I agree that the PhD system needs some rethinking but I don't think focusing research on more 'practical' problems is necessarily a good idea. I have seen 'practical' research going on in industry labs and I think it often falls into a no man's land of neither being practical nor advancing the state of knowledge in any meaningful way. Citation counts are problematic in some ways, but they do approximately measure what the research community thinks of as important work. I agree they seem to suffer from overly promoting "what's in fashion." OTOH, there is benefit to having a community of researchers all focusing on one topic at a time so that ideas can be exchanged and build on one another. Just like with startups, for some good ideas, it may just be that they are being proposed at the wrong time or haven't found the exact right form yet.