Change Papers: A shared effort to change North Carolina's climate for innovation.

In this paper, guest poster Ted Zoller, associate professor for entrepreneurship at Kenan-Flagler Business School and Executive Director of UNC-Chapel Hill’s Center for Entrepreneurial Studies, makes a key distinction between two creative parts of what we have defined as innovation (See Paper 02): invention – the act of creating a new technology, product, process or service; and entrepreneurship – the act of translating that new technology product process or service into the market, where it can be widely used and their value fully realized.  And he looks at what it will take for hotspots like RTP to achieve their maximum impact.

By Ted Zoller

One of the major criticisms of our higher education institutions is that they have been heavy in invention, but light in entrepreneurship.  While we have come a long way in rectifying this deficit on our campuses by putting in place strong entrepreneurship programs, I would further submit that while the university as source of new knowledge is inherently inventive, it is not the central job of the university to be entrepreneurial.

To be effective in translating innovation, universities should look outside the boundaries of campus to actors in the economy who translate and apply these innovations in the marketplace.  Put more simply, universities must engage the entrepreneurial culture of their surrounding communities, and perhaps the global economy, to be effective in translating invention through entrepreneurship.  If any criticism of the university is fair, the academy tends to be too insular and less engaged with the actors who can apply and act on new knowledge derived from invention.  Only with an intentional strategy to translate knowledge and engage the entrepreneurial community will the full impact of innovation be fully realized.

In my work examining how innovative regions maximize their entrepreneurial potential, I have looked at the structure of social capital that comprises the nation’s most important hotspots—from Silicon Valley and Boston—universally seen as the leaders who developed spontaneously, to RTP, which is generally cited as the region where the development of the innovation systems was largely planned.  Most local leaders would agree that the great experiment of the Old North State to found the Research Triangle has been an undeniable success as a center of invention, but those leaders would also assert that the entrepreneurial bent and the innovation culture of RTP emerged much later.

In looking more deeply at how the cultures of innovation and entrepreneurship interact in a vibrant high-tech economy, generally you will see an economy comprises three factors: (1) a significant wealth of inventors; (2) serial entrepreneurs and (3) market makers among equity investors.  Economies which have a strong engine of invention do not necessarily guarantee an equally strong entrepreneurial economy.  This may be evidenced by the following graphic of the structure of entrepreneurial social capital in innovation hotspots.

If we analyze the number of individuals in each of the leading innovation regions in the US who sit concurrently on more than three boards of directors, there is a clear difference between an economy like Silicon Valley which has five times the number of this special class of entrepreneur of any other region, and three times the next strongest region, Boston.  Following Silicon Valley and Boston, there are the emerging entrepreneurial economies of San Diego, Seattle and Denver, followed by the others, including RTP.  While we are blessed by a high-degree of invention in RTP, we don’t possess in comparison the entrepreneurial carrying capacity to realize its full economic potential due to a relatively thin layer of serial entrepreneurs and equity investors.

Now a fair criticism may relate to “what comes first?”  The proverbial chicken or egg scenario.  Does the innovative culture drive entrepreneurship or vice versa?  While this analysis cannot speak to this question, most entrepreneurs would say they are drawn to innovative economies, which implies that innovation drives entrepreneurship.  But perhaps a more subtle point would be that invention relies heavily on entrepreneurship to realize its full economic potential.

So perhaps the takeaway of this analysis is that invention and entrepreneurship are not synonymous, but are mutually reinforcing and interdependent, and both are required for an economy based on innovation to flourish.  It is not enough to create a culture of invention.  We should be equally concerned with and similarly intentional in creating a culture of entrepreneurship, where individuals are encouraged to leverage inventive processes, products and services in the marketplace.

This requires us to fundamentally recognize that while the culture of invention may find its heart at the university, a culture of entrepreneurship is largely found on Main Street, among a special set of serial entrepreneurs and investors who leverage invention, and discover tools in the market to realize its full potential.  This requires us to fuse the culture of invention on the grounds of our campuses and research centers, with the culture of entrepreneurship that lives downtown and in the coffeeshops that surround campus.  I’d suggest that we find the means to intentionally bring our inventors and entrepreneurs together, and nurture the symbiosis that reinforces and amplifies the innovative potential of our State.

Tags: Boston, Denver, entrepreneurial community, entrepreneurial university, innovation hotspots, innovative regions, invention, Kenan Flagler Business School, research centers, San Diego, Seattle, serial entrepreneurs, Silicon Valley, social capital, Ted Zoller, UNC-CH Center for Entrepreneurial Studies