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Notes from Innovation Policyworks
Last month, I spent five days at the Eureka Ranch, getting current in my training as an Innovation Engineering Black Belt. While I was there, Doug's team was working in real time on a new product that is truly extraordinary. They were going through very rapid learning cycles, and updating their concept on an almost hourly basis. We got to test some of their product (hint: it's an adult beverage aimed at Millennials) and it's truly amazing. 
 
A few weeks later, I was in DC at a major federal agency. They have a data product that is in dire need of updating and revising in a big way, as technology has rendered their original approach obsolete. For two days, a big group of us provided them feedback. Their response was generally focused on what they couldn't do - because of rules, regulations, reviews, and different systems in different agencies - a host of excuses. It was such a contrast to what was happening at the Ranch.
 
These two examples are at opposite ends of the spectrum, but they illustrate an important point. None of our organizations, whether governmental, nonprofit or for profit, are immune from the big changes happening in the market. Major demographic shifts, technological advances and globalization are affecting everyone. We all have a choice. Be proactive and get ahead of the changes, or be reactive, or worse, passive, and be run over.
 
Change isn't fun for most people, but consider the alternative. 
Read MORE.

Cathy
Write a Failure Resume
Lots of folks find the concept of failure really, really scary, and they even shy away from using the word. But many of us see failure as evidence that we're trying new things and experimenting. Just like there are no overnight successes, all of us are the product of our past experiments, some more successful than others. Bill Taylor suggests that writing our Failure Resume is a way to understand our success, by highlighting lessons learned along the way. He cites Bessemer Venture Partners' "Anti-Portfolio," a list of opportunities missed. One example: "Passed on the Series A round for PayPal. Rookie team, regulatory nightmare, and 4 years later, a $1.5 billion acquisition by eBay." MORE

Four Factors that Predict Startup Success
It's a common idea that it's easy to see the difference between a startup that going to make it and one that won't. Probably not true, but recent research by First Round Capital has yielded some interesting insights. My favorite: that investments with at least one female founder meaningfully outperformed investments with all-male founding teams. The research also found that founding teams with an average age of under 25 performed nearly 30% above the average investment. Founders from top schools also performed 220% better than other teams and experience at top tech companies (Amazon, Apple, Facebook, Google, Microsoft or Twitter) predicts success as a founder.  And, the one thing that did NOT predict success - being from Silicon Valley! Read MORE.

Six Innovation Strategies for Cities
According to Scott Andes at Brookings, cities should consider their own economic strengths and weaknesses when crafting an innovation strategy. He suggests:
  1. Recognize that all industries can be innovative, not just software and medical technology startups.
  2. Eliminate university technology transfer practices that focus on licensing and adopt options that allow specific departments and centers to cater to different industries.
  3. Establish partnerships with non-research colleges and universities to support firms seeking short-term process innovation.
  4. Modify the traditional accelerator model to respond to the innovation needs of startups in nontraditional growth sectors.
  5. Link designers, engineers and software developers in urban centers to manufacturing supply chains in the surrounding regions.
  6. Advance the appropriate place-based strategies to increase the density of innovative firms and support organizations.
More HERE.

New Research on Poverty and Race
Brookings has recently released new research on the five dimensions of poverty - low household income, limited education, living in a poor area, lack of health insurance and unemployment. They find that almost 50 percent of the adult population suffers from at least one of the five disadvantages and that almost 25 percent have two or more. Black and Hispanic adults with one disadvantage are more likely than their white peers to have more than one or many disadvantages. In a related paper, they also find that disadvantages cluster in places to differing degrees and add a nuance to anti-poverty policies not previously discussed. MORE

Catching up to the Gig Economy
ITIF just released a report on the Gig Economy, arguing that people who make all or part of their living through Internet-based market platforms such as Uber, Airnbn and TaskRabbit are poorly served by U.S. labor laws that rigidly categorize all workers as either regular employees or independent contractors. These outmoded labor laws are imposing costs on the Gig Economy, introducing a great deal of uncertainty, discouraging the creation of the flexible and varied job opportunities that many Americans want, and do not benefit or protect the workers. MORE

Transition in Coal Country
My longtime colleague and collaborator, Erik Pages, has written a great piece about the transitions forced on local and regional economies previously dominated by the coal industry. He could just as easily have been writing about Maine and the paper industry or any number of other places where longtime major employers are being, as they say, overtaken by events. Erik argues, "it's about making it easier for working people to pursue new careers and economic options in the face of economic dislocations. We need to rethink how we help workers, businesses and communities as they respond to economic shocks." Read his article HERE.

Innovation in Indiana
The academic literature has documented links between economic growth and innovation, specifically knowledge production at universities. I have even written a few of these articles! There is also a considerable literature about proximity - how close do you have to be to gain from the presence of a research asset? The usual answer has been 50-60 miles. Researchers at the Indiana University Kelley School of Business recently tried to measure the impact of knowledge creation from their university. They found that innovation in Indiana benefits from university-based knowledge spillovers, but large high-tech establishments also drive it. Most significantly, they find that STEM density is one of the most important drivers - innovation occurs where highly educated people reside. Read their article HERE.

Bright Outlook in Postsecondary Attainment
The Lumina Foundation believes that "the secret to individual and societal success .... is the knowledge, skills and abilities of our citizens." To this end, Lumina is committed to increasing student success, not just because of the credential, but of the learning inherent in the credential. The good news is that educational attainment is increasing in the US. The proportion of the US population aged 25-64 who holds a two- or four-year college degree reached 40.4 percent in 2014, up from 37.9 percent in 2008. When high-quality postsecondary certificates are added to the count, the overall postsecondary attainment rate is 45.3 percent. Read their entire report, Stronger Nation, HERE.

Founders vs. CEOs
It's broadly believed that the skills required to scale a company are very different from the skills needed to start one. Therefore, founders are often pushed out of companies at a certain point in their growth trajectory. New evidence from PitchBook suggests this is wrong. Looking at exits from venture-backed companies, PitchBook found that professional CEOs bring startups to a higher median exit valuation than founders. However, when viewed as valuations, founders come out on top, bringing exit valuations of 5.1x compared to 3.1x achieved by CEOs. And, founders bring their companies to an exit in a median time of 3.4 years after receiving their first round of institutional funding, compared to 6.0 years for CEOs. Food for thought. 
In This Issue - May 2016

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Quote of the Month 
 
"Only those who dare to fail greatly can ever achieve greatly." 

Robert F. Kennedy

The Board of Directors of the Maine Center for Entrepreneurial Development ("MCED") invites nominations and applications for the position of Executive Director of the MCED. In collaboration with the Board, the Executive Director leads the organization in fulfillment of its mission to stimulate and grow innovative enterprises in Maine by providing a wide range of resources to entrepreneurs and innovators, including the direction of the MCED's Top Gun accelerator program. The Board seeks a visionary leader with demonstrated strengths as a communicator and fund-raiser who is savvy in the entrepreneurial ecosystem. For a full description of the position and how to apply, please go to the MCED website.

New Evidence that Tax Cuts Don't Stimulate Economic Growth
In Arizona and Kansas, deep corporate tax cuts were enacted during the recession with the promise that they would stimulate business growth. Instead, Arizona has seen that the tax cuts only mean less revenue for the state, a loss of $300 million or 50% of the pre-cut revenue. At the same time, job gains in the state have been slower than for the rest of the nation. Kansas is facing a $160 million deficit after it cut taxes for many businesses and farmers. Job growth there is also slow. 

New Acronym: NOID
That's Naturally Occurring Innovation Districts - those that arise when a large technology company comes to a particular place, or when a business district arises around a university like Kendall Square in Cambridge. Some are saying you can't make an innovation district, they must be naturally occurring. I don't buy it. Even Kendall Square wasn't "naturally occurring." When I went to college in Cambridge, Kendall Square was a dump filled with empty, old derelict buildings. Only massive investment in the area made it attractive enough for the first pioneer companies like Lotus back 30+ years ago. However, some economists are making an important point. Labeling an area as an innovation district doesn't make it so. Authenticity is critical. You actually have to be innovative, in your culture, in your place-making, in the management and operations of your district, region or city. Read more HERE
Envisioning Maine
This book of essays by Maine's leaders shows the way forward. Buy your own copy at www.envisionmaine.org. 

Dr. Renault's essay talks about the importance of an innovation culture to support economic growth. 
 
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135 Maine Street, Suite A-183 Brunswick, ME 04011 207.522.9028

Innovation Policyworks enables economic development officials at state, regional and local levels make better, data-driven decisions by providing expert research, analysis and recommendations. Our clients see innovation and entrepreneurship as critical elements of their economic development strategy, and are developing new programs or policies, and/or evaluating existing ones. 


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. Cathy is currently working with the Newton/Needham (MA) Chamber of Commerce, Missouri Enterprise and Maine-based Midcoast Magnet. 
For a list of selected projects, see www.innovationpolicyworks.com/projects.