Innovation is the new buzz word.

Everyone likes to talk about it. Innovation means introducing new products or improved methods of completing a task. It can be a stronger, lighter composite material for racing yachts, or the ability to pay your bills online.

Innovation has been on the cover of Business Week, cited as the answer to China's economic challenge to the United States and it's a part of each candidate's stump speech -- but that is where the discussion ends.

If innovation is going to drive American competitiveness, the real challenge is how to turn it into jobs.

We have done a reasonable job defining the problem.

People are starting to agree that America is, indeed, facing new challenges in a global environment. We are watching as innovation around the world is helping create and advance dynamic economies.

Economists have made the credible case that productivity drives prosperity and that innovation has been and will be the key to continued productivity and growth in the American economy.

So why is it so difficult to go beyond the discussion and begin building an innovation agenda for the country?

One reason may be that the path from innovation to jobs is conceptually fuzzy. How are innovative ideas turned into sustainable U.S. jobs? Will dollars invested in science in the United States end up being a product manufactured in China? If we become more productive, will that mean jobs lost, not gained?

Another reason may be fear. Fear that the innovation agenda reeks of "industrial policy." Government is not well-suited to picking winners and losers in the economy, and regulations or laws that favor one industry over others can have serious unintended consequences.

But what about encouraging winners from the bottom up?

States -- including Maine -- are taking the lead.

Maine is investing in innovation through the state's Technology Asset Fund. Voters approved a $50 million research, development and commercialization bond last fall. This month, in a competitive process (using the American Association for Advancement of Science as outside evaluators), the Maine Technology Institute awarded more than $29 million to projects all over the state.

Those awards were given in such areas as aquaculture, forest products and composites.Universities, non-profits and companies are collaborating on innovations that over time have the potential to create thousands of new, well-paying jobs for the state.

The federal government is also spending on innovation, but not as efficiently as it could.

A recent Brookings Institution paper counted 250 separate federal programs administered through 14 agencies, sending $77 billion annually (including loan guarantees) to support regional innovation and economic development. But these programs all operated independently, often in silos and were poorly linked and aligned. In addition, they do not coordinate well with state and local funding aimed at similar activities.

Government -- and particularly the federal government -- needs to be a partner with states and the private sector in the important process of stimulating innovation and turning it into jobs.

Accomplishing this will take leadership, an agenda that clearly delineates what works and a sharp-edged focus on the issue until it's addressed and funded.

One idea gaining traction is to create a federal entity to focus innovation activity -- a National Innovation Foundation. John Kao, in his recent book, "Innovation Nation," suggests a National Innovation Adviser, using the model of Robert Rubin when he was appointed head of the National Economic Council.

A recent bill introduced by Sen. Susan Collins, R-Maine, and Sen. Hillary Clinton, D-N.Y., proposes a National Innovation Council located in the White House and in control of a number of current and expanded innovation programs. In addition, many, including the Brookings Institution and a recent Department of Commerce task force, are focused on the important goal of designing better data and statistics to measure innovation.

These proposals are important to all of us. It is time to get serious about the three actions they identify: defining a federal innovation policy from the White House, implementing it with adequate funding from Congress and then measuring our progress with a new and evolving set of tools that help track gains and highlight losses.

We can solve America's innovation challenge. We just have to decide that it is time to try.

Karen Mills of Brunswick is chairwoman of the Governor's Council on Competitiveness and the Economy and serves on the board of the Maine Technology Institute. She has served as president of MMP Group, a private equity investor and adviser since 1993.