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"Designed in the USA, built in China." These words, which appear on the bottom of every iPod, underscore Apple's (AAPL) justly deserved reputation for understanding the value of design and its relevance to corporate strategy. A quick search on Google (GOOG) reveals that a few other U.S. manufacturers make the claim "Designed in the USA" for their products: Chantal, producers of fine bakeware and cookware; and Tektite, makers of LED flashlights, which goes on to claim that its wares are manufactured in the U.S. as well.



Without the global success of Apple's iPod, would these words carry the same value? And what is the importance of this phrase, globally, in the context of increasing concern regarding America's battle for competitive advantage as India and China raise their innovative profile and GDPs?



The U.S. claims that the increasing capabilities of Asian nations such as India and China are a growing competitive threat. Their hordes of engineering and science graduates capable of churning out affordable research. Whether it's for GE (GE), Hewlett-Packard (HP), Microsoft (MSFT) or their own Wipro and Lenovo is immaterial -- they threaten America's technological lead and innovation advantage.



IMPROVING EDUCATION.

On Dec.15 legislation designed to promote innovation was introduced by Sens. John Ensign [R-Nev.] and Joseph Lieberman [D-Conn.]. Among the goals of the National Innovation Act 2005 are increasing investment in basic research, improving science and technology talent, and developing a robust innovation infrastructure.



There can be no argument against the importance and validity of these initiatives, which include boosting federal investment in basic research by 10 percent a year over the next seven years; recruiting 10,000 future science and math teachers each year and awarding them scholarships and bonuses to teach in underserved schools; giving training to 250,000 current math and science teachers; providing grants to 200 young researchers; creating a research-projects agency in the Dept. of Energy; providing 25,000 scholarships a year to undergraduates in physical sciences, engineering and math; funding 5,000 new graduate fellowships a year in those fields; making it easier for foreign students in those fields to obtain visas for study in the U.S. and remain there to work; expanding immigration opportunities for people with needed skills; providing tax incentives for U.S.-based innovations; and expanding access to broadband communications.



However, one must raise the concern: What about design? Is any of the increased funding to the National Science Foundation and other basic research focused on design methodology and tools, the building blocks of innovation? We've all heard the success stories in which design-led innovation has directly increased existing market share, grown new markets, added value to the bottom line, and raised the visibility of brands.



Take Google's design philosophy of simplicity or Procter & Gamble's (PG) emphasis on user needs -- both examples of global giants recognizing the value of design. Yet there is no mention of design or the design industry in the National Innovation Act.



SETTING STANDARDS.

Putting aside the debate on whether design is innovation or vice versa, it is difficult to understand why the design industry -- the august bodies such as the Industrial Designers Society of America, the American Institute of Graphic Arts, and the Association of Professional Design Firms -- have not raised their collective voices for representation.



Is it time for a national design council or design policy? The Indian government has just announced imminent ratification of a national design policy to be released in early 2006. Their plan includes a "Mark of Good Design" that qualified companies can affix to the items they export. Only well-designed products that take the user, the environment, materials, and ergonomics into account would carry the mark.



The government wants to ensure that the words "Designed in India" come to mean good value, just as Woolmark does in the wool industry. India also announced a new National Institute of Design and at least six more design schools.



SELF-HELP SOLUTIONS.

India's first prime minister, Jawaharlal Nehru, recognized the need for design as an engine for the growth of the newly born nation when he invited Charles and Ray Eames to write the white paper that underpins the foundations of India's design policy.



Every design student at NID is aware of these words: "One of the most valuable functions of a good industrial designer today is to ask the right questions of those concerned so that they become freshly involved and seek a solution themselves."



Design thinking in a nutshell. If we're worrying about the outsourcing of design to China, we should be concerned about outsourcing design thinking to India. And there are still other nations taking design seriously.



AROUND THE WORLD.

Taiwan has a robust design policy, supported by a growing number of design schools -- the best headed by one of the first PhD graduates from the Institute of Design. South Korean students outnumber every other nationality at the majority of graduate design programs in the U.S. Is it any wonder Samsung is making waves as an upcoming innovator? China is intent on shifting its manufacturing base from OEM to original design manufacture and brand-manufacturing operations. Hong Kong pulled together a design task force four years ago.



As designer and consultant John Thackara, who serves on the Hong Kong task force, wrote in a post dated Dec. 8, "As my own visit last week to South Korea confirmed, what's impressive about emerging economies is not where they stand today, but the scale of their commitment to knowledge-intensive industries, including design, in the near future."



Maybe a design council or policy is not the way for the U.S., a free market with companies as individualistic as its founding fathers. But technology cannot be the sole engine for innovation. Increased funding for basic research in the hard sciences is not enough.



FOCUS ON DESIGN.

Funds should also support the softer skills, the right-brain attributes deemed so important in this conceptual age, the skills that math- and science-focused India and China do not yet possess in any great capacity. After all, it is the ability to see the potential in the fruits of that research that currently sets the U.S. apart as a nation and has contributed to its lead as a producer of innovative goods and services.



That is where design skills and design thinking come into their own -- in taking new materials, processes, and technologies and turning them into products people want. Fund the design programs and the design research initiatives. Upgrade the design infrastructure. Then and only then can the National Innovation Act 2005 have the lasting impact it aims to achieve.