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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. Knowing from case studies that the rate of improvement is fairly constant, we were able to set realistic expectations for the subsequent 50% improvement - and thus motivate, monitor and evaluate our efforts to achieve continuous improvement in our manufacturing processes. However, when we increased our focus on growing the top line, we realized that our approaches to quality management weren''t helpful for exploring new and experimental growth strategies. The challenge is to balance a culture of accountability in established businesses with a culture of learning in experimental businesses. When financial results fall short of forecasts, the culturally ingrained conclusion within established businesses is that the managers under-performed. But in experimental businesses, an alternative conclusion could be that the prediction was wrong - and that the assumptions need re-evaluation on the basis of experience. To allow new ventures to benefit from the assets and experience available within a large corporation - the primary advantage over an independent start-up - leaders must nourish interaction between established and experimental businesses while letting the conflicting cultures maintain their identities. In today''s competitive world, that may be the only road to accelerated innovation and economic growth.