After studying innovation centers across the USA and in other countries there are a number of similarities around critical success factors. While I find most regions have many of the building blocks in place, there are key differentiators why some regions develop faster than others.
Critical Success Factors
- Regional Economic Development Plan: A shared agenda and prioritization is key for regional development. Most regions plans only encompass the existing state of programs and infrastructure. Many on constrained to a time horizon of an existing administration. A even fewer look at global trends in terms of what will be required regionally for businesses to have a competitive advantage in the global market. One common patterns that lead to these short comings exist around regions expecting this to be government lead. While gov/state involvement is a key player, many agencies are not funded or equipped to actually facilitate the overall strategic planning. Another pattern is small private entities spun up to support regional planning, but they tend to focus on the planning for the region internally and a best only looking at the local area they exist in. Two best practices have emerged, in the planning space. The first is the gov/state creates a private entity with public and private funding. A governance board is created spanning gov, corporate, academic, NGOs, & etc, to provide broad representation. Keep in mind broad means regional, not city or state scope of representation. This organization needs to not only lead the regional planning, but build out the next generation of business services and branding to help the region compete successfully. Teams of practitioners will be required to bring industry, market, and technology expertise into the creation, building and operations of the services. Large partnership networks spanning the globe will be engaged in the offerings. The scale of these organizations grows into the hundreds of people as the work is never done and they are in 24/7 business with not only their region’s organizations, but at the heart of global B2B business. A second option can also be pursued by regions that are trying to catch-up to the success of and competitive disadvantage they are experiencing. That is to employ one or more large scale existing economic development companies. These firms have the size and talent, plus are leading major projects in multiple regions. They have the network of global contacts to bring immediate B2B and investment into a region. While the first option is preferable for creating a long term asset to the region, the second can be combined to get a jump start and eventually evolve a regional organization over time.
- Government investment: Most of the most successful models, while not government lead, did get started through government endorsement and funding. Having state endorsement, commitment, and initial funding was consistently been the key to trigger corporate leadership and investment.
- Corporation Leadership & Investment: Corporations truly have played the leading role in developing the competitive advantage for regions. Until they step up the region will struggle to establish global competitive advantages around their inherent clusters. Investment takes the path of many forms. From pure capital to fund innovation center, mentoring start-ups, providing commercialization services, international partnership, internships & training, etc.
- Co-Opition: Corporate lead consortiums collaborating to build global advantage. Many times this can be cluster based, but there is also great possibilities in adjacent and cross industry collaborators. Top innovation centers are producing joint ventures and joint patents through providing B2B collaboration opportunities with partnerships around the globe. Start-ups at the centers are maturing quicker with less time and cost, plus the mentorship and commercialization support of the corporate members. Universities and other academic and research institutions can bring their experience to bare at the nexus of these innovation centers.
- New Investment Models: New investment models are required regional to support and attract start-ups, talent, and external venture capital. This span a full gambit of philanthropic, consortium fund of funds, members & subscription models. These models all serve different purposes in the innovation centers supporting a host of integrated programs. I’ll detail out each of the types and how they fit together in a future blog. While philanthropic is probably the smallest form of investment for the center model, in the beginning philanthropic support is critical to launch the centers, build the teams, and put the operational capabilities in place. Regions need to adopt a pay forward investment mentality to create a new competitive playing field that attracts invest, innovation, talent, partners, etc. The differentiation of pure venture capital and early stage funding is only a part of regional development. The capabilities and assets of the region must be developed in parallel to the direct investment in innovation itself.
- Proven Patterns: Many regions have tried to build the start-up community, but the success regions with innovation centers where focus on true economic development. Building a model that centered on corporate co-opitition and collaboration supported by universities and government agencies creates a support systems that can hugely benefit start-up funding, acceleration, incubation, and commercialization. Too many approaches have been start-up centric and simply tossing out a few events, contests, and a few small accelerators in a region has not lead to cultural shift in the region and it eventually runs out of energy.
A theme running through all of these success factors is Leadership. Government agencies need to lead the call for regional development but ultimately it is the Corporations that need to learn to collaborate through co-investment in the capabilities of the region. They are the ones that need to change what is possible for their cluster, adjacent clusters, and start-up ecosystem to thrive and become the brand that attracts more opportunity to the region. The key role for the government is the public call to action, cross administration commitment to regional development, empowerment of an independent entity to drive the business, and lastly the basic capital to attract other investment to start. In every model of public & private funding, the public money starts the investment and is quickly dwarfed by the extent of private money that sustains the model.
There are leaders and followers in every market. There is no need to invent the wheel. These models and centers already exist around the world and can be replicated. The challenge is the leadership cannot. It must be found within.