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Building innovation ecosystems: global and regional factors John Sibley Butler July 12, 2011.

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Presentation on theme: "Building innovation ecosystems: global and regional factors John Sibley Butler July 12, 2011."— Presentation transcript:

1 Building innovation ecosystems: global and regional factors John Sibley Butler July 12, 2011

2 How "Great Cities" Become "Great" Through Innovation, Technology Transfer and Economic Development John Sibley Butler Faculty of the McCombs School of Business Faculty of the College of Liberal Arts Director The Herb Kelleher Center and The IC 2 Institute The University of Texas at Austin

3 The Science of regional development & innovation The Science of regional development & innovation Lessons from Ancient economies Regional lessons of the Ancient World

4 Where Are the Most Successful U.S. Clusters? It depends on who you ask.

5 Technology Clusters According to Madison Economic Development Media Del Rey Silicon Hollow Silicon Forest Silicon Gulch/ Silicon Hills Silicon Village Silicon Vineyard Silicon Gulch Silicon Valley Multimedia Gulch Silicon Island Silicon Beach Digital Coast Silicon Desert Cyberchella Valley Silicon Mesa Silicon City Silicon Prairie Telecom Corridor Silicon Freeway Biotech Beach Silicon Bayou Silicon Beach Silicon Swamp Telecom Valley Silicon Triangle Silicon River Automation Alley Silicon Tundra/ Silicon Valley North WebPort Silicon Island Silicon Alley Silicon Valley Forge Philicon Valley Silicon Holler Silicon Mountain Silicon Seaboard Silicon Dominion/ Silicon Plantation E-Coast Cyber District Silicon Hill Silicon Necklace Silicon Sandbar Dot Commonwealth Silicon Mountain Silicon Snowbank Silicon Plains Silicon Glacier Silicon Orchard Silicon Island Silicon Rain Forest

6 Regional Clusters According to Institute of Portland Metropolitan Studies Seattle - Software Portland - Semiconductors - SME/EDA - Display - Computers Silicon Valley everything! San Diego - Communications Austin - Semiconductors - Computers - SME Salt Lake City - Software - Medical Devices - Storage Technology Sacramento - Computers Minneapolis - Computers - Medical Devices Boston - Computers Research Triangle Park - Software Denver - Telecommunciations - Satellite - Storage Atlanta - Database - Telecommunications Phoenix - Semiconductors

7 United Kingdom House of Commons Report on What is Needed for Biotechnology Clusters Strong science base Entrepreneurial culture Growing company base Ability to attract key staff Availability of finance Infrastructure Business support services and large companies in related industries Skilled workforce Effective networks Supportive policy environment

8 Silicon Valley: A “new” experiment

9 Silicon Valley: Mother of All Clusters Anna-Lee Saxenian A region of networks - Anna-Lee Saxenian

10 Dominance of Silicon Valley in VC Silicon Valley consumes almost 1/3 of total V.C. investments in the U.S.

11 Types of Industries in Silicon Valley IT industries, followed by Bio-Medical are dominants.

12 Other Technology Regions Seattle, Boston, Denver and Austin successfully attracted technology companies during the boom – and these areas are facing longer and steeper busts than cities with more diversified economies Cutting-edge tech hubs have to reinvent themselves every cycle. Such reinvention leads to life and death (creative destruction). This natural cycle can be... brutally painful to workers in certain sectors of the economy Ernie Goss, Creighton University

13 Employment Growth in the Information Industry in Six U.S. Regions The six regions follow similar patterns of growth and decline The downfall of San Jose, CA (Silicon Valley) is significant

14 Key NanoCenters Austin/Dallas.Houston, TEXAS Texas Nanotech Initiative UT-Dallas Rice Univ Zyvez Richard Smalley Center for Nanospace Technologies Start-up Cluster 5 Metropolitan New York and New Jersey Columbia Univ Nanotech Initiative New York University Highly educated workforce Industry-Academic Partnerships Financial Community Nanobusiness Alliance 4 Boston, Massachusetts Harvard University Mass Institute of Technology Start-up Cluster 6 Chicago, Illinois Northwestern Univ Chicago Nano Venture Capital 2 National Labs Michigan Silicon Valley, California > 50 Small Tech companies Technology-focused Infrastructure Academic Agenda Talent Pool Venture Capital Culture of Innovation Toronto Southern California, Los Angeles, Orange County, San Diego 30 Small tech companies National Research Facilities 4 major academic centers Lower costs of business Upstate New York Washington State North Carolina Ohio New Mexico = Small Times Magazine “Hot Spot” = Small Times Magazine “Places to Watch”

15 Albany Nanotech Albany NanoTech is a global R&D center on the SUNY Albany campus Partnership between state, City, IBM and numerous other local, national and transnational corporations The Albany NanoTech Complex currently has a net asset value in excess of $125 million and will exceed $500 million within two years Research park and incubator for nanotechnology “Build it and they will come” model of economic development

16 §TNI is a state-wide effort to bring nanotechnology companies, researchers, and funding together to create an environment conducive to the rapid commercialization. §Serves to promote Texas nanotechnology achievements and attract start-ups, capital and talent to Texas. §Funds Chairs at University of Texas at Dallas. §Regional Chamber of Commerce Model § “Nanotechnology is entering hyper-growth phase, with targeted programs in Pennsylvania and the northeast, and will most likely also see efforts in Illinois, California, and Washington. If we don't take the initiative now, we will lose the opportunity.” Texas Nanotechnology Initiative

17 Regional Clusters: Beyond Technology Dominated Paradigms The study of Regional Clusters and Regional Development has over emphasized the central role of technology & Venture Capital Also of central importance are the same concepts key to Technopolis Quality Hard and Smart Infrastructure Supportive Business Environment Education and Training Attracting and Retaining Talent Entrepreneurship: Business, Civic, and Social Regional Quality of Life Regional Networking and Collaboration – Leveraging assets to overcome challenges

18 Technological Innovation Market Innovation Creativity & Learning Organizational Innovation Academic/Business/Government Market/Customer Manufacturing Creativity & Learning Organizational Immigrant Entrepreneurship Civic Entrepreneurship Social Entrepreneurship Technological Entrepreneurship Entrepreneurship/Innovation needs to happen in a range of organizations and communities at the regional level Inside Outward Inward Overall

19 Education/Training is the keystone University state-of-the-art technology research and education and –Business know-how –Global ties and talent –Quality of life, sports, museums, entertainment, a learning environment –Attract and retain the “Creative Class” Colleges, Vocational, K-12

20 Two Basic Types of Knowledge/Technology Transfer to Commercial Applications private sector federal labs universities consortia corporate labs process application R&D/Mfg. Marketing/Sales spin-out technologies technology incubator private sector federal labs universities consortia commercial application 2 1 start-up company

21 State Government Support for education ? Support for research Supportive context for economic development Competitive tax rates Competitive infrastructure Targeted Programs –Advanced Technology Program (1987) –Technology Development & Transfer Program (1993) –Governor’s Council on Science and Biotechnology Development (Jan. 2002) –Nano ManTech Alliance (Oct. 2002) –Texas Enterprise Fund (2003) $295 Million $55 M to recruit biotech $40 M retain SEMATECH ($200 M 5 years) $8.5 M Home Depot – City $7.1 M Tax rebate/10 years – 850 jobs $50-$60,000/year

22 Local/Regional Government is increasingly important ED planning and quality of life –Austin’s music & life style: KEEP AUSTIN WEIRD –K-12 education - computers in schools/digital divide –Parks - Barton Springs –Downtown Development - CSC Competitive rate structures Quality civil/hard infrastructure – light rail and bike trails – Wireless Hubs Forum for Civic Entrepreneurship and International activities discussion/collaboration/cooperation/synergy

23 But Excellence in any one or all these sectors is not sufficient!

24 Networks 1st and 2nd Level Influencers Leadership and vision Personal and professional Regional, national, global High credibility and trust Inspire implementers Cross all segments of the Technopolis Wheel

25 Support/Networking Groups are very important Austin has at least one networking event every day with cultural/sport/recreation events on every weekend. People get networked! Chamber of Commerce Chamber of Commerce Business and community groups Business and community groups Professional associations Professional associations Entrepreneurial/Industry Entrepreneurial/Industry Associations Associations The Austin Technology Council The Austin Technology Council

26 Technopolis/Cluster: Critical Components Build on Regional Strengths & Assets University/Centers of Excellence Industry: small, medium & large Finance: Government, VC, Angel, Self-Funded Effective Knowledge/Technology Transfer Science Park (s) ? Incubator (s) ? Quality of Life & Diverse/Tolerant Culture Hard & Smart infrastructure Talent” Grow, Retain, Recruit “Creative Class” Entrepreneurship: Business, Civic, Social Global Partnerships

27 Thank You Questions?

28 In the mid-1980s a few visionaries representing Austin’s academic, business, and government sectors were key opinion leaders/champions who acted on the belief that Austin could be a globally competitive high tech region – In the late 1980s Austin was most known for “see through” buildings and a depressed economy - The area was losing its entrepreneurial & technology talent. Why all the national and global interest in the Austin Model

29 Within 10 Years Austin was Branded as Austin #1 - The Best U.S. Cities for Business – Top Five Wealth Creators (Fortune, November 23, 1998) Austin #1 - Top 15 U.S. Cities for Entrepreneurship (Forbes magazine, Vol 165, #13, May 29, 2000, p. 137) Austin #2 - Top 10 U.S. Cities: Creativity Index (Richard Florida, The Rise of the Creative Class, 2002) Best Place for Business and Careers (Forbes ) #1 for Economic Vitality (Wall Street Journal, 2007) #3 Most inventive city due to patent activity (Wall Street Journal 2007

30 Major and Less Visible Wins 1983 MCC (and DELL, Nt’l Instruments, GSDM, Whole Foods, others…) M (Major R&D activity) 1988 Sematech (Applied Materials and more) IBM Austin transition from Selectric Typewriter (1966) to major R&D/Innovation Center IC² Institute (Thanks George, Ray, Laura, Fred, and Fellows) –1987 IC² Technopolis Conference –1988 IC² Technopolis publications –1989 ATI and Texas Capital Network –1991 Austin Entrepreneurial to Software to Technology Council –Many National and International Visitors to Austin and to IC2 Institute, Visiting Scholars: Russia, China, Japan, Korea, Taiwan, Brazil, Chile, Germany, France, Netherlands, Norway, (100+), etc.

31 City, Chamber of Commerce, and IC 2 Institute & Four Strategies for Regional Economic Development – UT-Austin central to ALL 4 strategies Industrial Relocation Retention and Expansion Newer Institutional Alliances/Partnerships for Leveraged Economic Development Building New Companies

32 Winning MCC was a key catalyst Quality of Life –primary and secondary education –affordable housing –low crime –recreational and cultural amenities State and local government support Existing high-tech industry and a supportive business environment Overall cost of doing business Public/Private Cooperation and a Can-Do Attitude ======================= And something NEW (Admiral Inman): A MAJOR emphasis on Pipeline of Talent: Attract, Grow, Retain Access to a local university that had the desire and potential to be world-class in targeted areas, especially – electrical engineering – computer science

33 “Creating the Technopolis” & the Austin Model Austin provided a definitive model for the technopolis framework and research. The KEY role of influencers and networks IC² Institute researchers continue to adapt this framework as they explore methods and practices that will transform and sustain different regions worldwide.

34 Knowledge/Technology Transfer & Entrepreneurship at the Regional Level Universities, Research Institutes, Consortia Small, Mid-Sized, and Large Firms State and Regional Government Talent Capital Know-How Successful Value-Added Technology Adoption Technology COMMUNITY Market Need: Established, Emerging, and New to the World

35 Broad-Based Regional Entrepreneurship

36 Austin, We Have a Problem (Thanks Pike – Civic Entp!) "Analysts Suggest Spansion's Austin Plant up For Sale" (AAS, Sept. 6, 2008) “NY Pushing for Tech Leadership Despite Budget Woes” (AAS, Oct. 10, 2008) “Cypress to Close Chip-making Plant in Round Rock" (AAS, Sept. 3, 2008) “Freescale to Cut its Worldwide Workforce" (AAS, Oct. 31, 2008) “AMD cutting 500 workers, 3 pct of staff " (AAS, Nov. 5, 2008) Central Texas has lost 27,800 manufacturing jobs over last 7 years resulting in an ~$8 billion negative impact on the GDP of Central Texas & a 30% decline in manufacturing employment.

37 Central Texas FABs Austin Round Rock 35 X X X X X X X Motorola/Freescale Mos AMD Fab AMD Fab AMD Fab Cypress Round Rock1986 AMD Fab Motorola/Freescale Mos Sematech1988 Motorola/Freescale Mos AMD Fab Motorola/Freescale Mos Samsung 200mm Fab Samsung 300mm Fab Motorola/Freescale Mos FabYearYear OpenClosed 1974Total Fabs: 1Total Jobs: 2,000 X 1975Total Fabs: 2Total Jobs: 4, Total Fabs: 3Total Jobs: 6, Total Fabs: 4Total Jobs: 8, Total Fabs: 5Total Jobs: 10, Total Fabs: 7Total Jobs: 14, Total Fabs: 7Total Jobs: 14, Total Fabs: 8Total Jobs: 16, Total Fabs: 9Total Jobs: 18, Total Fabs: 10Total Jobs: 20, Total Fabs: 11Total Jobs: 22, Total Fabs: 11Total Jobs: 22, Total Fabs: 9Total Jobs: 18, Total Fabs: 6Total Jobs: 12, Total Fabs: 7Total Jobs: 14, Total Fabs: 6Total Jobs: 12,000

38 Austin: Industry Clusters Historic (?) –Semiconductors –Software –Computers & Peripherals (DELL) Emerging (?) –Digital Entertainment (Games, Multimedia, Film & Music) –Clean Energy –Wireless –Biosciences/Medical –Nano-technology

39 Central Texas Assets Transferable Technical Talent Leading Research University Entrepreneurs & Supporting Corps. Community Collaboration Emerging Platforms Nanotechnology Bio-Medicine Clean Technology Digital Entertainment Can Austin do it again?

40 COMMUNITY/COLLABORATION COMMERIALIZATION COMMUNITY INVESTMENT INNOVATION CORPORATE

41 The Technopolis Wheel: Gone Global & Digital – Emph. Knowledge Innovation Networks (Thanks Debra and Dave S.) GLOBAL NETWORK S of Networks

42 IC² Institute: A Catalyst for Accelerated Technology-Based Growth Past and Current Austin & Texas (Houston, San Antonio, Waco, San Angelo) NASA: Sunnyvale, CA and Houston, TX New Mexico: Albuquerque - Sandia, Los Alamos Tennessee: Oak Ridge South Carolina: Charleston and NOAA Florida: Orlando China: Shanghai, Beijing, and Fuzhou Taiwan: National Science Council Japan: Kansai and Sendai Russia: Moscow (MPEI and ISTC) Mexico: Monterrey, Matamoros-Brownsville Brazil: Curitiba, Rio Poland: Lodz India Canada: Moncton Chile Korea Egypt Portugal

43 A Continuing Regional Challenge That is Increasingly Global Mechanisms Metrics Process KT Creativity GovernmentIndustry Innovation Education/Training Foundations (Old Wealth)

44 Portugal: Learning Networks Based on Proportional Reciprocity (Thanks Manuel and Pedro) Pole D Codified Pole LD Codified Wetware Pole MLD Codified Wetware Codified Tacit Knowledge

45 Knowledge, Innovation, and Economic Growth Creation and distribution of knowledge Wealth and job creation Technological innovation and development Shared Prosperity

46 IC² Institute: The New Experiments Tomorrow Up-Dates from –John on New Experiments & –TechBA –ATI –MSTC –Global Commercialization Group –Portugal Program

47 Thank You Discussion


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