Innovation Centers – Part II

Reflection1After 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.

Blog Tag - Reflection Blog Tag - Best Practice

Innovation Centers – Wisconsin’s Success – Part I

screenshot 1

This month I had the chance to visit the one of the Innovation Centers in Milwaukee Wisconsin.  The Global Water Center is the first of many cluster-focused centers launched in Wisconsin over the past few years.     Wisconsin has taken the lead in development of these centers in partnership with federal gov, state gov, and leading corporations.   They now serve as a model for other states that seek to replicate their success.   Below I have condensed many of the learning’s from visiting the center to pass along.   Wisconsin’s success vastly exceeded all expectations.

screenshot 3

Goals:

  • Create regional advantages for competitive advantage
  • Be a global leader to attract investment and relocation to region
  • Have a global brand
  • Be first to market to set the standard
  • Be first to build to capitalize on government, academic, and investor funding sources before it is common practice

Key Drivers / Enablers:

  • Strategic plan in place
  • Public and Private partnership for funding
  • Cluster focus / Footprint in place / Leverage regional assets & expertise / multiple parallel tracks
  • Consortium engagements of cluster companies at the heart of economic model
  • Maturity of strategy and approach is attracting increasing support and investment ( gravity )

Creation of WEDC (5 year journey from idea to regional advantage)

  • Created 2011 from the State Department of Commerce as a separate 501c3 built to operate like a business focused on the development of the states innovation ecosystem
  • It does not report to the state or legislature, but has board members from state, industry & academia
  • Organization is already over 100 employees and growing focused on regional development and building global network
  • State funding created the organization building initial team, planning, building network of sponsors, and operational capabilities
  • Once state dollars where committed, companies rapidly joined and sponsored build out of services and facilities
  • Once underway they qualified for Federal grants across a broad spectrum: Innovation, job creation, and urban revitalization
  • Corporate & Startup tax incentives from state
  • Initial corporate sponsors where contributing $8M – $10M each for the build out of the centers and industry parks
  • Within a year they were raising $30 for each $1 the state contributed
  • Within three years they were raising $70 for each dollars the state contributed

Initial Pilot Center

  • Water Council – industry association formed years ago to build out network of leading companies globally
  • Water Tech 1 Building / Global Water Center Building is 2 yrs old; 100,000 sq/ft – 7 floors of Class A space
  • Water Tech 2 Building / Designed with construction to start this year; Class A space
  • Water Annex Building / Class B Incubation space where selected startups coming out of the Accelerator graduate to
  • Water Industry park / Corporations building facilities from HQs, Labs, and Manufacturing near center

Results to Date

  • Global Water Center (Water Tech 1) was opened in 2013 with Class A space, high tech labs, auditors and meetings rooms. By 2015 the seven floor center was completely full with over 40 corporations offering in the facility with dedicated staff
  • Regional, National, and Foreign demand has required Water Tech 2 to launch construction to house more corporations
  • Many corporations are building out facilities in the industry park
  • Corporations from Netherlands, Korea, China, Singapore, France, etc.  Looking to join center and build international corridors for start-ups to be funded to come over
  • Foreign academic institutions and governments are sending delegations looking for partnerships
  • Several large corporations, who were early skeptics, have already relocated their headquarters into the industry park with considerable expense because of the competitive advantage they see in participating
  • MN companies are participating – Wisconsin is now the leader in the water cluster
  • 8+ academic institutions are members providing many levels of training in water science, entrepreneurship, etc.
  • Corporations are funding industry events
  • Venture capital and angel networks are now integrated; major investors like JP Morgan are participating
  • They are attracting new venture capital from other regions
  • In three years over 19 joint patents have been created by B2B collaboration
  • The start-up accelerator hosts cohorts of start-ups in the facility with services supported by the center, academic partners, and corporate partners
  • Start-ups that are selected from the cohorts are sponsored into the new Water Annex that is a new Class B office facility
  • Many other adjacent industries are now coming into the region
  • Revitalize Walker point district in Milwaukee over $211M invested in surrounding neighborhood + job creation
  • Many of the neighborhood buildings are being renovated to host a variety of business
  • Lifestyle business of food, entertainment,  shopping and housing are spring up all around the area
  • They are attracting young talent from the regions
  • The model is working so successfully they are already launching 8+ more centers with others being planned
  • Other states and countries are seeking them for help to build the model in their regions

Real Estate Investments around a single center:

Real Estate Investments

Centers in development

  • Global Water – initial pilot launched 3 years ago in Milwaukee
  • Energy & Power – Milwaukee
  • Aviation & Aerospace = Oshkosh
  • Advanced IT – Madison
  • Bio Science – Madison

Food & Beverage – Milwaukee

Centers in planning / consideration phase

  • Internet of Things – Madison
  • Agriculture – TBD
  • Insurance / Financial – Madison

Academic & Professional Institutions already providing services

  • University of Milwaukee
  • University of Madison
  • University of Whitewater
  • Marquette University
  • School of Fresh Water Science / new $50M facility built in MKE / 1 of 3 in USA
  • Multiple Law Firms
  • Multiple IP Firms
  • Multiple Account Firms

Wisconsin advantages – from their perspective

  • Wisconsin has tremendous assets in industries, education, national resources and culture
  • Wisconsin’s culture is more progressive and collaborative – planning & investing forward for future competitive advantage
  • Wisconsin has a regional economic development plan & shared agenda in place and evolving
  • Wisconsin has removed tenure from state law; academic institutions are evolving their business model and generate value to the ecosystem
  • Wisconsin will be the leader in multiple clusters as a global brand
  • Leadership

Key Learning’s

  • State commitment and basic investment was the critical trigger for corporate and federal funding.
  • The state created an independent business to create the ecosystem centers – WEDC
  • They built a 100+ person business to create centers and create the partnerships
  • It was corporate leadership through participation, planning, and funding that actually made it a reality.   The leading companies of the region, to establish Wisconsin as the Global Center for Water, invested millions of dollars
  • The centers were built as businesses for accelerating business & competitive advantage; they are already leveraging a 70:1 investment ratio.  Industry is now leading the state’s economic development.
  • While they may be already 5 years ahead in formation from Minnesota, Wisconsin is accelerating rapidly into multiple clusters simultaneously.   This process will go much faster than the building out and selling of the original concept.  In another 5 years they will be relatively 15 years ahead.

Take a closer look at the extensive facilities.

Images from Tour:

https://www.pinterest.com/davidiwilliams/cheval-economic-development/