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Notes from Innovation Policyworks
In the beginning of my career, science and technology-based economic development (TBED) was in its own silo, separate from "traditional" economic development focused on attraction of new enterprise from other places, workforce development, community development and tourism. While these silos occasionally existed within a single Department of Commerce at the state level, there were extremely few bridges among or between them.
In the intervening twenty-five years, changing circumstances have forced bridges to be built and collaborations to go forward. The latest circumstance is the new urbanism brought about by the choices and preferences of Millennials. These young people, who are rejecting the suburban lifestyle for a more integrated live, work and play environment, and who were practically born as "digital natives," there is no such thing as TBED. There is only innovation. There is only sustainability. There is only a fully automated, sensor-filled, AI-enabled productivity-enhanced future.
So, workforce needs (i.e., baby boomer retirements and needing to attract skilled Millennials) cause community development initiatives that refresh and redevelop authentic places into mixed-use, transportation-enabled innovation districts, supported by updated communications, planning, and zoning, with amenities that used to be reserved for tourists. Everyone needs to be innovative in how they do their jobs, how they communicate to citizens, workers and visitors, and how they collaborate with other parts of the economic development system.
A new day indeed...
Cathy
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Prosperity and Sustainability Go Together
Writing a new white paper on the Energy Sector for the Environmental and Energy Technology Council of Maine (E2Tech), I came once again to the conclusion that supporting technology development in renewable energy, energy efficiency and distributed energy resources is good for the environment and good for the economy.
This is also the theme of a new book called, The New Grand Strategy: Restoring America's Prosperity Security and Sustainability in the 21st Century. The authors argue that sustainability must be the organizing logic for an economic revival in America, making us economically stronger, more secure and more resilient. They focus on what success would look like, rather than the gloom and doom descriptions common among past books on the subject. Their vision focuses on three elements that will generate the demand to make sustainability profitable: walkable communities, regenerative agriculture and resource productivity. Together, these represent a $1.3 trillion opportunity for the economy. Read MORE.
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Urbanization of the 'Burbs
Next week, we're going to Newton and Needham, MA to present our final report for the N-squared Innovation Corridor. The client represents a group of stakeholders that want to redevelop a suburban area outside of Boston that is currently home to some older office parks into an innovation district. This is an admirable goal, as people all over the world are recognizing the power of consolidating workers, research facilities, entrepreneurs and sources of capital into urban districts. This captures the essence of what economists call agglomeration economics: many good things come from places that encourage "happy collisions" in terms of creativity and innovation. These districts also appeal to baby boomers and Millennials who are developing preferences for integrated live, work and play experiences that are less dependent upon cars. On the other hand, suburban American is exactly what innovation districts are designed not to be, so how can the two be reconciled?
The key is to understand that the 90 million Millennials aren't going to give up their urban lifestyle completely as they age. They are still going to want smaller houses, in close proximity to where they work, and close to coffee shops, bars and restaurants.
We think that the essence of an innovation district is simply a place that is denser than suburbia, with mixed used development (retail, office and residential), enabled by innovative transportation solutions. Where this can also be integrated with nature, such as the N-squared Corridor's opportunity along the Charles River, so much the better. With a highly educated, creative and culturally diverse population, Newton and Needham already have the type of workforce that will attract many entrepreneurs and growing companies.
We are recommending that the N-squared Corridor needs a sense of themselves as an innovative place, and the ability to communicate that to the outside world, whether through marketing and social media, or through just doing it! After all, authenticity is the most crucial component. Be yourself, and tell your story, we are saying. And work toward the denser, yet integrated community with lots of relationships, networks and "happy collisions."
Read more about Millennials HERE.
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The Economic Impact of High-growth Startups
Babson College entrepreneurship guru Daniel Isenberg is fond of proclaiming that there is no connection between startups and economic growth. While this is a semantic argument at its best, the data are clear that some startups lead to high-growth firms, and those firms account for as many as 50 percent of new jobs created, expand in size and in number of locations, and encourage subsequent employment growth in their related industries. Of course, the policy challenge is to figure out which startups have the most growth potential. (If we could figure this out, we'd be VCs, not policy wonks!)
MIT researchers have linked this to early decisions such as how a firm is named (i.e., not eponymous), where it is registered and whether or not it files for patents and trademarks. The MIT research found that while more startups with high-growth potential are being founded today than in the past, fewer are successfully scaling up, creating an opportunity for public interventions to assist.
Kauffman's data also shows that growth-oriented startups are all around the country, in big cities and small, rural towns. Among the largest states, Virginia and Maryland saw the biggest increases 2015-2016, while Utah led the small states, followed by New Hampshire. Maine was one of the states to see a large decrease in its ranking, down from 13th to 19th. MORE
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Women Entrepreneurs and Funding
Having been a feminist when it wasn't cool, I have long resisted the idea that women entrepreneurs needed any special assistance. After all, women are just as likely (or maybe more likely) to come up with innovative business ideas. However, new research plainly demonstrates that there are vast differences in access to capital. Women start businesses with 50% less capital than men, but grow at 21%, 5 times as fast as men. But it's still a men's club: 6% of VCs and 26% of angels are women, yet only 5% of VC-backed companies have a woman CEO, 18% have women leaders and 28% of angel-backed companies are led by women. Data HERE.
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Getting a Handle of Today's Political Climate
Clearly, lots of Americans are unhappy, judging from the support for outsiders like Donald Trump and Bernie Sanders. The data show that there are large number of Americans who are unhappy, stressed and lacking hope. But it's not who you think. The least optimistic group is poor whites, those who have fallen in status the most because of changes in our economy. Most blue-collar whites are insecure and facing much more competition for jobs than their parents did. Mortality rates related to opioid addiction, suicide and other preventable causes among uneducated whites have been on the increase, even as the increasing inequality between the richest and poorest has grown. MORE
Another explanation is contained in a new book by Colin Woodard, American Character. In a riff on his earlier work that divided American into 11 regions, each with its own distinctive political character, this new book delves deeper into the differences by region on the key issue in politics: individual liberties versus the common good. Eerily prescient, Colin's narrative predicts the rise of Donald Trump and the other divisions of the current election year (although he has had the benefit of six years of Governor of Maine, Paul LePage as a model). Required reading for those of you who love political history.
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Industry 4.0 Transforming Manufacturing and Energy
Just when you thought it was safe, along comes another revolution, this one called Industry 4.0. If Industry 1.0 was triggered by the commercial steam engine, 2.0 electricity and mass production, and 3.0 the computer, then Industry 4.0 is coming about from digitization. Technologies as varied as robotics, artificial intelligence, sensors, cloud computing, the Internet of Things, digital fabrication, and mobile devices all contribute. When joined together, they integrate the physical and virtual worlds in ways that will transform everything. The three biggest changes will be in the full digitization of a company's operation, the redesign of products and services, and in closer interactions with customers. MORE and MORE
Remember that Theodore Levitt parable about buggy whip manufacturers who didn't understand they were in the transportation business? This is an old marketing lesson that's coming around again for today's manufacturers, made possible by Industry 4.0. To drive profitable growth, manufacturers are being urged to focus on outcomes, not products. This isn't as straightforward as it seems, however. It can be that individual customers each have their own desired outcome, forcing a manufacturer into a personalized product strategy. Or, it can mean incorporating real-time service level monitoring into a product so that a customer can have access to operating data and the manufacturer can continually improve the product. Pricing may become tied to usage. And, it means being focused on continual innovation to meet the outcomes desired by customers. MORE
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"Tell me and I forget. Teach me and I remember. Involve me and I learn."
Benjamin Franklin
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Allentown Incubator Launches Microloan Fund
Startup businesses at the Bridgeworks Enterprise Center, a former client, are now eligible for microloans from the Allentown Economic Development Corporation. Bridgeworks believes that its clients need an alternative funding source, because many are too new to secure traditional lines of credit and can't survive a long wait for a loan approval. Bridgeworks in located in a refurbished Mack Truck plant in Allentown, PA, and focuses on startup manufacturers. MORE here.
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Which Cities Get the Best VC Returns?
It used to be that the vast majority of venture capital investments were made in Silicon Valley, and Boston, with a little more sprinkled in Austin, TX for good measure. While venture capital is still heavily skewed, it turns out that many other vibrant communities are growing entrepreneurs that are yielding good returns for adventurous investors. The top ten cities, ranked by the percent of exits with the highest returns measured as multiple on invested capital (MOIC) are: Chicago, Raleigh, New York City, LA, Philadelphia, Austin, Atlanta, the Bay Area, Seattle, and Boston. Data are HERE.
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Are You a Geek or a Nerd?
Geek and Nerd don't mean the same thing. While a Geek is an "enthusiast" of a particular topic or field, obsessed with the newest, coolest and trendiest things (think Sheldon on the Big Bang Theory), a Nerd is a studious intellectual, focused on obtaining knowledge or skills. Another way to put it: "Geeks are fans of their subject while Nerds are practitioners." Click HERE to see a cool map so you can see where you fit.....me, I'm a Nerd all the way.
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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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Recently, economists and those of us interested in workforce issues have been talking about the fact that the national statistical system isn't very helpful when measuring one of the biggest trends in employment, the gig economy. The rise of so-called "alternative work arrangements," such as on-call workers, temporary help agency workers, contract workers, independent contractors and freelancers, has been quite rapid. Remote workers, those who work for a single company, but off-site, are another type of invisible worker. Some say that as many as 40 percent of the workforce will be in these categories by 2020. Some think this is a stinging rebuke to the resilience of the mainstream economy; others think this is a sign of increased entrepreneurial resiliency and worker independence. In either case, we should probably figure out how to measure its impact better. MORE.
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