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Notes from Innovation Policyworks
I recently had the occasion to review all the regional and statewide economic development plans, public and private, written for Maine in the last five years. The good news is that all of the plans identified some of the same challenges and opportunities for the state, and many agreed on the broad outlines of work to be done. For instance, nearly everyone now sees the demographic tsunami coming at us in the dual guises of an aging population and decreasing workforce. Another universal theme is the dearth of high-speed internet services, especially in rural areas.
For me, the shock was the also universal call for increased entrepreneurship and innovation. I wasn't shocked at its inclusion: I've been calling for the same thing for literally decades. What was shocking was 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. I'm hosting a panel at the International Business Innovation Association (iNBIA) conference in late March to learn from people that are implementing programs to support entrepreneurs in innovation hubs in rural areas. As a group, the panelists seem undeterred by rural challenges. Just Do It seems to be their motto - maybe it's time for Maine to do the same.
Unfortunately, the state budget currently being debated is looking in another direction. The Governor and his staff zeroed out funding for the state's incubators, a grand savings of $170,000. We're working on getting this put back or moved over to MTI who has the funds to support entrepreneurship programs. More later!
Cathy
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Measuring Entrepreneurial Ecosystems
Two years ago, the Kauffman Foundation first laid out some thoughts about how to measure entrepreneurial and innovation ecosystems, an important metric to consider when implementing programs designed to strengthen and augment the economic strength of a region. Unfortunately, many of Kauffman's initial suggestions did not line up well with existing data, especially at regional and local levels, making their ideas difficult to translate into action. Now, JumpStart and Cleveland State University have released a paper with more detailed and pragmatic recommendations for measuring this important dynamic. The authors find that measures of density and connectivity are the two most meaningful metrics, and they translate this into three indicators: innovation, centers of commerce, and small business hubs, with measures such as patents, bachelor's degree attainment, entrepreneurial finance, high-tech density, traded industries, high growth firms, university presence, business environment, immigrants, share of employment in new and young firms and population flux. This paper does operationalize its metrics, which is useful, although the suggestions for measuring the connectivity of a place are still hampered by severe data shortages. Read the paper
HERE.
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What Makes Workforce Development Work?
Given that so many employers say they can't find the workers they need, and the large number of workers who have dropped out of the workforce, the workforce development system is being tested more today than ever. McKinsey has written an article detailing what makes workforce development programs that work for everyone. They suggest a five step approach:
- Define geographic assets and identify target professions. What high-growth sectors have worker shortages or high turnover? It's best when employers are part of this discussion.
- Deliver Return on Investment to employers and workers. Track metrics before, during and after training and show results.
- Support comprehensive, demand-driven training methods. Involve employers from the start. Use "boot camps" or other practical, competency-based methods. Make training accessible by providing transportation, childcare, equipment, and clothing as necessary.
- Assess and prepare learners before they start training. Make sure trainees have the necessary pre-requisites, and that they know what the job will be like before they start the training.
- Coordinate the workforce-development process centrally. Siloed solutions create extra cost, sow confusion and waste time and money.
McKinsey's article is
HERE.
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Three Trends Shaping Entrepreneurship
The latest data from the Kauffman Foundation finds that the state of entrepreneurship in improving in terms of new firm creation, job creation and optimism by entrepreneurs. However, certain indicators of entrepreneurial dynamism are still in a long-term decline. Kauffman suggests that there are three trends worth watching:
- New demographics of entrepreneurship. US entrepreneurs are still largely white and male, even while the population is older and more diverse. Certain demographics groups continue to be underrepresented in the entrepreneurial economy, especially minorities, women and adults without formal education.
- New map of entrepreneurship. Entrepreneurship has spread beyond the traditional confines of Silicon Valley and Boston, yet it still remains primarily an urban phenomenon. In 1977, two out of every ten startups were in rural areas. Now it's one out of ten.
- New nature of entrepreneurship. While technology has made starting a company easier and cheaper, it has also cut into the job gains associated with revenue growth. However, new industries open and become accessible through new technologies.
More HERE.
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Big Win for Ohio Third Frontier
Ohio created the Third Frontier program in 2002 and voters backed it with very large bonds in that year, 2005 and 2010. The Third Frontier has invested heavily in Ohio universities and in entrepreneurial support organizations. In January, McKesson Corp, one of the three biggest US healthcare product corporations announced the acquisition of fast growing Columbus software company CoverMyMeds for $1.1billion. JumpStart, the nonprofit group that administers Third Frontier funds for Northeast Ohio, invested $500,000 in the company, so the exit is considered a huge win for them and for the Third Frontier. CoverMyMeds automates the process for pharmacies to obtain prior authorization from insurers before filling prescriptions.
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Family-owned Firms more Innovative
It's counterintuitive, really. You would think that family owned firms would be stodgy, slow to change, and conservative. It turns out this stereotype is wrong. New research shows that family-owned firms are among the most innovative in their industries. Interestingly, family owned firms are more parsimonious with their R&D dollars, but their long-term relationships and deep knowledge of their industries allows them to develop more creative ideas, products and process with less. Another finding was that family-owned firms have a culture that empowers employees, leverage deep trust relationships, so that more people are contributing to the generation of new ideas than in more siloed, publically owned companies. Read the research
HERE.
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"
The world is but a canvas to the imagination."
Henry David Thoreau
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I'm Not Moving: Millennials are Staying Put
While jobs are increasingly concentrated in our largest cities, it appears that workers are less inclined than in the past to move for work. In fact, Americans are moving at the lowest rate on record, according to the US Census Bureau. The primary driver is that Millennials are moving significantly less than earlier generation of young adults. Only 20% of Millennials moved in 2016, compared to 27% of Baby Boomers in 1990. While Millennials are less likely to be married, own a home or have a child, they are still moving less. It appears that the labor market is to blame, as is their significant student debt which is helping postpone home buying, a prime reason for earlier generations to move.
More
HERE.
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Intellectual Property- Intensive Industries Pay More
Patents, trademarks and copyrights are the tools used to protect and codify new innovation. As such, they are indicators of creativity and innovation in US industry. US intellectual property-intensive industries employ at least 27.9 million works in 2014, nearly 30 percent of all US jobs, according to the US Patent and Trade Office. They also found that workers in these industries earned wages 46 percent higher than the average in non-IP intensive sectors, even when average educational attainment was the same. Since intellectual property is based on new, unique ideas, the importance of innovation and creativity to economic prosperity is demonstrated by these statistics. Here's a link to the
REPORT.
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Rise of the Rest,
Part II
Steve Case, founder of AOL and of venture firm Revolution LLC, has been putting his money where his mouth is. The firm has invested $840 million in startups outside of CA, NY and MA, and Case himself has invested an additional $4 million in pitch-competition winners from his Rise of the Rest Tour of places outside of traditional venture capital hotbeds. The Tour came to Maine in October 2015. Rappaport was the winner of the Portland, ME pitch competition. In a recent interview with the Wall Street Journal, Case noted, "We need to figure out ways to make sure this next wave of entrepreneurship is more inclusive, and that includes regional inclusivity and also different people."
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