The World’s Largest Science and

Innovation Park

Egils MilbergsWashington Economic Development Commission

May 7, 2010Tuesday GroupWashington DC

V.1.2

A History of Innovation

COSTCO

Commercial

Airplanes

2007 Rank

Metro AreaTotal Score

1San Jose –Sunnyvale-Santa Clara, CA

100.0

2 Seattle-Bellevue-Everett, WA

46.4

3 Cambridge-Newton-Framingham, MA

45.2

4Washington-Arlington-Alexandria, DC-VA-MD-WV

41.8

5Los Angeles – Long Beach – Glendale, CA

40.2

6 Dallas – Plano -Irving, TX

21.8

7 San Diego – Carlsbad – San Marcos, CA

19.3

8 Santa Ana –Anaheim-Irvine, CA

17.7

9New York – White Plains – Wayne, NY-NJ

16.8

10San Francisco – San Mateo-Redwood City, CA

16.1

Geography of Knowledge Based IndustriesMilken Institute

4

Seattle –King County

Source: Sommers,Beyers,Wenzl,Industry Cluster Analysis, 2008

5

6

Geography of WA Unemployment (Mar. NSA)

A New Innovation Growth Curve

TIME

PR

OSP

ERIT

Y

We are here

1960s & 1970s

Advantage is Cost

Strategy is

“Make it Cheaper”

1980s & 1990s

Advantage is Quality

Strategy is

“Make it Better”

2000sAdvantage is Innovation

Strategy is

“Make something new”

Innovation is key to economic recovery

Over half of Fortune 500 and just under half of 2008 Inc. list began during a recession or bear market.

Dane Stangler, Kauffman Foundation

There is no better time likea downturn to innovate.

The risks inherent to starting a thriving business in today’s troubled waters are immense, but the rewards have never been greater.

The Commission’s Ten Year VisionWe should not fear to lead

Make Washington State the

most attractive, creative and

fertile investment

environment for innovation in

the world.

11

…, we can’t rest on our laurels, so

let’s commit today to grooming a

workforce and leaders who are

agile, creative, and embrace

innovation.Gov. Chris Gregoire

March 10, 2009

We must look over the horizon and prepare for the new economy that will emerge when this recession passes.

Commerce Secretary Gary LockeMarch 18, 2009

InvestmentEntrepreneurship

Talent

Infrastructure

GrowthEmployment ProsperityQuality of Life Competitiveness

Innovation Drivers

Innovation Outcomes

Innovation Ecosystem

Innovation Policy Framework

GSH

12

Innovation

Ecosystem

Education

Research

Entrepreneurs

Associations

Non-ProfitsGov’t

Capital

Business

Workforce Skills

Talent Challenge

13Egils Milbergs

Researchers and

entrepreneurs

create new ideas

Firm creation

and innovation

success

Transforming ideas

Into applications

No capital

Dead

ideas

No capital

Creating business

models

Dead

firms

Graphic concept adapted from

Dr. Charles Wessner, National Academies

Investment Challenge

Double “Valley of Death”14Egils Milbergs

Post “ICE” Age?Internal Combustion Engine

15Egils Milbergs

Smarter, Cleaner, Greener Infrastructure

WEDC 2010 Scorecard LegAction

Notes

Talent & Workforce

Retrain dislocated workers in high demand fields and occupations..

Deploy education and training resources to meet specific needs of employers

Sustain the capacity of our higher education system

Investment & Entrepreneurship

Expand STARS program and strengthen Innovation Partnership Zones.

Provide job creation incentives and integrated business services for small business.

Compete for Federal R&D funds in strategic areas.

Infrastructure

Provide tax increment financing and other tools for local investment.

Streamline the regulatory process for significant projects and small business

Develop state-wide energy strategy and plan.

Promote next generation broadband.

Apply economic development criteria to transportation projects.

New Model for Economic Development

Traditional Model Innovation Driven Model

Attract and retain companies Invest in talent, ideas and infrastructure

Jobs Quality of jobs, per capita incomes

Lowest cost of business inputs Higher value inputs, increasing productivity and outcomes

Top down economic development Bottom-up and organic growth

Competing regions: zero sum game Collaborating regions: value creation

Closed linear innovation system Open innovation ecosystem

Single disciplines, functions Multiple disciplines, integration

Locally linked clusters Globally linked clusters

Strategize Organize Operationize17

Source: Washington Technology Industry Association (WTIA)http://wtia.micromaps.com/

Emergent Innovation Ecosystems(illustrative portfolio)

SMART GRID/ ENERGY EFFICIENCY

CLOUD COMPUTINGRENEWABLE

ENERGY

GLOBAL HEALTHELECTRIC VEHICLEINFRASTRUCTURE

ADVANCED MANUCTURING

NEW MATERIALSHEALTH IT

MEDICAL DEVICESWATER RESOURCES/

ENVIRONMENT

LOGISTICS/FREIGHT MOBILITY

DEFENSETECHNOLOGY

FOOD PROCESSING

Global Health Ecosystem

Ecosystem

21

Innovation Ecosystems Evolve

Growth Node

Innovation Ecosystem

Nascent Cluster

Virtual Cluster

None or few firmsGrowth potential

Few to many firmsFast growthKey linkages

Virtualized functionsAccelerated

collaboration

Many nodesDense linkages

Network to Network

STARSIPZs

R&D

EIRsPatents

Incubators

InnovationAccelerators

Tax Incentives

Talent

Gap Funding SBIR

Aerospace

IT, gaming, simulation

Biomedical, Incubators

Clean Tech, Smart Grid, Biofuels

Defense

Biotech, Energy, Semi-conductors, Exports

Wine, Water

Life Sciences, Global Health

World’s Largest Innovation Park

Food Processing, Rail Innovation

Wind, Solar, Data Centers,

Adv. Mfg.

Marine

Food TourismMarine Energy

Agriculture,Composites

New Forestry

“Twilight”

Medical Devices

EnvironmentRemediation

Electric Cars

Clean IT

Extending the Innovation Ecosystem

PNWER GDP and PopulationIf PNWER were a separate country, it

would rank 13th in total GDP

Country GDP* 1. US 13,811,200 2. Japan 4,376,705 3. Germany 3,297,705 4. China 3,280,053 5. U.K. 2,727,806 6. France 2,562,288 7. Italy 2,107,481 8. Spain 1,429,226 9. Canada 1,326,37610. Brazil 1,314,17011. Russia 1,291,01112. India 1,170,96813. PNWER 1,051,841

*2007 GDP in $US Million

PNWER Region (GDP/Pop.)

State/Prov. GDP* Population

Wash. 311,270 6,468,424Alberta 259,900 3,585,000 Oregon 158,233 3,790,060B.C. 150,412 4,310,305Idaho 51,149 1,523,816 Sask. 40,340 1,008,697Alaska 44,517 686,293Montana 34,253 967,440 Yukon 1,767 32,714

Total 1,051,841 22,372,731

*2007 population & GDP in $US Million

25

Your view of the Pacific Northwest economy in the next 24 months?

A. Robust growth and

outperforming national

averages

B. Performance in line with

national economy trends

C. Underperforming in most

business sectors

D. Don’t know

43%39%

17%

0%0%

10%

20%

30%

40%

50%

26

Will innovation be more important in the next three decades than in the last three?

A. Yes

B. No

91%

9%

0%

20%

40%

60%

80%

100%

Yes No

27

Are there significant opportunities in cross border innovation and collaboration?

1. Yes

2. Maybe

3. No

74%

22%

4%0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes Maybe No (4)

28

Which areas offer the biggest opportunity for innovation collaboration?

1. Clean Energy

2. Information Technology

3. Health Services

4. Communications

5. Transportation/Logistics

65%

9% 4% 4%17%

0%10%20%30%40%50%60%70%

29

What is the major factor limiting Pacific Northwest’s innovation performance?

1. Schools lagging in science and math education

2. Government not doing enough to support technological innovation

3. Business not investing enough in technological innovation

4. Workers lacking skills to be technologically innovative

5. Don’t know

22%26%

17%

26%

9%

0%0%5%

10%15%20%25%30%

30

What primary skills will children need to drive innovation in the future?

1. Math and science skills

2. Creative approaches to problem-solving

3. Entrepreneurial and business skills

4. Knowledge of the world’s culture

4%

61%

22%9% 4%

0%10%20%30%40%50%60%70%

31

How effective are your innovation and R&D collaboration linkages with neighboring states/ provinces?

1. Absolutely great

2. Good

3. Fair

4. Needs more attention

5. Poor0%

4%

17%

43%35%

0%

10%

20%

30%

40%

50%

32

What is the biggest hurdle in forging productive collaborations in the PNW?

1. Disseminating awareness of opportunities

2. Overcoming cultural, political, institutional rivalry

3. Finding funds for collaborative projects and ventures

4. Removing specific policy and regulatory barriers

5. Adequately coordinating relevant stakeholders

5%

27%32%

14%

23%

0%5%

10%15%20%25%30%35%

States and regions can be powerful players in the innovation economy

• States, regions and smaller nations are:

– Large enough to:

• create intellectual capital

• build innovation ecosystem(s)

• connect globally

• respond to innovation opportunities

– Small enough for:

• shared vision and achievable outcomes

• trusted personal relationships

• effective governance

33

Considerations for organizing effective regional innovation ecosystems

• make innovation a clear and central mission• focus on outcomes and local, organic growth • enhance the visibility of regional resources• adapt policy to different economic structures• enable regional leadership• maximize results through collaboration• rationalize government program structure• creatively leverage public sector programs• measure performance and outcomes

Innovation Inputs

Talent

R&DPersonnel

STEM Proficiency

Education Pipeline

Workforce Quality

Lifelong Learning

InvestmentEntrepreneurship

R&D Intensity

InnovationCommercialization

Business Start-ups

Capital Access

InwardInvestment

Infrastructure

Transportation

Broadband

Energy

Business Climate

Sustainability

Innovation Performance

Business Performance

New Products

& Services

Productivity

Exports

Profitability

Market Capitalization

Public Impact

State GDP

Employment Growth

Standard of living

Income Distribution

State Revenues

The best way to predict the future is to invent it.