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Notes from Innovation Policyworks


Do you have an Apple Watch yet? Probably not, unless you are among the 1 percent of the world that are early adopters - you know, those folks who just have to have the latest thing. I'm clearly not one of them. It took a new boss to force me to get a Blackberry, and then my Blackberry had to die right in my hand before I would go to an iPhone. Looking back, it seems like these choices were inevitable, and it was just a matter of time before I caved in and adopted what became new standards in technology. And, so it seems, goes the adoption of high-speed broadband by communities and municipalities. Unfortunately, it's a rare community that will take the leap and be ahead of the pack...READ MORE



Baby Boomers Say: Bring On Entrepreneurship!


According to the Kaufmann Foundation, baby boomers (born between 1946 and 1964) are twice as likely to launch a new business in 2015 compared to Millennials. And, they are poised to make it work, having a lot of work experience, enough equity to get started, and know how to handle the work/life balance.  There's even a new term, seniorpreneurship, referring to entrepreneurs over 50, even though most of us don't think of ourselves as seniors! I think baby boomers are just going to reinvent retirement, just like we've reinvented every other stage of life! Isn't 60 the new 40? READ MORE


Tax Credits Discredited


In the last month, most of Maine's economic development community has been focused on the story on State New Markets Tax Credits used in a "one-day loan" deal that benefited the investors, but did little for the project or the community. New research just published in the Economic Development Quarterly studying tax credits in North Carolina found that statutory tax credits (as opposed to economic development programs where benefits are negotiated and awarded on a case-by-case basis) "had a limited influence on investment behavior and did not substantially affect perceptions of the state's business climate." Thirty percent of the business executives from companies that received the tax credits were unaware of the fact!  The abstract of the EDQ article is HERE.


What Does It Take To Be a Truly Innovative Company?


It takes a systematic process to be a truly innovative company, according to a new Harvard Business Review article by Gary Hamel and Nancy Tennant. They argue that the five elements required are:


1.     Employees who have been taught to think like innovators.

2.     A sharp, shared definition of innovation.

3.     Comprehensive innovation metrics.

4.     Accountable and capable innovation leaders.

5.     Innovation-friendly management processes.


It's interesting to me how many tech companies think they are innovative, yet do not have these types of systems in place. As a result, they look for new opportunities sporadically, rather than on an ongoing basis, take too long to get to market, and allow existing products and services to dominate over new ideas. Read the article HERE.


And, along the same lines, click HERE to see a cool video on what to do if you want to kill creativity in your company!


Quality of Life and Entrepreneurship


I have yet to visit a region that doesn't believe that it has a great quality of life, as compared to everywhere else. Yet there are real data points that can be measured that point to quality of life, including low crime rates, access to nature and cultural assets, good education and health care, among others. However, different people give each of these elements different priorities and weights, and truly, many are out of the control of local policymakers.


Dan White of Moody's Analytics recently tried to quantify quality of life and correlate it to entrepreneurial decisions. He found that metro areas in the Northeast, upper Midwest and West have relatively high quality of life, compare to low scores for California's Central Valley and much of the South. The low scores were largely driven by poverty rates, and failing economies.


He found a significant correlation between quality of life and new business formation, with quality of life being most influential on startups in areas experiencing faster in-migration and population growth. Read the study HERE.


Measure of Growth-2015


Every year, the Maine Development Foundation (MDF) releases a series of benchmarks for Maine's economy, providing a snapshot of the state's progress (or lack thereof). The 2015 indicators document that the state made progress on four indicators, lost ground on seven and saw no movement on twelve. According the MDF, the four indicators showing significant improvement were Cost of Doing Business, Cost of Energy, Air Quality and Water Quality. Red flags were assigned to Research and Development Expenditures, High Speed Internet Subscribers, Fourth Grade Reading Scores, Transportation Infrastructure, and Wellness and Prevention.  I will spare you the obvious political commentary and point you to the data HERE.


Why People Thrive in Co-Working Spaces


A few weeks ago, I attended the annual National Business Incubation Association (NBIA) conference in Denver. I like to check in with this community every few years - I went to my first NBIA conference in 1990! It will surprise almost no one that the topic of conversation was incubators versus accelerators versus co-working spaces. And, the on-the-ground reality is that most places have adopted a little from each model, suitable to their particular economies, communities and partnerships.


It may not be readily obvious why simple co-working should be a powerful tool, when compared to incubators and accelerators, but a new study reveals some important data. People who thrived in co-working spaces had three things in common. First, they saw their work as meaningful. There is little office politics and drama in a co-working space, and it is often the social norm to help each other out, rather than compete. Second, co-working spaces allow folks more job control. Partly because the spaces are accessible 24/7, workers can manage the work/life balance better than those in a classic corporate environment. Third, co-working spaces that are thriving create community for folks who work alone. Connections with other people are a huge benefit. Read more about co-working HERE.


Interestingly, however, it is also the sense of community that makes more incubators work, and the interactions within cohorts of entrepreneurs found in accelerator programs have also been identified as key elements of success. Entrepreneurs learn from interacting with one another irrespective of industry boundaries and this is especially true for seed and early-stage startups. This is the surprising finding from another new Kauffman Foundation study of entrepreneurial ecosystems. The policy implication is that we should focus on the creation of entrepreneurial cohorts, such as those formed when a group of entrepreneurs goes through an accelerator program together. The Kauffman study goes on to say, "connections matter, and a dense network of connections, among a small number of programs, is arguably more important than a sparse network among a larger number." This also tells policymakers to stop creating program upon program, and instead build the capacity and reach of existing networks. READ MORE 


In This Issue - May 2015

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Quote of the Month 

 "In a gentle way, you can shake the world." 


Mahatma Gandhi


What Do Successful Start-ups Have in Common?


MIT's Scott Stern et. al. have released a new study looking at 800,000 companies launched in California from 2001-2006 to see which characteristics distinguished the ones with rapid growth. They measured growth by those that had an IPO or were acquired within 6 years of founding, so there is definitely a bias there, but the results are still enlightening. The factor that was most correlated (but not causal): Being incorporated in Delaware (this is required by many venture capitalists). The second more important factor: having patents. Companies with both were 195 times more likely to succeed. Having patents or trademarks was also more important than being a high-tech company. The two factors least likely to be associated with growth: Being named after the founder and having mostly local customers. The original research is HERE.


Is There a Role for Government in Innovation?


To hear some entrepreneurs talk, there is no role for government in innovation. These same folks are often the ones who got a tax credit for their investors, or are happy to hire engineers from the state university. Leaving aside these discrepancies in perception, Robert Atkinson argues that government does have an important role in innovation. Government's job is to ensure that organizations, big and small, have access to "needed innovation inputs, such as a skilled workforce and scientific and technological knowledge." 


This means that government should do workforce training, ensure the immigration of needed scientists and engineers, fund university research, and provide the regulatory, trade and legal environment to protect innovation. Atkinson also suggests that a permanent R&D tax credit is required, as well as programs like the Manufacturing Extension Partnership that help manufacturers access new technology, and funding for public-private research partnerships in key technologies. Read the whole article HERE.


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Innovation Policyworks, LLC, is an innovation and entrepreneurship strategy firm focused on policy and practice. Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for 25 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. Cathy is currently leading a project with Camoin Associates in New York State, working with a coalition of counties and communities called the I-86 Corridor on a strategic action plan. For a list of selected projects, see www.innovationpolicyworks.com/projects.