Five Ways The Government Can Create Sustainable Innovation

President Obama’s second term is the chance to turn lemons into lemonade. America has a lot of experience with that: Like rebuilding the U.S. infrastructure after WWII; or using the space race in the 1960s to drive innovation. The big challenges now are mobility (transportation), energy (electricity), and water. That means they are also the big wealth opportunities. Why? At the core of each is insatiable consumer demand.

We need look no further than Hurricane Sandy to see our dependence upon transportation fuel, electricity, and drinking water. While we have just experienced two years of gridlock in Washington, there is a clear role for government, particularly in infrastructure. In the new bipartisan effort to compromise on the fiscal cliff in order to stimulate growth and create jobs, the question is, “How can the government now push us forward with 'controlled chaos’?” The government should set the “control” part by creating the rules of the game, no different than the rules in sports. The "chaos" is provided by the players, or the entrepreneurs, who drive businesses and industries. But, the rule-makers (government) cannot be players, or investors in businesses.

So, here are five things government can do to leverage mobility, energy, and water into economic growth:

1. Coordinate: The infrastructure funders, governments, and other decision makers are not on board yet. And unlike the Internet and other recent innovations, this type of infrastructure requires consistent and equal participation ongoing, since all of the parties, including the government, have the ability to scuttle the deal.
2. Create a roadmap: In electricity, water, and mobility the people who fund entrepreneurs will not put up sufficient capital (trillions of dollars) without a 5-to-10-year vision. We simply need a plan.
3. End subsidies for mature industries: Remove all subsidies for legacy and mature infrastructure technologies to level the playing field.
4. Define scale mechanisms for new technologies: Put in place systems to help new technologies scale rapidly, with defined goals and sunset provisions after no more than 10 years so that they know the help they’re getting will eventually run out
5. Be the first-mover user: Lead by using government buildings and land as a first mover to spur the kind of scale-up necessary to deploy technologies faster.