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Is it about creativity and speed? Or is it about cost cutting and risk avoidance? New ideas and opportunities? Or the stock market and layoffs? We all know the simple truth: You can't cost-cut your way to the future. The future depends on innovation. To refocus the conversation, Fast Company gathered 10 business leaders for a fast-paced, 90-minute roundtable discussion in San Francisco. The questions: What is the state of innovation? How are leaders competing on innovation? The answer: an approach to innovation that matches this new business environment -- smart, practical, and continuous. Here is an edited transcript of a lively Fast Talk conference about the power of innovation.

Innovation Is Alive and Well -- and It's Here Among Us!

Alan Webber: Think of one thing -- a product, an organizational model, a way of working -- that's genuinely innovative.

Peter Moore (President and COO, SEGA of America Inc.): My world is interactive entertainment, and I'm always amazed by the incredible things that young people can generate from what seems to me to be such limited experience in life. Guys in their twenties devise games that blow me away.

Chip Conley (Chairman and CEO, Joie de Vivre Hospitality): I'm in the hospitality business, and I'm most impressed with Ian Schrager's Hudson Hotel in New York. But it creates style for the masses in what has historically been a dinosaur industry.

Mike McCue (CEO, cofounder, and chairman, Tellme Networks Inc.): I'm totally consumed by a combination of the telephone and the Internet. The phone is a trillion-dollar industry, and everything about it is changing.

Rusty Rueff (Senior vice president, human resources, Electronic Arts Inc.): I love things that suddenly end up in the middle of pop culture. The Razor scooter is one of the coolest examples. Somebody got really smart when he decided to put a handle on a skateboard. It makes me wish I were 12 years old again.

Linda Yates (Mentor capitalist, partner, Painted Wolf Ltd.; cofounder, former CEO, and adviser, Strategos): What jazzes me is more than just a particular product. It's the fact that the startup is still alive. We have to stop worrying about the dismal state of the NASDAQ and the Dow. There are entrepreneurs out there. There are ideas out there.

Arno Penzias (Venture partner, New Enterprise Associates; 1978 Nobel Laureate in physics): I'm here as the token old-economy techie. I'm jazzed by fluid self-assembly. Imagine silicon chips the size of grains of sand. You mix them in a glass of water. You pour the mixture over a piece of plastic. The little chips fall in the holes, and now you can build a two-way radio for about a penny. We'll be making them in a couple of years.

Beth Sawi (Executive vice president and chief administrative officer, Charles Schwab & Co. Inc.): I see innovation in what's happening today with AIDS in poor countries, where people are breaking the rules on pharmaceuticals. The women in South Africa who are breaking the rules to fight AIDS are going to prove everybody wrong.

Tim Brown (President and CEO, Ideo Product Development Inc.): I think that iTunes is a wonderfully innovative little piece of software that turns a Mac into a real home appliance. It speaks to an issue that I think is crucial: Innovation is only valuable when you implement it beautifully and elegantly.