In the countless instances where I’ve engaged others on important matters facing our nation, and especially challenges and opportunities critical to African Americans, I cannot ever recall asserting that I have “the” answer to a problem.
This instance, however, is different.
Today, I declare that I have “the” answer to a seemingly intractable problem: What must America do to ensure our continued ability to produce meaningful innovations and successfully compete in an increasingly and uncompromisingly competitive world? Continue reading “U.S. Innovation and Competitiveness Strategy: “All Hands On Deck””
With the days getting shorter and the nights chillier, here are four great “fireplace” reads in the fourth economy.
First up, two books from Daniel H. Pink – A Whole New Mind: Moving from the Information Age to the Conceptual Age and Drive: The Surprising Truth About What Motivates Us. In both books Pink offers his take on how the modern talent base thinks and what motivates the knowledge worker. His insights provide an important reference for community and economic development specialists that can greatly guide their strategic plans.
The next book tackles the big question (which may explain its long title) of what attracts some people to certain communities across our great country. In Life 2.0: How People Across America Are Transforming Their Lives by Finding the Where of their Happiness, Rich Karlgaard shares his observations gained while piloting a single engine airplane across the country. What can we learn from that? He interviews highly successful entrepreneurs, venture capitalist, technology pioneers and global policy analysis. The stories they told as to where and why they live where they do will likely have a direct impact into how communities are position and prepare for future growth.
Finally, on the more ethereal side of life is The Cathedral Within by Bill Shore. This book has been on my shelves for several years. Shore takes a look back to the ancient cathedral builders, when a single construction project spanned many generations of workers. Most knew they would never live to see its completion, yet they remained engaged and inspired by the artistry and permanence of the creation. What can the modern business and political climate learn from that experience? How can we build cathedrals in our own communities? – Just a few of the questions addressed on the pages.
The three themes in these books are critical to the fourth economy. Especially in light of the extreme political and economic turmoil the world is facing. Collaboration, social enterprise, long-term vision and innovation will remain the keys to our success. Stay warm and enjoy the reads.
There has been a lot of talk recently about the role of “innovation” and “technology” in strengthening our national economic competitiveness. While some firmly believe that innovation is the key to recovery and future growth, others say we should focus first on traditional manufacturing jobs. Many who advocate for the latter submit that manufacturing jobs make more of an economic impact in more regions of the country.
While most of us can be sympathetic to both views, we also can’t forget that manufacturing jobs and products were made possible first through innovation, research, discovery and capital. All parts of the country, small towns and big cities alike, must determine how their location and assets can serve the modern economic development continuum, from the budding entrepreneur with a new idea, through to product development, reinvention and production.
A client recently asked us a basic question – “If we want to attract and increase high-pay, high-growth investment, what do we need to know?” In response, our team gathered a sample of incentive programs and strategies that some states have employed to attract higher value, technology-based research and development sectors while also hoping to accelerate new company formation. While not a comprehensive search to say the least, this scan does provide some program themes of what has been put in place over the past few years to grow higher growth, higher wage sectors. First some general observations:
Unlike highly cost sensitive sectors, R&D operations, corporate headquarters and technology-driven firms will likely place more emphasis on place-based assets and resources. These include community factors such as high-quality and diverse housing options, recreational venues, transit linkages, good airport access and cultural venues. Operational resources such as wet-lab space, university access, flexible capital, venture funds and ready-to-go class A/B flex office space are also critical. Increasingly, we are also finding an attraction to urban infill redevelopment opportunities, live-work-play centers and adaptive reuse of older or historic buildings to accommodate these sectors. Many of these factors came together to help Google expand in Pittsburgh and in their choice of the expensive high profile Chelsea neighborhood in New York City.
Venture Capital, Tax Credits and Micro Grants
While capital is important to all sectors, high growth high wage sectors will likely require more access to risk capital, venture funding resources and networks. We have also found that smaller firms to include start-ups and spin-outs also value micro-grant programs that offer $5,000 to $25,000 to support patent filings/research, IP protection lab rental or graduate student research support. Mid-sized and larger firms take advantage of Research and Development Tax Credit programs. Several examples of these programs are included in the links below.
Knowledge Network Management
Another growing industry demand represents an opportunity for economic development intermediaries to position as a core service or incentive program. That is the facilitation and management of collaborative partnerships among high value sector firms, universities, researchers or other resource providers. Through our work with the Pennsylvania Keystone Innovation Zone Program, many smaller technology-based companies and legacy firms in search of new product development or spin-out services, found value in a “single point of contact;” one able to facilitate those efforts and bring the right resources effectively to the table. States such as Michigan and Minnesota have taken on “networking” among high-growth high-wage sectors as a core economic development delivery service.
Aligning New Programs
When planning new incentives or revamping older programs, it is important to keep in mind that the general profile and characteristic of the modern business and how it operates is rapidly evolving. Modern firms are often smaller than what we may expect, usually less than 25 employees, and will likely stay that way for a longer period of time. They are more comfortable than legacy industry to rely on contract labor and sub-relationships rather than hiring permanent in house staff. For efficiency and security reasons, even larger firms are also becoming more decentralized, with smaller offices and manufacturing facilities spread across more locations. These conditions pose challenges for traditional incentive programs that have established eligibility thresholds based on larger manufacturing or corporate headquarters profiles. As a result, many legacy workforce, loan and grant programs then are less applicable and attractive to the smaller, more nimble high growth high wage firms.
Articles and Resources
The following articles talks generally about state programs and rankings as they relate to higher value industry sectors such as Biotechnology, Life Sciences, Medical Devices and Energy.
We have highlighted a few states that have established incentive programs and approaches targeting research and development activities as well as high value sector firms generally. These states have consistently been placed in the top 10 or 15 states in various technology economic development (TBED) rankings. We have included a public policy narrative under the North Carolina section that provides third-party policy recommendations that other regions may find of interest.
Any industry sector including manufacturers who cite favorable location factors other than “cost” alone are more likely to remain and grow in that community. Employees that enjoy living in certain communities are often happier and more productive, wanting to ensure the operational success for their employer. So it is no longer as simple as water supply and interstate access. Technology and Place-based economic development strategies will continue to challenge many communities to reposition their program tools and incentives. But the sustainable economic outcomes are worth the effort.
The majority of states have implemented programs designed to support innovation based economic development. From grants to loans and venture capital investment, these efforts are in many ways experiments as they chart new ways that states are trying to support job creation within high growth firms. Understanding the effectiveness of process and outcomes for these new programs is critical. Rich Overmoyer is a co-author of this article that is in the current Texas Business Review that looks at efforts underway and offers suggestions for the Lone Star state and others considering these efforts. More information on other state efforts can be found at the National Association of Seed and Venture Funds and the State Science and Technology Institute.