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on the factory floor are critical thinkers and can improve processes along the way,” said Byron Auguste, the McKinsey director. In any factory or call center, he noted, “there is often dramatic variation in productivity in different parts of the system. If you have continuous learners on the shop floor or in the call center, there is a constant opportunity to learn and spread the word, and then everyone improves. If you are doing that in every node of your production, design, and aftersales service, you will have a system that delivers three percent productivity growth every year and is not dependent on new inventions coming out of Carnegie Mellon University or Silicon Valley.”

In the past, companies had ‘‘innovation centers” off in the woods, where big-thinking R&D teams devised new things that were then produced on the assembly line. Some companies still have such centers, but others are opting instead for continuous innovation that includes frontline workers as well as top management. Now every employee is part of the process, often using social networking tools such as Twitter and Facebook. The assembly-line worker today not only has more information than ever before, but also the capacity to communicate what he or she is learning instantly to upper management and throughout the company.

Continuous innovation is not a luxury anymore—it is becoming a necessity. In the hyper-connected world, whatever can be done, will be done. The only question for a company is whether it will be done by it or to it: but it will be done. A breakthrough product, such as the iPhone, instantly generates competition—the Android. Within months, the iPad had multiple competitors. So a company that does not practice constant innovation by taking advantage of every ounce of brainpower at every level will fall behind farther and faster than ever before.

Before the world became hyper-connected, American companies moved jobs around the world—that is, they outsourced parts of their business process—to save money that they then reinvested in new products, services, and people in the United States, because they could. Now companies move jobs around the world to do “crowdsourcing” and distributed innovation, because they must. They find the most creative brainpower, the most productive workforce, the most inviting tax rules, and the best infrastructure in or near the fastest-growing markets, because they must. They must use the whole global “crowd” to invent, design, manufacture, improve, and sell their products. If they don’t, their competition will. We repeat: In the hyper-connected world, whatever can be done, will be done. The only question is, will it be done by you or to you?

Ask Curtis Carlson, the CEO of SRI International, which serves as an innovation factory for governments and companies on topics ranging from education to clean energy to homeland security. Government agencies and private companies come to Carlson and his teams of scientists, engineers, and educators; they describe what they want—often blue-sky wish lists or solutions to seemingly insoluble problems—and ask SRI to invent it for them. When he gets a request, Carlson’s first step is to assemble a team of SRI scientists, engineers, and designers, along with outside experts—fitting the people to the problem as best he can.

“There are few problems left today where one person with one skill can solve them,” he explained. “That means you had better assemble the best team. Not a good team—the best team. You don’t want to be ‘world class.’ That just means there are a lot of others like you. You want your team to be best in the world.”

Given the rising innovative power and knowledge that can so easily move from the bottom up now—the power to invent, design, manufacture, improve, and sell products—and not just from the top down, Carlson sees the following mega-trend barreling down the highway: “More and more, innovation that happens from the top down tends to be orderly but dumb. Innovation that happens from the bottom up tends to be chaotic but smart.” Therefore, “the sweet spot