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In Schumpeterian growth theory, the step-by-step innovation framework has a unique place with its realistic modeling of competition among firms and the effect of firms’ strategic behavior on innovation outcomes. As such, this framework provides a fertile ground for examining the basic mechanisms that link competition and innovation and how their interaction shapes firm dynamics and economic growth. In this piece, I summarize two recent papers building on this framework, Akcigit and Ates (2021) and Akcigit et al.(2021), which shed light on the slowing business dynamism in the US economy and the implications of trade and industrial policy in open economies. Doing so, I will highlight key mechanisms (the depth) as well as the wide-reaching applications (the breadth) of the step-by-step innovation model.