SubscribePaper 05: Three “What If’s?” for an NC Innovation Council
When they are announced, big statewide councils are sort of like undressed, department store mannequins — you don’t see them very often, so when you do everybody has ideas about what should be draped on them. Despite the temptation to wear a little bit of everything, the NC Innovation Council should work hard to JUST SAY NO.
The truth is that there are probably a gazillion things — both big and small — that could improve the state’s climate for innovation. But since the Council has limited time — and power — it should focus on a manageable number of high leverage things.
Another truth is this: when a new idea comes along, it takes some getting used to. Despite all of the energy applied by a few to try to focus the state’s attention on innovation as the primary approach to economic, community and workforce development, for most folks the idea isn’t even on the radar screen.
So what kinds of ideas could the Council recommend that would really move things along, help develop NC’s innovation soil/ecosystem/infrastructure, build understanding and momentum?
We have three starter ideas that just might be the right size for a Council to get behind. They could set the stage for a bunch of other good things to happen, and could show people what an innovation-driven state would look, feel and act like.
Finding and Replenishing the Right Nutrients
The Council will need to think about finding and replenishing the right nutrients, the kind that help grow ideas in an innovation climate.
They might hear about new capital sources: a patent development fund, gap funding for early seed stage companies, expansion of the One North Carolina Small Business Fund to nurture tech-heavy startup companies, an enhanced venture capital market.
They might hear about different tax treatments for innovation: like a boosted R&D tax credit, adjusted tax credits for Qualified Business Ventures.
They might hear about new ways of valuing workplace innovation: awards or rewards for innovative thinking.
All of these fixes are built on a belief that we must get rid of barriers to innovation, whether they are financial or social, by rewarding good ideas more than we currently do, and creating a metaphorical space where people feel confident thinking big or differently.
Idea #1: What if NC created places where people could innovate with confidence?
What if big chunks of North Carolina became what Alex Steffen has called special innovation zones? In these free innovation zones, the biggest barriers to innovation could be removed.
It’s worked before. Think back to the special economic zones China employed in the 1970s, where “foreign investment was encouraged and capitalism was unconstrained.” Whole companies and cities rose up in no time, and jumpstarted a struggling economy. In Wikinomics, business strategist Don Tapscott cites similar zones as successful examples of open source collaboration creating true business value. Companies in these zones get rid of traditional idea barriers, choosing instead to give workers more decision-making capacity for making improvements to products and services. In these places, smart risk is rewarded and people are encouraged to make failure end in success. As management guru Peter Drucker once put it, “People who don’t take risks generally make about two big mistakes a year. People who do take risks generally make about two big mistakes a year.”
It’s not a completely foreign concept for NC either. We know open source well: we nurtured Red Hat, the world’s largest Linux distribution company, through its growth. And since then, other companies have started to figure out this might be a good place to set up shop.
What could happen inside a free innovation zone? We don’t exactly know — and if we told innovators what to do, wouldn’t that take the “fiz” out of these zones — make them like everywhere else?
We do believe the zones should build on the strengths of that particular region. Each might have a specific policy, incentive or regulatory set-up that encourages 1) a particular type of innovation; or 2) innovation for a particular industry or sector. For example, a rural, agriculture-based county — like Duplin — might find ways to make the county more attractive as a place where leading thinkers on hog waste conversion or switchgrass could partner with local farmers to experiment and imagine new techniques, technologies, and systems.
A group of western North Carolina counties might look at how to blend their native knowledge of natural biodiversity, with innovators in Traditional Chinese Medicine (TCM) from Shanghai, with top scientists from Wake Forest or the Murdock Center in Kannapolis. And technical assistance organizations like the Small Business Technology Development Center (SBTDC) — or nearby community college Small Business Centers — could help growing small businesses nurture and translate innovative ideas into innovative companies.
Stitch the zones together, and the state would be a tapestry of innovative communities, networked together to live and work in complementary ways to get where we want to go.
Keeping the Best Planters, Nurturers and Harvesters
The Council will hear many good ideas about how to nurture and grow more innovative people and companies. But it might not hear as much about how to hold on to, recruit, or recruit back innovative people. If we are to be successful in the 21st century global economy, we should value innovative people just as much as we currently value companies.
Think about it. We spend bucketloads recruiting and incenting companies to move here. We spend cupfuls retaining and trying to grow our existing companies, to make sure they are happy and healthy here. OK and OK.
But we have NO intentional — not even a thimble-sized — effort underway to retain highly-skilled people graduating from our high schools, community colleges and universities. Simply HOPING they will stay don’t float nobody’s boat, and wishing ain’t gonna make it so.
Idea #2: What if NC held a state-wide Homecoming 2010?
What if we launched an effort to locate, talk with and recruit back some of the most innovative graduates of our schools (and encourage them to bring their companies and research staffs with ‘em!). Call it Homecoming 2010. We’d have to figure out what the profile of thoese ex-pats looks like (see here and here). We’d have to be careful to talk about what was different about our state so they’d know what (besides our winning personality, sweet tea and barbecue) they would be coming back to (the free innovation zones would be a start). And we’d need to find a way to do it without breaking the bank.
But these wouldn’t be complete cold calls either. By definition we’d be reaching out to people who had already distinguished themselves by their education, or their ideas, or their ability to start innovative companies. They would know our state. And if we got them back here, their spirit, instincts and energy would infect others around them.
Building the Reputation
North Carolina’s great state motto is Esse Quam Videri which — Latin jocks say and long time North Carolinians know — translates as to be rather than to seem. But where innovation is concerned, maybe we should tweak it to say: Esse AND Videri. We need to BE more innovative AND we need to SEEM to be more innovative too.
The Council will get all sorts of ideas about how to set the conditions for NC to be more innovative. But they also need to be conscious of the importance of telling it on the mountain, making sure people know. If we are going to be the most innovative place in the world, we want people to know what we are doing and why, and to see us as the go-to source for innovation — through our education systems, our business climate, our nonprofits, our government. We want to be the place where people come to fly the Wright- Brothers-plane-sized ideas of the 21st century.
That can’t happen without relentlessly discovering new ways to create that environment, and without an ever-developing track record proving we can do it.
But it also can’t happen without tagging ourselves effectively, talking about (and getting people talking about) what we are doing so others know about it and want to be part of what we are doing.
Idea #3: What if NC made 2010 The Year of Innovation?
A Governor can proclaim almost any day or a month almost anything. But rarely does a Governor proclaim a commitment of a whole year to something.
Governor Perdue should designate 2010 as the Year of Innovation in North Carolina.
What does that get us? A tag. A positioning platform. Some visibility. A sense of immediacy. A way of organizing the findings of the Council and the ideas of people that join in the movement.
The proclamation would have to be accompanied by a lot of work from a lot of people. Videri without esse is meaningless.
It doesn’t have to, and can’t, end in a year. But a Year of Innovation could give us the momentum to tip the state irresistably toward what Governor Perdue has called “the state of innovation.” And that would be a really exciting state to live in.
So what do you think about these ideas? Doable? Right-sized? How could they be improved? What would your one or three ideas be for the Council to take up?
Tags: Alex Steffen, Don Tapscott, free innovation zones, Gov. Bev Perdue, innovation climate, innovation infrastructure, NC Innovation Council, nurture, open source, Peter Drucker, Year of Innovation
There are so many ways we need to do better, but you asked me for one. I’ve also assumed that in terms of innovation, that most of the energy would be focused on either life science or technology (including chemistry/greentech/IT).
The life science side of the house actually does a better and better job of innovating and driving repeat entrepreneurs (like in Boston or SV) because UNC and Duke are fundamental drivers which push new blood and ideas into the marketplace. We also have a ready-made acquisition community here b/c pharma is so well represented.
On the bucket I call “technology”, NC (and the Triangle) is seriously
lacking that encouraging environment. If you go to a “venture” meeting in this state, the crowd is dominated by mid-30’s and up males wearing blue blazers and more than 50% of the audience are people who take money out of the system (lawyers, acct’s, etc.) than entrepreneurs or people who put money in (angels/VC’s).
So, I think the state needs to get very focused on creating a nurturing environment for young talent (coming, presumably, from State, Carolina, Duke, Wake, UNCC, etc.) to get into the risk-taking game. The only industry to have done so here is the video gaming business…and they’ve been quite successful.
No market can do everything (except maybe NorCal), so we will have to focus on markets where our universities give us an advantage, but we need more 20-something dominated early stage companies working out of basements using old doors for desks to create some real creative energy and buzz.
If we can make a high-risk but high-reward, innovative/creative career an option out of grad school (think of the options people from the CS school at Stanford or MIT have in their neighborhoods) here locally, the money, jobs, exits and press coverage will come.
Hope this helps and always happy to contribute more…you’re working on really impt stuff imo.
The toughest challenge for any innovation apart from overcoming the inherent opposition to change is money. First it takes time to get it, sometimes years, second it takes money to make money, or as an investment banker friend once said “you know how to make a small fortune, start with a large one.”
Well innovators for the most part do not have large fortunes.
So the question for me is, if the State is really interested in helping get people out of gate, they have to help fund them. The fact is traditional investors rarely come in on the ground floor. At a presentation by Business Week writer (Vivek Wadhwa) a few months ago, he gave the figures over 75% of funding comes from the Inventor, their close family and friends to start companies.
So what is needed:
1) Start up funds not tied to any existing SBIR program.
2) Subsidizing overhead, free office, phones, hosting lab space
3) Networking to resources, such as web designers, legal, marketing etc, who will not charge market rates, or have them subsidized
4)Opportunities to use existing facilities free of charge, such as a testing facility
5) Sponsorship from local companies
such as IBM, Red Hat, Cisco, by that I mean in the 10 and 100s of thousands of dollars. A kind of patrician interest in developing new ideas, as payback for all the tax breaks they received.
6) All this has to happen on a short time frame, one can go broke waiting for decisions to made..
Time is Money
To Mark R: This is a good reality check. We need more volume, pure and simple, a greater % of people emerging from our schools with skills/tools/mindset to be innovative.
Two quick reactions:
1. Upping that % will require some changes in how we do education. What needs to happen if we are to produce more people with that kind of mindset.
2. Keeping that % up will require some support for folks post graduation. One model: IBM has a nice venture mentoring program that pairs young (and not so young) entrepreneurs with an idea they want to bring forward with mentors. The qualifications of the mentors: must have started at least a) one successful company and b) one miserable failure.
So what are the logical steps in getting that sort of environment set up?
Here is a suggestion to allow NC to become the most innovative place in the world and translate new ideas and technologies into new systems, products and services.
Allow the research universities to open up not-for-profit ventures (unrestricted by any protectionist regulations of the state) that are wholly managed by people appointed by the universities w/o any interference from the state. These arms of the universities would function as innovation incubators and venture capital firms that invest in any innovations emanating from that university (or any other in NC) just like any angle investor would.
Related prototypes for such activity exist – see, for example, the “Emerging innovations Fund” at Purdue Research park enterprise at URL below:
http://www.purdue.edu/discoverypark/pdf/Emerging%20Innovations%20Fund.pdf
JB
I think the universities have to play a big role in our “innovation” society. Right now, most UNC schools (and our private schools) are completely opaque when it comes to helping the commercial sector understand what technologies are under development and maturing to the point they are ready for spin-out. UNC and Duke focus on life science royalty deals looking for that blockbuster drug. On the tech side, however, there really isn’t much. Duke was more aggressive when Kris Johnson was the dean of the Pratt school, but since then they’ve got a bit dark too.
I don’t think their role is to fund things – they aren’t good at it and it isn’t their mission – but rather to showcase them and make it easier for those projects to see commercial light. Look at VentureLab at GaTech, the Deshpande Center or CSAIL at MIT or pretty much anything at Cal or Stanford. They are constantly striving to make it easier for the outside to look in and vice-versa….State and Carolina both need to figure this out.
Money flows to the opportunity….and it is out there. To create opportunities, however, you have to make the ideas known and the people behind them available.
To Leslie’s questions about changing education – I don’t think it’s curriculum, but rather exposure to other disciplines (engineering to MBA, researcher to engineer, etc.) that would matter.
On venture mentoring, do you think IBM has an interest in starting new companies? No. They have an interest in bringing them in house…which is great, but doesn’t necessarily help the State of NC. If you expose the ideas to the world and those ideas are good, money and “nurturers” will come running.
btw, one final thing….we have to accept, and teach others here, that it is OK to fail.
In other celebrated “innovation hubs”, failure is often seen as a stepping stone to success….as long as you learn from your failure.
Those folks understand that true innovation isn’t about batting avg., but rather about slugging pct…You can strike out alot as long you hit a home run every once in while….
To Mark, Joy and Peter:
Both Joy, Mark and Peter seem to be hitting on the importance of universities shortening the time from idea to product, though there seem to be differing ideas about how they could do that.
Joy suggests setting up sort of an inhouse-but-independent commercialization arm for universities. I think there is some track record to support the incubation part of that, provided there is some assistance to companies with the business end of things. I’m not sure there are many examples of universities being great at making investment decisions in new ventures, and tend to agree with Mark that “they aren’t good at it and it isn’t their mission.” Maybe Purdue will pull it off, but if that happens, I suspect it will be by bringing in folks with VC experience outside of the university.
Mark and Peter suggest different strategies to allow companies to better understand the intellectual property and new technologies and new ideas that universities have — Peter suggesting a pushout strategy and Mark suggesting making it easier to look in, kick tires, anything to improve on their current behavior, which makes our IP “completely opaque.”
For the time being, in the UNC System’s recent report on how to accelerate innovation and tech transfer, and in the work all 16 university campuses are doing going forward to implement the recommendations of the report, the UNC system is pushing for improving “look in” capacity over “push out” marketing efforts.
Some of the changes expected over the next few months: new electronic access to university IP available to interested parties and searchable by key word, deeper early-stage relationships with private sector to expedit backend commercialization, and streamlined licensing agreements.
Making IP searchable is good, but companies outside of life sciences rarely rely on patents…it’s mostly trade secrets, etc.
Have a demo day, invite the venture community in for a look around, create a list of research projects with the goal of the projects made obvious so that people can review them.
Create a position (think about Steve Fleming’s position at GaTech) that creates the “boiler room” of new innovation so that people come by and easily see what’s being cooked.
Universities must abandon that mindset that each piece of IP is the next blockbuster drug that will funnel millions to their campuses. Rather, couldn’t they think of this innovation as the way they drive economic activity, given away (or close to it) with the hope/promise that those recipients will repay with donations, new buildings, etc.? And that the states will see them for economic engines that deserve the kind of incentives now reserved for big companies?
Great to see the discussions being brought out – certainly, the comments echo much of what we heard over the past 8 months or so as UNC and several of our public and private sector partners set out to understand what could be improved in terms of our innovation and technology development efforts. The list isn’t short. But the interest and energy has been high. As a result, UNC institutions are now grappling with some big questions – both individually and collectively – around how to do this innovation thing better. One of the main improvements anticipated is in the ways campuses generate, use and share information about projects and their potential for economic and social impact. In fact, UNC-CH and NCSU are right now formulating a collaborative demonstration project that would allow public audiences to have a glimpse at their expertise and capacities in a way never before accessible. This alone won’t completely solve the “look in” issues, but it’s a desperately needed first step.
Demonstration projects are the way to go, but we live in a global community with people who can be investors (companies, institutions VCs etc), all over the country. Those are the people you need to reach, they will bring in investment to NC, because they will set up shop close to the source of knowledge. One cannot see a demonstration on paper, it has to be recorded then distributed. A few months ago I was sent this link to a new software platform that is now being touted as the next Google. All I was sent was a link to a visual demonstration of the software platform, and I forwarded that link to contacts at NASA, DOD, investment banker and others around the country and overseas.. its just a link and it works… watch
http://www.wolframalpha.com/screencast/introducingwolframalpha.html
Then ask yourself this questions, 1) if Peter hadn’t put it out there how would you have heard about it?
2)Wolfram is based in London and Cambridge Mass, do I care? If I am an investor living in California and I am interested would that stop me from contact them?
3)Would I have preferred reading this on a bit of paper or watching the link?
I am a regional economic developer, and my comments are not specifically in response to Paper 05, but to all of the papers submitted to date. Michael Porter, in his 2001 Clusters of Innovation: Regional Foundations of U.S. Competitiveness report that studied the Research Triangle and four other regions, stated: “While fiscal and monetary policies pump dollars into the economy to boost the level of activity, innovation infuses the economy with growth-incubating new ideas, new products, services, and technologies. National policies and national investment choices have much to do with the growth and capacity of the American economy. For innovation, however, the real locus of innovation is at the regional level. The vitality of the U.S. economy then depends on creating innovation and competitiveness at the regional level.”
The same can be said of state economies generally, and the North Carolina economy specifically. There is no monolithic North Carolina economy, and in my opinion there is no single strategy to boost North Carolina’s innovation capacity. Paper 05 discusses the value of strategies customized to regional assets and strengths, but there needs to be a regional infrastructure to support innovation at the regional level.
The Strengthening America’s Communities Advisory Committee, chaired by Council on Competitiveness President Deborah Wince-Smith, reached a similar conclusion. In their July 2005 report evaluating federal economic development policy the Committee concluded “Globalization has fundamentally transformed the American economy. Regions–defined by economic rather than political boundaries–are the new building blocks of prosperity.” This report provided the policy underpinnings for a major Department of Labor grant program called WIRED–Workforce Innovation in Regional Economic Development. The Piedmont Triad Partnership successfully competed for a $15 million 4-year WIRED grant in 2006 that has made the Piedmont Triad a national demonstration project and successful national model for a regional economic transformation strategy.
The Brookings Institution has focused attention recently on the need for a federal “Metropolitan Policy” that elevates the importance of regional collaboration, and even regional governance. In a recent (September 23) speech, Bruce Katz, Vice President & Director of the Brookings Institution Metropolitan Program, stated “metropolitan fragmentation exerts a negative impact on competitiveness and weakens long-term regional economic performance….This is …. due to the fact that parochial jurisdictions are spending their time competing against each other rather than working together to compete in the world economy.” Katz also quotes Jerry Paytas of Carnegie Mellon University, who wrote “How well a region organizes and utilizes its assets and resources is the key to its ability to compete and to respond to change. Long term competitiveness requires flexibility and fragmented regions are less likely to mobilize the consensus for change. Fragmented regions divide the regional constituency, offering opponents of change more opportunities, forums and even institutional support to resist change. Unification encourages serving the regional constituency rather than parochial interests.” This quote evokes comparisons to the Machiavelli quote posted in an earlier comment following Paper 03.
Although Brookings’ focus is on metropolitan regions, regions are arguably even more important for rural prosperity and competitiveness. Mark Drabenstott, formerly of RUPRI and the Federal Reserve Bank of Kansas City Center for the study of Rural America, concludes “Probably no single strategy has become more important to rural regions than thinking and acting regionally.”
The most important economic geography in the global economy is regions, whether it is in the United States or elsewhere. The federal government is increasingly realizing that in order for the United States to compete successfully in the global economy we must have globally competitive regions. The same can be said of the State of North Carolina, and the state must develop a deliberate and comprehensive strategy to complement and leverage differentiating regional strengths for competitive advantage if we are to prosper in the global economy.
Regionalism is hard. We have no regional governments or regional taxing authorities. Regionalism is threatening to many invested in the status quo. But we ignore the importance of regional economies, and regional geographies, at our own peril. Regions are a critically important geography for planting, nurturing, harvesting, and even marketing, innovation.
These are great thoughts, Don. What do others think? Do we need to direct our focus to regional innovation strategies? If so, what would those look like? Given our lack of regional governments and taxing authorities are there other organizational forms that could effectively pull off this regional cohesion idea? Are our state’s seven economic development regions the right size for this effort?
While I think a very strong argument can be made to leverage the geographies of the seven regional economic development partnerships as the foundation of a statewide regional strategy, I think the specific geography is less important than the need for a deliberate and comprehensive North Carolina regionalism plan. There are currently many state agencies and state-funded organizations that provide services regionally, and at a minimum these state-funded efforts should be aligned geographically and programatically. This alignment would certainly enhance a statewide innovation agenda. Just in the areas of education, workforce development and economic development, there are numerous organizations and agencies (e.g. NCDOC Business and Industry, NCDOC Community Assistance, NCDOC Workforce Development Boards, regional economic development partnerships, Councils of Government, military commissions, SBTDC, Small Business Centers, Industrial Extension, regional K-12 educational consortia affiliated with the Department of Public Instruction, among others).
The North Carolina Economic Development Board is developing a statewide economic development plan, an outline of which the Governor has requested in January. The Governor has also charged the Budget Reform and Accountability Commission with consolidating and streamlining state services to improve programs and reduce costs. If an Innovation Commission is chartered and charged with developing a statewide innovation strategy, these three statewide initiatives should be coordinated for mutual gain. In my opinion they would all benefit from a deliberate regionalism strategy that can deliver better outcomes at less cost to the State. These outcomes would include an improved innovation climate for North Carolina.
Don:
The trick for the Innovation Council, I think, is going to be finding the right focus and the right levers for change, and then developing a small number of achievable ideas it can champion and find implementers who will wrestle them to the ground.
I agree alignment of regional workforce and economic development entities is really important for the future of the state, and that, if it were focused on how to get agencies out of the way of or aligned behind innovation, it would complement the work of an Innovation Council.
And I’ll bet if you polled North Carolinians, you would find overwhelming support for doing something like that. It’s a no-brainer for most people. Of course we should act like that.
But I think it turns out to be a gargantuan and deeply political piece of work that could consume 2-3 years of the life of whoever undertook it. Do we want to redraw the lines for all these regional entities so that they all operate out of the same geography? If so, who gives up their sacred geography and who gets to keep theirs? If the goal is to improve efficiency and communication, wouldn’t an unduplicated world logically lead to fewer employees at one agency or another? If so, which agencies “win” and which “lose” and won’t people spend crazy amounts of energy defending their turf rather than figuring out what the right thing to do is? And even if you aren’t losing any employees in the process, who would be responsible for driving the consensus goals given that these folks have several different bosses, some in different parts of the state, some of different political parties. And as long as we are consolidating or synching up workforce and economic development entities, shouldn’t we also synch up community college service areas and public school systems and legislative districts? Talk about a political melee — this would really need to be a key initiative for a statewide leader who was willing to give the time needed to make the case for it, make the case for doing it in a specific way, be willing to build coalitions to support it, and be willing to spend huge amounts of political capital to do it.
None of that is to say that the work shouldn’t be done or that it wouldn’t make NC more effective, just that you can’t wave a wand and do it, and it would threaten to be an all-consuming followup task for an Innovation Council to take on. I’d argue that it should be addressed separately by a group that can take it on with manic laser focus.
An assumption that seems to be prevalent in discussions about innovation is that, given the place or opportunity to innovate, people will seize the opportunity to do so. My question is what underlies that assumption? Where are we creating a climate for innovative thinking? Are risk-taking and creativity byproducts, for example, of the classroom? In particular, how can our educational system empower its learners to be creative?
Education has long been a controlled system of knowledge delivery, with curricula and delivery mechanisms to a large degree controlling what and how instructors teach and instructors controlling what and how students learn.
Even today, with the tremendous resources of the world-wide web, the teacher typically determines almost all matters academic, yet desires the student to learn autonomously and to experience joy in the learning. A professed goal of our educational system is that students will become life-long learners, continuing to expand their knowledge base to the benefit of their employees and themselves. In actuality, however, a system which maintains tight control over the students runs the risk of stifling their creativity and innovation. In addition, such a rigid system resists opportunities to reflect on, revise, or redesign the system itself, remaining sluggish in its ability to recognize or implement significant but necessary changes, even in the face of incredible social and technological changes.
Partly as a result of education’s rigidity, students have departmentalized education and insulated themselves from it, making it something that happens to them, unfortunately, or for them, in the case of the “entitled,” rather than something that happens in them, largely by them. They agree to buy a grade, a piece of paper that will ensure them a secure and comfortable income, but they resist, even resent, the suggestion that they become engaged, creative learners. Fear for economic survival is the strongest motivation for such students, but fear is a weak substitute for a life-long love of learning.
Unimaginative students, or those whose imagination has never been appreciated, do not contribute creatively to their communities.
How, then, do our students begin to feel empowered to be innovative?
How do we encourage learner-centered and life-long learning through the educational system? What would it really look like at each level of our educational system?
Joyce: I hope you can find a way to get engaged in raising this issue in your region and in the state. It’s the kind of critical “culture change” work we have to be working on. There’s a great Ted Talk by Ken Robinson from last year that really supports your point.