The Washington Innovation The Washington Innovation Economy Economy Recovery or Reinvention? Egils Milbergs Executive Director Washington State Economic Development Commission 1
Ten Year Vision • Make Washington State the most attractive, creative and fertile investment environment for innovation in the world as a means of achieving long term global competitiveness prosperity and economic opportunity for all the state’s citizens. www.wedc.wa.gov 2
Context "never allow a crisis to go to waste ," Rahm Emanuel $787 Billion $8+ = Federal Billion Innovation Stimulus State Crisis Deficit Or Opportunity? “Fasten your seat belts. Its going to be a bumpy night.” Bette Davis All About Eve, 1950 Washington Economic Development Commission 3 3
Shifting of Competitive Advantage Shifting of Competitive Advantage � 1960s & 1970s Advantage is Cost Strategy is “Making it cheaper” � 1980s & 1990s Advantage is Quality Strategy is “Making it better” � 2000s Advantage is Innovation Strategy is “Making something new” 4 WEDC 4
Nature of Innovation is Changing Nature of Innovation is Changing Linear Model Ecosystem Model Research Development Commercialization • Single discipline • Multidisciplinary • Hierarchical governance • Self organizing relationships • Closed system • Open innovation • Internal talent • Access talent everywhere • Controlled process • IP commons • IP hoarded • Customer centric • Product centric • Sense and respond • Forecasting demand 5 WEDC 5
The Double “Valley of Death” Transform ing I deas into Applications Creating Business Models Researchers and Entrepreneurs Create New I deas No Capital No Capital Firm Creation Dead and I nnovation Ideas Success Dead Firms Graphic concept adapted from Dr. Charles Wessner, National Academies 6
New Model for Economic Development New Model for Economic Development Traditional Model Innovation Driven Model Attracting companies Investing in talent and infrastructure Jobs Quality of jobs, per capita incomes Lowest cost of business inputs Higher value inputs, increasing productivity Focus on skills and single occupation Focus on learning and career flexibility Large corporations, economies of scale Entrepreneurs, agile businesses, free agents Top down economic development Bottom-up partnerships and organic growth Investing in technology inputs--Linear Investing in innovation outcome--Ecosystem Competing regions: zero sum game Collaborating regions: value creation game Closed innovation system Open innovation systems, networks Locally focused clusters Globally focused clusters Washington Economic Development Commission 7
WEDC “Make Washington State the most attractive, creative and fertile investment environment for innovation in the world” Vision Talent Investment & Infrastructure Entrepreneurship Grow talent in strategic Diversify R&D base, ignite Invest in smart, clean, and green industries and high demand local innovation and infrastructure occupations entrepreneurship Develop home-grown talent and Compete for federal R&D Funds Focus on infrastructure for innovation continue attracting talent globally Expand STARS Program and Leverage transportation stimulus Coordinate economic and workforce entrepreneurs in residence development Implement “”smart utility” services Strengthen Innovation Partnership Reduce K-12 drop-outs Zones Accelerate transition from oil Strengthen post-secondary pipeline Create innovation awards Deploy next generation broadband Adult learning skills Implement real-time innovation Enhance air and marine facilities dashboard Market life-long learning, discovery, Ensure infrastructure financing tools creativity and entrepreneurship Increase access to risk capital Streamline regulatory process Facilitate job transitions Define criteria for innovation projects 8 Strengthen apprenticeship programs
Economic Development R&D Education Funders Companies Government Innovation Ecosystem
Deepening Relationships in Washington’s Deepening Relationships in Washington’s Innovation Innovation Ecosystem Ecosystem IPZs IPZs ADO ADO ADO ADO ADO ADO ADO 10
allows investment in leads Economic necessary Innovation Business to for Growth and Drivers Performance Competitiveness Talent • Supply of middle skills Increased, Better • S&E attainment Employment • Verbal, math, science proficiency • Income growth • Educational attainment Competitive Companies • R&D personnel • Employment • Life long learning • Market share • Reduced income disparity Investment • Productivity growth • Trade growth Wealth Generated Entrepreneurship • University R&D • High impact firms • GDP by state • Private R&D intensity • Profitability • Standard of living • Intellectual property generated • Company startup Increased State Revenue Investment • Equity investment • Aligned policy & investment • Federal investment • State revenue generated • Foreign capital attracted Infrastructure Economic Growth and Vitality Transport • Freight • Information delivery Metrics for Washington state • Commuting Business Climate • Cost of business • Business attractiveness
The Innovation Ecosystem Shifts the Debate Policymaking Tends to Focus on Alternative is Single Discrete Issues With Narrow Innovation Policy with a Constituencies Broad Constituency Seed Capital Business Start-ups Entrepreneurship Regional Federal R&D Economic Transportation Development Workforce Energy Training Trade Technology INNOVATION Intellectual Transfer Cultural Assets Property STRATEGY Taxes & Manufacturing Health Regulations Higher Broadband Education Business- K-12 University Offshoring Education Collaborations 12 WEDC
Summary � No one factor independently leads to superior economic performance--rather it is the interaction of policies and processes that lead one region to outperform others. � Many are well known—sound macro fiscal and monetary conditions, flexible labor markets, access to capital. � What is new is the growing role of knowledge, human talent, entrepreneurship, technology investment and rise of innovation ecosystems. � And other states and nations are giving innovation top level policy attention as the driver of future growth. � Implication: A Washington innovation strategy is needed to come out of the “Great Recession” more stronger, innovative, competitive and prosperous. 13 WEDC
It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change . — Charles Darwin Washington Economic Development Commission 14 14 14
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