Erin Sparks

CSG-WEST Annual Meeting

July 31, 2013

Policies to GrowState Economies

U.S. Not Getting Back Many of the Jobs Lost During the Recession

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Recent Trends Suggest U.S. Economy Has Turned Soft on Risks

• Companies add jobs more slowly• Investors put less money in new ventures• Americans start fewer businesses and are

less inclined to change jobs or move for new opportunities

• All three reverse prior trends

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Source: “Risk-Adverse Culture Infects U.S. Workers, Entrepreneurs”, WSJ, 6-3-13

Economic Development in the State of the States

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The top 100 words governors used when discussing economic development in their 2013 state of the state addresses.

• Governors are still talking about business attraction, but they’re talking about startup companies, entrepreneurship, and growing businesses in the state just as much.

• Governors are focused on supporting on innovation and entrepreneurship.

• With the new focus on “growing from within”, governors are launching partnerships and tools to help existing businesses grow and stay competitive.

• Most governors are talking about lowering taxes to create better business conditions, but some governors did discuss raising taxes.

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Economic Development in the State of the States

Where Does Growth Come From?Where Does Growth Come From?Role of EDUCATION, WORKFORCE & ECONOMIC DEVELOPMENT PolicyRole of EDUCATION, WORKFORCE & ECONOMIC DEVELOPMENT Policy

An Action Plan for Growth: 12 Actions

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Distinguish among different entrepreneurs and companies; target resources accordingly.

• Wisconsin: Most new jobs are going to come from new businesses created here or from small businesses growing in our state. We need to help them tap into the capital they need to make investments that will lead to more jobs.

• Colorado: We hope to partner with the Secretary of State and fund a comprehensive “suite of business services” that will give entrepreneurs additional resources to grow their businesses.

• Illinois: We're partnering with the University of Illinois and the National Center for Supercomputing Applications to create an advanced manufacturing hub where companies - big and small - come to learn and use the world's most sophisticated tools and software. The Illinois Manufacturing Lab will make our manufacturers more competitive.

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State of the States Excerpts: Growing From Within

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Cast a wide net.

Not all entrepreneurs are twenty-something “techies” – reach out to baby boomers (“reinventuers”), women, immigrants.

Provide entrepreneurship training for veterans and the unemployed.

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Find the high-growth companies;

help them grow.

Success Stories

• Innovation Works (Pennsylvania)– Has invested more than $50 million in over 150 companies

that have created thousands of new jobs and attracted over $1.2 billion in follow-on capital.

• Pipeline Fellowship Program (Kansas)– Since 2007, companies led by Pipeline fellows have grown at

an average rate of 82 percent.

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Recent Initiatives• Michigan’s Pure Business Connect

– $8 billion, multiyear initiative to help Michigan-based companies grow.– Helps companies find new ways to raise capital, get access to various

business services, and connect with each other for business-to-business procurement opportunities.

– Michigan is also investing $12 million in entrepreneurship support services.

• Hawaii Growth Initiative– Set of policies aimed at developing an ecosystem to support high-growth

entrepreneurial companies in the state.– funded with $6 million, will focus on three main areas: mentoring,

collaborating, and funding opportunities for entrepreneurs to establish and grow their businesses; leading partnerships between public and private organizations to build research and commercialization activities; and networking Hawaii’s businesses into broader U.S. and international sources of investment.

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Reward strong ties among universities,

companies, and entrepreneurs.

Offer R&D Funding in New Ways

Utah Science Technology and Research Initiative (USTAR)

– Utah has invested a total of $977 million in research teams and infrastructure, which has generated $4.9 billion in new research funds and $4.9 in new state revenues.

– The University of Utah generated more startups in 2011 than any other U.S. university.

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Utah’s Results

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Source: Jack Brittain, Presentation to NGA, April 25, 2012.

Helping Create Good Paying Jobs in the State

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Utah

Utah

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Virginia’s Commonwealth for Advanced Manufacturing

– State played key role in developing a “mega” partnership of that provided tailored R&D and workforce to attract a Rolls Royce production facility to the state.

– Partnership includes worldwide manufacturers, 3 universities, and the state.

– CCAM’s eight industry members, including Newport News Shipbuilding, Rolls Royce, and Siemans, make sizable contributions to the partnership, drive university research to be production ready, and provide direction on workforce strategy.

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Invest in Mega Partnerships

Recent Initiatives

• Maryland Innovation Initiative– Partnership between the state and five academic research institutions.– Created the role of “site miners” to make connections between partners.– In order to access funding that will assist with the costs of

commercialization, university faculty and other entrepreneurs are required to meet with a site miner, who will make sure their application is business-oriented and champion the application during the review process.

• Washington W Fund– A combination of state, university, and philanthropic funding.– Provides early-stage venture funds to promising companies that are

started at the state’s research institutions.

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Build ecosystems, not programs.

The Elements of the Innovation Ecosystem

• Institutions that attract and support the people with the talent and foresight to create new ideas;

• Industry networks that encourage interaction, stimulate further innovation, help develop specialized services to support area companies, and encourage cross-industry partnerships;

• Facilitation of entrepreneurship to commercialize concepts so that ideas, and businesses based on them, grow in the area; and

• Cultural and social amenities constituting quality of life that motivate knowledge workers and the innovation-based companies that rely on them to stay in the area. Source: Rosabeth Moss Kanter, 1995,

Harvard Business School

Who Coordinates Key Elements of an Innovation Ecosystem?

Source: Mary Walshok, 2010

Institutes for Collaboration• Innovation is built in from the beginning as a core mission. Their job is to

build, nurture and link the elements of “an innovative place” – a local ecosystem of people, institutions, and companies that all support the innovation process.

• They are building an innovation ecosystem for a particular industry cluster. Connected to a particular industry from inception, they know how to create consistency from research ideas forward through the commercialization process to feed the industrial base within the state.

• The institutes are not part of one university. They sit at the nexus of multiple universities and aim for a “catalytic effect” that will produce results.

• They depart from traditional university technology transfer efforts by

focusing on what is required “upstream” to bring new products out “downstream”. The goal is not to focus on just ideas or just markets, but to stimulate the entire innovation process in such a profound way that the state’s entire innovation pipeline is transformed.

 

Leaders who proactively find and nurture connections across the boundaries and know who to connect with whom. Companies and entrepreneurs need one point of contact that will connect them with all the diverse resources they need.

Speed and Flexibility in working with industry. For this reason, non-profit organizations that operate outside of the university/government orbit may be needed, but they must excel at bringing together the resources of several universities.

Industry Focus that allows innovation to be strategically targeted at sectors that are promising to the state or region. At the same time, however, there is a balancing act between being sector-focused (built up around innovation process and network for one sector) and bringing together research and companies from different disciplines and industries.

Space That Crosses Traditional Academic Boundaries so that innovation results from different disciplines working together. Shared research facilities push researchers, entrepreneurs and industries beyond their specializations and allow for discoveries at the boundaries of disciplines.

These Organizations Require

Evolving from….

Source: Regis Kelly, QB3

To this…..and…

Source: Regis Kelly, QB3

….To this: Institutes of Collaboration

Source: Regis Kelly, QB3

Institute of Collaboration

Source: Regis Kelly, QB3

Recent Initiatives• Connecticut Innovation Ecosystem

– Funded with $4.8 million in its first year for four innovations hubs to help scalable young companies start and grow in Connecticut.

– Launched innovation vouchers program to help most promising early stage companies develop their ideas and get products to market faster.

• StartupNY– Creates tax free zones near universities across the state in an

effort to create, keep and attract high-tech and other startups and venture capital.

– Aligns with Regional Councils.

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Overarching Lessons Learned

• Companies within the state are most likely to create new jobs and entrepreneurs leading the fastest growing companies should be a focus of economic development efforts.

• States are emphasizing policies and programs that have strong industry buy-in and participation.

• States are applying lessons learned from cluster strategies to innovation hub strategies, which combines a cluster strategy with a place-based strategy for entrepreneurship and revitalization. Each strategy depends on getting public and private leaders to work together to develop an ecosystem of statewide proficiencies.

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