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Notes from Innovation Policyworks


I get asked all the time, What is the single thing we could do to move Maine toward an Innovation Economy? In some ways, this is a great question because it is thought provoking, and forces you to think about how to prioritize actions.


However, it's also a dangerous question because it implies that there is a silver bullet for our economy, and there is not. Any economy is actually a system, with many pieces that move independently and together, and pushing on just one lever may or may not make the entire system move in the desired direction. MORE



Innovation Districts Are the Latest Thing


At the annual SSTI conference this year, the most energized sessions were around "democratizing entrepreneurship" and "innovation districts." Given that we were in Chicago, just blocks from the Merchandise Mart, now home to a 75,000 square foot incubator/accelerator/co-working space called 1871, it just made sense.


A new urban model, innovation districts are places where anchor industries (big companies and/or research institutions) cluster and connect with start-ups, incubators and accelerators. These districts are compact, accessible by transit, wired (or not) for high-speed Internet, and co-located with mixed-use housing, office and retail. They exist because people are craving community, proximity, collaboration and diversity.


According to Brookings, they appear to have the "potential to spur productive, inclusive and sustainable economic development."
McKinsey adds, "Local policy makers should think systematically about what it takes to support a start-up ecosystem."  

Evaluations Essential for Smart Incentives


Tesla recently announced that it will build a $10 billion plant in Nevada to make lithium ion batteries. This was the result of an eight-month long competition among the Western states to see who would win the project. Using economic development incentives reportedly worth $1.2 billion over twenty years, Nevada landed the project that is estimated to have a potential $1.9 billion impact on the state's economy.


This is just the latest in a decades long contest, mostly fought in the South and Midwest, to lure companies to move or expand in one place or another through the use of economic development incentives. This is a practice that many economists view with skepticism. Richard Florida, the author of The Creative Economy, wrote that "the state of Nevada is letting Tesla walk away with the store." Florida believes that incentives play little is any role in companies' location decisions, compared to factors such as workforce quality and availability, proximity to markets and suppliers, and qualities of the location. And, he writes that companies have figured out how to get governments to come up with incentives by gaming them to bid against each other.


In North Carolina, the legislature adjourned with renewing several tax credits or offering funding for several economic development programs, causing many to call for a special session to decide upon appropriate investment levels. Some are hoping that these programs will simply go away, and be replaced with across-the-board tax reductions.


My colleague Ellen Harpel recently presented at the National Council of State Legislatures (NCSL) Job Summit. She discussed the project we are working on with the Pew Foundation, the Center for Regional Economic Competitiveness (CREC) and seven states to look at economic development incentives. To date, our findings are that states and communities need much better data and analysis to identify what incentives work and to enable sound decisions about incentives. 

Climate Week Implications


During last week's Climate Week, scientists opined that global emissions are still on pace for the "worst-case scenario" and that only "large and sustained mitigation" can keep the global average temperature below a 2 degree Celsius increase over pre-industrial levels. According to VERGE, large and sustained mitigation includes large-scale renewables adoption, but there is also growing momentum around the adoption of distributed, decentralized systems for energy and food, among others, as exemplified by the "sharing economy" (think Airbnb, Uber, etc.).


And 100 of the world's largest businesses are being encouraged to commit to 100 percent renewable power. Early adopters of this pledge include IKEA, Mars, Nestle, Phillips and Walmart. MORE about this.


This is becoming an easier and easier pledge to make, as the cost of wind power continues its decline. Lazard has documented that the levelized cost of wind power has decreased 58 percent in the past five years, and that wind power purchase agreements are also at historic lows, all made possible by reductions in wind turbine prices and installed project costs. Wind power is now so cost effective that it saves money as it reduces carbon emissions. Lazard found that wind saves $31 for every ton of carbon it saves, while natural gas saves only $10. MORE


In Maine, a Battelle report just released by the Maine Technology Institute shows that the renewable energy sector is the fastest growing technology sector in the state, with 11.9 percent growth from 2007-2012. Read the whole report HERE.

Quote of the Month 


"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming."

Theodore Roosevelt

Income Inequality Widening, Pessimism Too


According to the Federal Reserve, the surge in the stock market has disproportionately affected wealthy Americans. Between 1989 and 2013, the proportion of all US family wealth owned by the top 3% rose from 44.8 to 54.4%, while the proportion owned by the bottom 90% fell from 33.2 to 24.7%.


This might explain why many Americans are still pessimistic, even as the economy is improving. The Pew Research Center found in a recent poll that 56% of Americans say their family income is falling behind the cost of living, and 45 percent say they have experienced one or more serious financial hardships over the last year. Fifty-eight percent believe that good jobs are still hard to find, and 79% think economic conditions are only fair or poor. Only those with incomes over $75,000 feel that are "staying even." Read all the statistics HERE.


An Investment in Education Pays the Best Interest

By Doug Hall


Ben Franklin wrote, "An investment in education pays the best interest." 


So too it is with innovation.  The greatest waste today is the lack of education provided in our schools and work places on how to innovate.  Our brains are jammed with content from the humanities, arts and sciences.  However, we are rarely if ever taught how to transform that content into innovations for making our worlds a better place.


Creativity classes teach the creation of ideas - but ideas are but 20% of the challenge when it comes to turning an idea into reality.


Entrepreneurship courses teach you how to start a business.  However, they spend little time on the soul of all successful businesses - the innovation the business is based on.


Management programs teach you how to manage.  They make the assumption that the key is how you organize and manage the innovation not on how to create the innovation in the first place.


Think of every organization you've ever worked for - were you ever taught the organization's definition of innovation, why it innovated and the company's method for how it innovates? We are given objectives to change the direction of the company through new ideas.  But we are given no method to accomplish it.


When we are educated in a system for innovation, we see problems as opportunities to be fixed.  The "blame game" is replaced with collaboration.  Whining is transformed into empowerment.

That, my friends, is my singular purpose in life - to help educate - so that everyone, everywhere can innovate everyday.

To learn more about Innovation Engineering, visit Doug HERE.
In This Issue - September 2014
Innovation Districts
Evaluations and Tax Credits
Climate Week Implications
Income Inequality
An Investment in Education
Aimee's Corner
Cooperative Extension
Young Veterans
Maine Seed Capital Tax Credit

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Aimee's Corner


Are You as Innovative as Your Clients?


Two weeks ago, I was in Chicago at the SSTI Annual Conference. Cathy and I delivered a 3-hour workshop introducing Innovation Engineering to economic development practitioners, academics and government staff. In our workshop, we demonstrated how economic development professionals could be as innovative as the companies that they served.


We started by explaining the IE Blue Card's purpose as a mechanism to communicate your organization's strategic plan, a way to engage every employee as collaborators suggesting ideas making your organization's strategy come to life. At the end of this session, it was eye-opening for the workshop attendees to see the value of writing Blue Cards in to help others to better understand your needs. This simple example showed our workshop attendees how they could move from very high-level strategic plans to concrete, actionable ideas. They realized the value of writing ideas to paper, providing clarity when asking for help, and the value of input from others.


They were eager to craft Blue Cards that represented Very Important Opportunities or Systems (VIO/VIS) faced by their university, government agency or nonprofit organization. They wrote and wrote and wrote. With renewed energy, they gladly shared their Blue Cards with others in the room seeking clarity checks and new ideas. The IE process infused them with energy because they now saw that their problems could find solutions using this process.


Our IE workshop attendees left after the three hours with concrete examples of how they might implement a system for innovation at their university, their government agency, or their nonprofit. We lit the fuse for innovation. Cathy and I showed them that there was help available. In the next few weeks we will follow up with each attendee to offer the next step in their innovation journey.

Cooperative Extension in the 21st Century


You could be forgiven for thinking that Cooperative Extension is a relic of an old, agrarian economy, and has no place in today's land-grant universities. After all, less than 2 percent of Americans farm for a living and only 17 percent live in rural areas. But you would be wrong. According to the Pew Trust, Cooperative Extension Services still have a place sharing scientific research aimed at making farms and ranches more profitable. But there is a new emphasis on broader problems that citizens have such as environmental protection and safe food. Read MORE about what some states are doing in Extension and decide for yourself.  

Skills Gap Continued: Young Veterans


The discussion over whether or not the skills gap really exists continues, but a new piece of research sheds light on a key question, What's going on with young veterans? In 2013, the unemployment rate for young veterans aged 25-34 was 9.1 percent, compared to 7.4 percent for non-veterans the same age. 


One piece of evidence is that the young veterans as less educated than their peers. Only 30 percent have completed an associate's degree or higher. The key word in the sentence is "completed." Two-thirds have attended some college, but more of them attended for-profit schools than non-veterans. Unfortunately, there is clear evidence linking attendance at more selective colleges in terms of both graduation rates and future earnings. So, young veterans need to be better prepared and encouraged to aim higher, and colleges and universities should work to recruit, support and graduate these veterans. See the whole report HERE 

Maine Seed Capital Tax Credit Limited in 2014


Two years ago, Maine extended one of its incentive programs, the Seed Capital Tax Credit, based on solid evidence of its effectiveness in bringing new outside capital to Maine entrepreneurs. However, budget constraints limited the amount of tax credits available to $675,000 in 2014 (starting August 1), $4 million in 2015 and $5 million in 2016 and beyond. This led the Finance Authority of Maine (FAME) to take the unprecedented step of publishing a procedure for applications for the credit in 2014. Starting last month, FAME is allowing investors and businesses to apply for the credit on a first come, first served basis, and stated that it expects the total available credit amount to be depleted quickly. For more information, check out the Business section of the FAME website 

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135 Maine Street, Suite A-183 Brunswick, ME 04011 207.522.9028

Innovation Policyworks, LLC, is an innovation strategy firm focused on innovation policy and practice. 
Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for over 22 years, most recently as science advisor and Director of the Office of Innovation for the State of Maine.  She is a Certified Innovation Engineering Black Belt.

Aimee Dobrzeniecki works with clients in Washington DC and across the country sharing her 20 years of government policy, economic development, and technology transition experience. 

She is also  Certified Black Belt in Innovation Engineering, and is following her passion by helping organizations that have a positive outlook on the future. Through her individual coaching skills, she is ready to roll up her sleeves and provide an ally to businesses seeking to enter new markets, create new products, or test new business models. Aimee not only explains why it is the time to innovate; she demonstrates the steps to innovate faster than your competition.


For a list of selected projects, see www.innovationpolicyworks.com/projects.