Why has innovation been disconnected from job creation in United States? That's the pressing question that drove Henry Nothhaft to write "Great Again: Revitalizing America’s Entrepreneurial Leadership."

Nothhaft knows a little about business innovation.  Over his career, he has led six start-up enterprises.  From this perspective, he sees small business as the key driver of job growth in the U.S.  "Small businesses are responsible for most of the job creation over the past 20 to 30 years," Nothhaft said in his Go To Market Show interview.  "Some of the things we've done from policy perspective are strangling companies from prospering and creating jobs."  

With book in hand, Nothhaft has been on a mission to deliver some sound advice to policymakers in Washington D.C.  He has delivered a copy of his book to every member of the U.S. House of Representatives and Senate, all fifty state governors, presidential candidates and more.  

So what are some examples of the broken thinking that plagues us?  Nothhaft points to Sarbanes-Oxley as one. Originally penned to prevent another Enron or MCI collapse, the legislation puts unreasonable and unnecessary burdens on small businesses. It hits hard when companies plan to go public, layering excessive costs for compliance and monitoring that takes many companies off the IPO track.  Nothhaft notes that 92% of all jobs created by venture-backed companies happen after their initial public offerings.

In Nothhaft's case, one start-up he worked with faced an estimated $3 million bill for initial Sarbanes-Oxley compliance and $1 million each year following.  This for a $100 million company that generated $10 million in profits.  That initial cost would represent a 30% reduction in profits.  Company leaders decided to steer clear of an IPO and instead sold to IBM.

Another area Nothhaft is targeting for change is the U.S. Patent Office.  The agency is self-funded, with fees from applicants covering all of the expenses (no tax subsidy needed). Despite this fact, there are 1.2 million applications pending, and the wait time is three to four years before someone looks at an application. Rather than hiring more reviewers, Congress uses funds from the U.S. Patent Office to spend in other areas of government that are not self-funded. Nothhaft is currently lobbying for a change in this practice.

Why should we care?  Because without intellectual property protection, companies can't get funding to grow.  Between 20% to 25% of all patent applications are from small businesses.  For every patent issued there is an average of 3 to 10 new jobs created.  Clearing the backlog could result in 1 million to 2.5 million jobs according to Nothhaft.  In a time when unemployment is high, and economic recovery slow, a self-funded job creation program is a no-brainer.

Nothhaft also advocates improving U.S. business tax policy.  It is regulation and taxes that have driven jobs overseas, not cheap labor he contends.  He points to Germany, a country with higher wages than the U.S., but with lower unemployment and a much more competitive position in the global manufacturing arena.  "If companies see communist China as a better environment to grow a business than the U.S., we have a problem," Nothhaft said.  

Connected to this is the need to retain the talents of foreign nationals in our country. 60% of college math and science students in the U.S. are from other countries. Keeping them here after they graduate will provide a talent pool that can help our country retain our position as a leader in innovation.  

What it will take to drive substantive change is anybody's guess.  A crisis may do it. We nearly had one with the recent economic turmoil, and Nothhaft hopes it won't take something worse to force action.  Since we've created these problems, he is optimistic that we can solve them. But it will require inspirational leadership - a 'Sputnik moment' as he puts it. He hopes there is a leader out there who can pull our country together, inspire us to return to greatness, align forces and set us on a course toward innovation.  That moment could make us 'Great Again' just as Nothhaft claims in his book.  Let's hope it happens.  

Get your copy of 'Great Again' here.