An economy’s capacity to innovate determines its capacity to thrive. A company’s capacity to innovate determines its capacity to survive. The expected life span of a Fortune 500 corporation is only 40 to 50 years, and that life expectancy is getting shorter. Intel Corp. chairman Andy Grove had it right: “Only the paranoid survive.”For years, at Analog Devices Inc., I have pondered the mystery of what constrains innovation. I long ago concluded that its limits have more to do with managerial capabilities than technological or creative capabilities. Particularly important to encouraging innovation are processes for allocating resources, projecting performance and evaluating outcomes — systems sophisticated enough to implement experimental strategies in ways that both support organizationwide learning and keep the company moving forward.At Analog we have a great deal of strength in this area, but we are still learning. During the 1980s, we became skilled at predicting when a given quality initiative should meet its goal. By determining how long it took for 50% improvement, we could ascertain the rate of improvement — the half-life approach to learning.