Policy and Practice Header
Notes from Innovation Policyworks
Starting last Monday morning, more than 400,000 people in Maine have been without power (and Internet) due to an unusually strong storm with winds nearing 70 mph. Four days in, there are still 150,000 Mainers without power, including at our house. Here, near the coast, trees are still down across roads and power lines in many places, and some towns are still at 100% dark. 

Being Mainers, we plug in our generators, help out our neighbors, and thank the weather gods that it's in the 50s rather than the 20s and that there's no snow or ice to add to the misery. We'll tough it out. 

This experience certainly brings new appreciation to what our fellow citizens in Puerto Rico are still enduring, and the degree to which the ability to flip a switch for power or turn on the tap for water or click on a website controls our lives. It's a real world wake-up call to realize that many of us spend our time obsessing about things that aren't as important as a warm and safe place to sleep, enough food to eat and healthy families and friends. 


Innovation and Entrepreneurship Can Fuel
Rural America
In our travels around the country, many in rural communities feel left behind by the changes in our economy. Employment in traditional industries is decreasing. In many regions, a demographic tsunami is coming in the guise of an aging population and decreasing workforce. Another universal theme is the dearth of high-speed Internet services.
Most all the regional and statewide economic development plans for rural regions, whether written by public or private sector organizations, identify these challenges and opportunities, and include a call for increased entrepreneurship and innovation. I'm not shocked at the inclusion of innovation and entrepreneurship: I've been advocating for and implementing the same thing for decades. But, it's surprising that these ideas are now mainstream.
Unfortunately, the action and implementation plans associated with this goal are still weak and nebulous, leaving a lot to be desired. Perhaps the reason for this is that it's difficult to know exactly what to do, especially in rural areas, where entrepreneurs and innovators are far apart, and not particularly visible.
So, I'm wondering, what would you like to know about how to implement innovation and entrepreneurship programs in your region? To respond, click HERE.Thanks in advance.

Startup CEOs with Too Much Power?
Entrepreneurship guru Steve Blank has a provocative piece in the Harvard Business Review that's worth reading. His thesis is that changes in how startups are funded and managed have led some CEOs to have too much power. Exhibit A: Former CEO and Founder of Uber, Travis Kalanick. You would think that when the allegations against him surfaced, Kalanick would have been gone. But he controlled the Board of Directors, and it took a while for the Board to decide, finally, that Uber needed to go on without him. Steve's thesis is that the decline of IPOs and less focus on management credentials means that fewer startup CEOs get replaced early on, and end up managing extremely large companies. His solution - more seasoned COOs and directors with public-company experience. Read the whole article HERE.
TrendWatching Innovation of the Day
For daily inspiration, look no further than a new daily email from TrendWatching called Innovation of the Day. Each item includes a description of a product or service innovation and asks a thought-provoking question about how it might apply to your business. (Sounds like Innovation Engineering Sparks to me!) Case in point, today's innovation is the decision by Gucci to stop selling or producing items made with animal fur by 2018. Considering Gucci's early embrace of fur, this decision to align themselves with customer's personal values is striking. TrendWatching's question is: Is there something you can (or should) fundamentally change about your company? Click HERE and chose Subscribe to get this email series.
Top 3 Innovation System Insights from 2017
Doug Hall recently posted about the top 3 learnings he had from the past year. First is that leadership is pivotal in the sustained success of innovation. He quotes the CEO of Bose who, when asked how often his mind and actions are focused on building, reinforcing and supporting a culture of innovation, said, "All of it. All the time. And I never plan to stop." Second, everyone needs more education than they think and than you think. The more you learn about innovation, the more you realize there is to learn. Third, it's the System, Stupid. The data clearly show widespread agreement about the need for innovation, but also that many managers don't know exactly what to do. As Dr. W. Edward Deming always emphasized, 94% of the failures are due to the system; 6% are due to the worker. We need to have a system that folks can follow, all the time. Read Doug's whole post HERE

How Innovation Leads to Economic Segregation
Talk about unintended consequences. A new study by Enrico Berkes and Ruben Gaetani finds that the level of patenting (a proxy for innovation intensity) accounts from more than half (56%) of the variation in economic segregation between cities. And, this same factor accounts for 20% of the increase in economic segregation that occurred between 1990 and 2010. This is fundamentally connected to the growing concentration of knowledge-based industries and occupations in cities. Richard Florida comments, "The same clustering of knowledge and talent that powers innovation and economic growth also generates the divides that tear us apart. Those divides have led to the anti-urban, anti-innovation, anti-immigrant backlash from the right and an anti-tech-industry backlash from the left." Read Florida HERE and the study HERE.

2017 Kauffman Index: Growth Entrepreneurship
The latest release of the Kauffman Index shows (thankfully) that the much-hyped decline in entrepreneurship that bottomed out in 2011 has ended and that growth entrepreneurship has fully recovered to pre-recession levels. What's also significant is that although venture capital continues to be highly concentrated in CA and MA, "other areas of the country have been flying below the radar, quietly growing their ecosystems and nurturing entrepreneurial activity in their backyards." Of course, I don't think the other places have been all that quiet, but many powers that be, such as Kauffman, continue to be tone deaf to the activity outside of major metropolitan areas on the coasts. If you only measure success by the level of venture activity, you are going to miss what's going on! The five large states with the highest density of growth entrepreneurs are: Virginia, Georgia, Maryland, Massachusetts, and Texas. Among the smaller states, the top five are Utah, Hawaii, North Dakota, Nevada, and New Hampshire. My home state of Maine ranks 16th among the small states, up from 20th. Read the 2017 Index  HERE.

Five Reasons Why Downtown Universities Matter
Years ago, Harvey Goldstein and I wrote a paper demonstrating the close link between research universities and regional economic development. A new report builds on this base to look at why downtown universities in particular are so important. The author, Scott Andes, suggests the five reasons why these universities matter for economic growth are:
  1. Research universities are essential for innovation and innovation is essential for economic growth. Long-run growth can occur only by inventing new things to sell or improving the quality and reducing the cost of existing products and services.
  2. Universities located in urban areas produce more patents, corporate partnerships and startups.
  3. Universities located within innovation districts build on existing urban assets.
  4. Downtown universities specialize in research.
  5. Downtown universities still have a lot of room to improve their outcomes.
Download the full report HERE.
Inclusive Competitiveness: A Moral Imperative
In direct response to concerns about economic segregation, you may want to pick up this book about inclusion and competitiveness. It is written by Jonathan Holifield, formerly with NorTech, a Northeast Ohio cluster development organization, a long-time advocate for the economic imperative of finding the assets hidden in our diverse population. Jonathan is also a former NFL player, attorney, and civil rights advocate, and brings a fresh perspective to innovation-based economic development. His book, The Future Economy and Inclusive Competitiveness, is available HERE

A study by Brookings suggests that metro areas that achieved inclusive growth shared a few common traits:
  1. They tended to add jobs in high-skilled traded sectors like advance business and professional services, information and manufacturing at a higher rate than the nation.
  2. They tended to add jobs in lower-paid types of work within these traded sectors.
  3. They balanced "traded-sector job growth with good-paying jobs in non-traded sectors like construction, logistics and health care. 
  4. They relied on traded and secondary sectors to fuel modest growth of local serving sectors like hospitality and retail that expanded employment opportunities for less-skilled workers.
Read Brookings HERE.

In This Issue - November 2017

Join Our Mailing List

Quote of the Month 
" If you do not expect the unexpected, you will not find it, for it is not to be reached by search or trail. "  

Open Offices
Do you hate open offices? I do. I can't concentrate. I can't think. I can't breathe. I thought it was just me. But new research finds there's a reason why many people find open offices difficult to deal with, but can work without a problem at a coffee shop. The simple reason is that in an open office, there's always the likelihood of interruption, while at the coffee shop, the noise becomes background sound, and you are not likely to be interrupted. The study suggests that the right level of background sound may actually boost one's creative thinking ability. Check out the article HERE

Who Will Get Amazon HQ2?
For the last six weeks or so, it's been impossible to get the attention of any local, regional, or state economic developer. They were all busy preparing proposals for Amazon's second headquarters. In the end, Amazon received over 280 proposals. Most are destined to fail, but the economic development community obviously felt that if they didn't try, it was tacit acknowledgement that they don't have the right product! 

The truth of the matter is that Amazon set out some criteria that many ignored. For instance, Amazon required proposals to be from metropolitan areas of at least 1 million residents. That didn't stop two places in Maine (with only 1.2 million residents statewide) from putting in proposals. Second, Amazon is looking for a specific parcel of land large enough for a 50,000 person headquarters. Third, it will cost regions to compete. There will be strings in the form of tax incentives. My prediction - the Washington, DC region, specifically Northern Virginia, will win. 

Metrics for Entrepreneurship Programs
Have you been wondering how to convince your stakeholders that your program is performing well? My book on evaluating entrepreneurial programs, written for the International Business Innovation Association (iNBIA), is available on their website. The basics apply to any economic development program. Check it out HERE.

What's In and Out in Proposed Tax Reform
In the process of developing their tax reform package, House Republicans have decided to exclude an important and effective tool, New Markets Tax Credits (NMTC), which have been instrumental in enabling many important rural economic development projects. According to the NMTC Coalition, " An analysis of . . . data between 2003 and 2011 shows that the NMTC delivered $3.5 billion in capital to non-metro census tracts, leveraging an additional $3.5 billion from other sources for a total of $7 billion in capital investment to over 600 rural businesses. These NMTC investments created more than 67,000 jobs, including nearly 47,000 full-time jobs and over 20,000 construction jobs." Read about this important program HERE
View our profile on LinkedIn

135 Maine Street, Suite A-183 · Brunswick, ME 04011 · 207.522.9028

Innovation Policyworks enables economic development officials at state, regional and local levels make better, data-driven decisions by providing expert research, analysis and recommendations. Our clients see innovation and entrepreneurship as critical elements of their economic development strategy, and are developing new programs or policies, and/or evaluating existing ones. 

Dr. Catherine S. Renault has been delivering innovation-based economic development results in rural states for more than 25 years, most recently as science advisor and Director of the Office of Innovation for the State of Maine. Cathy is currently working on cluster projects in Albany, NY and for the state of Maine.
   For a list of selected projects, see www.innovationpolicyworks.com/projects.