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Notes from Innovation Policyworks
Here's a little-known secret about the economy: innovative companies grow faster, have higher profits, and pay higher wages. It doesn't matter whether they're big or small, high tech or no tech, in a city or in rural areas. Innovation can happen in new industries or older ones, in for-profits or not-for-profits and in multi-generational companies that are constantly re-inventing themselves, or start-ups and scale-ups working in garages, small offices or new campuses.
 After all, innovation simply means a new idea or way of doing things or a new product that somebody somewhere cares enough about to buy. Most Maine companies start with a new idea; the real trick is to keep innovating.
And, innovative companies end up in places that support the creativity it takes to constantly learn and grow, place where it's alright to say: I don't know. I need to learn more. I fail a lot. This is why innovative companies can often be found in the same places where there are lot of artists, writers, and other creative people.
How can we leverage our creative and intellectual assets to accelerate economic growth? How can we create more budding entrepreneurs and help more existing businesses and emerging success stories to innovate, and to believe in themselves enough to leap to the next level? And, how can we create a community where these companies and entrepreneurs will thrive?
These are the questions I'm currently wrestling with. It seems like the opportunity to impact the economy has moved from the national level (in the 1980s) to the state level (in the 1990s and 2000s) to the community level today.
Cathy
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New Definition of Advanced Industries
One challenge for economic researchers trying to understand the high technology economy has been the definition of high tech. It's unfortunately not sufficient to say, "I know it when I see it." For decades, we have relied on a list of industries put together by the Department of Labor. Obviously, technology changes, and so should the list.
Brookings has just published a new report describing America's advanced industries, giving us a new list of 50 sectors that share a high level of R&D spending per worker and employ skilled STEM workers. The list ranges from automaking and aerospace to energy industries and high-tech services such as computer software and systems design, including health applications.
Brookings found that these 50 sectors employ 12.3 million US workers, about 9 percent of the US total. However, they produce $2.7 trillion in vale added annually - 17 percent of US Gross Domestic Product. These sectors employ 80 percent of the US engineers, perform 90% of private sector R&D, generate 85 percent of all US patents, and 60 percent of US exports. These sectors generate 2.2 jobs outside their sector for every job in their sector, a high multiplier.
To learn more about these sectors, and how to support them, click HERE.
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Education as the Great Equalizer
In the face of rising income inequality, the Washington Center for Equitable Growth studied the consequences of raising the educational achievement of children from the bottom three quarters of families to more closely match those of children born into the top quarter of families. The report concludes that just raising the educational achievement to the average level of all nations would add 1.7 percent to the US Gross Domestic Product by 2050, while raising the level to match Canadian children would increase GDP by 6.7% and matching the top US scores would raise GDP 10% by 2050. The Center concludes that public policy strategies including early childhood care and education, criminal justice reform and family-friendly workplaces would all contribute to the goal of raising achievement levels. MORE
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Entrepreneurship Recovering from Recession
US entrepreneurship levels rose to nearly 14 percent in 2014 from a recession-era low of 7.6 percent in 2010, according to the Global Entrepreneurship Monitor 2014 Global Report. Entrepreneurship rates were also found to be quite high in African nations, in contrast to European Union nations, where there are perceived to be fewer opportunities. Youth entrepreneurship is also growing internationally. In the US, 18 percent of 25-34 year olds were starting or running a new business in 2014, up from 15 percent in 2013. MORE
A Gallup poll also reported that Baby Boomers are also flocking to entrepreneurship, being twice as likely as Millennials to be planning to start a business in he next year. The study's authors conclude, "Young, high-tech entrepreneurs may get the most attention from investors, but in the technology sector and other high-growth industries, boomers often outpace their younger counterparts in building successful businesses. The wisdom that comes from years of professional and trade experience likely translates into better business performance for boomers." MORE
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Internet Speed
The latest economic development fad seems to be community and municipal broadband initiatives. While low-speed Internet is a major deterrent to economic growth because it detracts from productivity and slows access to information, markets, and capital, not all communities are in a position to take on the challenges related to capitalizing and running an Internet project.
The White House has announced a major new initiative, BroadbandUSA, to promote broadband deployment and adoption. Building on expertise gained from overseeing the $4.7 billion Broadband Technology Opportunities Program funded through the Recovery Act, BroadbandUSA will offer online and in-person technical assistance to communities; host a series of regional workshops around the country; and publish guides and tools that provide communities with proven solutions to address problems in broadband infrastructure planning, financing, construction, and operations across many types of business models. MORE
In Maine, the ConnectME Authority has also taken steps to address the issue as well. The first was to change the definition of "underserved" to include areas where simultaneous upload and download speeds are less than 10 megabytes per second. In addition, there are several bills pending in the legislature to create a bond fund for building more broadband capacity. Maine recently was ranked 50th among the states in broadband speeds. MORE
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Venture Capital in Maine - 2014
MaineBiz reports that more Maine companies received venture capital investments in 2014, but the total value was less. Twelve deals were completed in the past year, for a total of $18.87 million. A $16 million raise by Putney, a latter-stage veterinary product company, impacted the numbers. (Incidentally, Putney just announced that it received FDA approval for one of its products.)
A decade ago, in 2004, $26 million in venture capital was invested in Maine, and over $140 million in 2000, the peak of the dot.com era. In general, venture capital investments in Maine have been and continue to be very low compared to the US, and vary considerably from year to year because of the small numbers of deals.
It will be interesting to chart the impact, if any, from new Maine Crowdfunding rules that went into effect January 1. Unlike Kickstarter, Maine Crowdfunding is open only to Maine companies, limits the size of the offering to less than $1 million, and the amount that any one person can invest ($5000, except for accredited investors). There are more rules, and a company considering using this option should seek the guidance of an attorney with appropriate experience. MORE
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Top 5 Sustainability Risks and Opportunities
The Global Opportunity Network recently identified their top five sustainability risks around the world, and the opportunities that could come to entrepreneurs and innovators that look for solutions. The risks were:
- Extreme Weather is likely to be more severe and frequent. Opportunities are in early warning and forecasting systems, investments in resilience and cost-effective adaptation.
- Lack of Fresh Water continues to threaten health, food and energy. Opportunities are in water-efficient agriculture, fresh water production and smart water regulation.
- Unsustainable urbanization has costs in congestion, pollution and health. Opportunities are in compact, green and connected cities, rural growth initiatives and smart cities.
- The rise of Non Communicable Diseases such as cardiovascular disease, cancers, and diabetes threaten quality of life and increase healthcare costs. Opportunities include combating these diseases with mobile technologies, new financing options and everyday health enablers.
- Fossil Fuels continue to inhibit reductions in emissions, and slow the introduction of alternative energy sources. Opportunities exist in regulated energy transitions, energy autonomy and green consumer choices.
To read more, click HERE.
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Luddite of the Year Award
I realize that you may find it amusing that I, as a non-Facebook, non-Twitter, non-Pinerest using Luddite myself, like the fact that the Information Technology and Innovation Foundation (ITIF) just came out with their Luddite of the Year announcement. This award highlights the worst anti-technology ideas and/or actions in the past year. The award goes to....the states of Arizona, Michigan, New Jersey and Texas, all of which took action last year to prevent Tesla Motors from opening stores in their states to sell electric cars directly to consumers. To see the other nominees, click HERE.
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Upcoming Learning
Innovation Engineering Executive Experience,
Eureka! Ranch, Cincinnati, OH
The Executive Experience lets you see, feel and experience the Innovation System that Increases Speed to Market and Decreases Risk. You will leave with an understanding of what it takes to craft an organization that lives and breathes innovation.
Dates: March 19-20, 2015.
Contact us for more information.
FREE Webinars
These introductory webinars led by Doug Hall and members of his Eureka! Ranch team are held regularly, and are free. Register HERE and use the password IPW.
Friday, February 20 - 2pm Eastern
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Aimee's Corner
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"We believe that scientists have a responsibility to share the meaning and implications of their work, and that an engaged public encourages sound public decision-making." That is the mission statement of the Alan Alda Center for Communicating Science at Stony Brook University located on Long Island in New York. This program focuses on discovery and communication. They understand that scientific discovery is most beneficial when more people can use the new knowledge. You may ask, what would Alan Alda, a movie and television actor, know about communicating science. It all started several years ago when Mr. Alda wrote a guest editorial to the journal, Science. In the piece, he explained why we need scientists to communicate clearly and vividly with the public. MORE Aimee |
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Oklahoma Incentives Legislation
For the past year, I have been working with the Pew Charitable Trusts and the Center for Regional Economic Competitiveness (CREC), on a project to improve the evaluation of economic development incentives. We have been working specifically with six states, and I was the lead on the Oklahoma team.
Last week, Oklahoma Governor Mary Fallin mentioned our project in her State of the State address, saying:
"We need to ensure that money we are investing in economic incentives and business-related tax credits is paying off and helping to create good jobs. I've always said that the state should keep incentives that work and phase out those that don't. The problem is that we do not have an effective and objective way of evaluating these incentives. Without good information, we can't make good decisions. To fix that, my office, legislators and several agencies spend the past year working with the Pew Charitable Trusts analyzing better ways to correctly evaluate our incentives. They worked with us to developing legislation requiring all incentives to be evaluated on their own merits at least once every four years."
To learn more about the project, click HERE.
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"If you're not prepared to be wrong, you'll never come up with anything original."
Sir Ken Robinson
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Portland ME a Top Startup City
Popular Mechanics anointed Portland, ME as a Top Startup City in their February issue. While we agree with their conclusion, their reasoning was a little skewed. They rightly pointed out the great foodies culture and microbrew scene, but didn't manage to capture the energy coming from the Top Gun Accelerator program, Think Tank, Peleton Labs, Blackstone Accelerates Growth or Maine Startup and Create Week, among the many initiatives that are supporting, illuminating and/or accelerating the entrepreneurial energy in the region.
David Butler, Coca-Cola's VP of Innovation, may have an explanation for Portland's emergence as a startup city. He documents three stages of the startup "revolution." Stage one was the dot.com era, where a ton of internet-based companies grew up, and then blew up. Butler rightly talks about the "fantasy-based business models" common at the time. Stage Two began after than, with Steve Blank's approach to teaching entrepreneurship that emphasized customer development, agile product development and business models. This launched an ecosystem that supported entrepreneurs through accelerators and initiatives like we have in Portland.
Butler concludes that the third stage will be about scale. This makes sense. Scale is what holds individual companies back, as well as regions and cities like Portland. He argues that scale will come when big companies that aren't so good at innovation link up with emerging companies that are. Or, to say it another way, scale means to have a culture of innovation where everyone is an entrepreneur, whether in a startup or in a big company. Imagine that. Read more of Butler's article HERE.
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