage it anymore. They're still spending money on research and development, but those budgets have shrunk dramatically in most cases, and many are outsourcing R&D or forming R&D alliances with other big companies.

Surowiecki focuses on the decline of an innovation culture at Sony, which hasn't really been able to corner any market since the Walkman. While some may bemoan the disintegration of innovation out of such giants, it's really not so sad. New ideas that come from smaller businesses are often more exciting and groundbreaking (just look at many of the ideas that come from the Inc. 500), and, as small businesses make up three-quarters of all businesses, perhaps even more essential to the health of the economy.