Institute For The Future

The Future of Technology-led Economic Development

The American economy has long relied upon technological innovation to drive its economy. Today,basic investment in science and technology is once again taking center stage,as a cure for both our economic and environmental ills.

The signs of this shift are everywhere. For the first time ever, a professional scientist will craft our energy policy, as Secretary Steven Chu expands investment in clean, affordable, renewable energy. An eight-year ban on the use of federal funds in embyronic stem cell research is no more. The economic stimulus package injected money into basic R&D, biomedical research facilities and essential broadband infrastructure.

 

Turning Science into Growth: Existing Tools

As the federal government injects billions of dollars into federal labs and research universities, the challenge for economic developers is to capture these investments in ways that promote sustainable clusters that can innovate and create value and jobs over the long-term. Already, university research managers are grappling with the challenge of where this injection of funding, which may turn out to be a one-time windfall, will leave them after it runs out in a few years.

For the last fifty years, the main strategy for turning science and technology into local economic growth were research parks and incubators. The first generation of science parks in the United States, Stanford Industrial Park in California and Research Triangle Park in North Carolina, became a model that’s been copied thousands of times around the world. At their heart, these were real estate plays, using low-cost land to create a low-cost home with easy access to research universities for technology-driven firms. Over time, it’s been so successful that parks like Research Triangle now actually have higher land values than surrounding areas.

In the 1980s, the emphasis shifted from attracting corporate branch plants and offices to creating and growing new startup firms. Instead of just subsidizing land, incubators provided everything from seed funding to bookkeeping for theirtenants. The thinking was two-fold: dating companies was a zero-sum game playing regions off against each other, and growing firms locally would be more “sticky” and likely to produce secondary benefits. Essentially, this was the Silicon Valley model, seeking to create a rich regional mix of mobile labor, entrepreneurs and clusters of firms. Almost universally, incubators have been positioned around universities, in the hope of leveraging their research and talent.

Challenges to Existing Strategies

Today, however, research parks and incubators are starting to show their age as an economic development tool. Tectonic shifts in the way scientific research and technological innovation happen are leaving them behind, and pioneering new models of collaboration that will require us to rethink how we create places for these activities. The next generation of technology-based economic development strategies will need to address a dramatically different world from the one in which research parks and incubators were born and thrived.

At the International Economic Development Council Leadership Summit held this past January in Tempe, Arizona, I shared preliminary results of a fifty-year forecast on the future of technology-based economic development that the Institute for the Future is conducting for the Research Triangle Foundation of North Carolina. As one of the early pioneers of the research park model, Research Triangle Park is now confronting the need to reinvent itself for the next fifty years, and is supporting this study as a way to provoke a strategic discussion with peers around the world about the role of place in tomorrow’s networks of innovation.

Based on interviews with experts in innovation and entrepreneurship, scientific collaboration, university research management and urban design and development, we have identified external trends that will challenge our existing models for technology-based economic development in coming years:

The Biological World. If the 20^th century was defined by physics, the 21^st century will be defined by biology. Biomedical clusters will grow according to a very different set of rules than IT industries did.

Global, Networked Science. Science is becoming globalized, which means that local clusters cannot exist in isolated. To succeed they need to beconnected to other innovation hubs.

The New Scientist. The lone genius is rapidly becoming a thing of the past, as young scientists pioneer massively collaborative work styles. Science 2.0 will shake the institutional foundations of science, from journals to patents to university departments.

Big Science, Lightweight Innovation. As the federal government pours money into basic research, companies are stripping their R&D organizations to the bone, instead favoring lightweight and open innovation strategies. The inevitable disconnect means a need for new systems that can take raw breakthroughs and prepare them for commercialization.

New Public Agenda. Turning federal dollars into jobs fast is the order of the day. But it’s not clear if research parks and incubators can deliver at the pace demanded.

The Persistence of Place. While science is taking full advantage of the web, place is more important than ever for the creative collaborative work that can’t be virtualized. But the way young innovators use space will bemore dynamic, ad hoc and flexible.

Universities Transformed. Today’s leading research universities treat intellectual property like corporations of yesterday, while the most innovative companies are opening up and becoming more like yesterday’s universities. As universities shift roles from ivory tower to economic engine, fundamental flaws in technology transfer mechanisms will become all too clear.

Towards a New Model: Building Regional Knowledge Ecosystems

The trends described in the preceding section are global trends, which means there is little that economic developers in any one community can do to shape the speed or scope of how they play out. But there is one more important trend, the growth of regional approaches to technology-based economic development. Unlike those, the rise of technology regions is a trend that you can help shape.

We are just beginning to see the outlines of this approach, which involves many partners – research parks, large research-driven companies, startups, universities, investors and professionals – working together to develop regional knowledge ecosystems. These networks consist of a number of elements, someformal and other informal:

• Research partnerships between universities and companies
• Social networks of entrepreneurs,professionals and amateurs
• Investor cliques and clubs
• Virtual networks and their members both inside and outside the region

Regional knowledge ecosystems are different from clusters, because they aren’t limited to a single industry, and companies aren’t necessarily the most important pieces. In a sense, for regional knowledge ecosystems, firms are the way that network expresses its ideas about what technologies ought to be commercially developed. For instance, when enough people in Silicon Valley begin experimenting with a new technology, inevitably a whole array of firms launch to develop it further. The firms emerge from the ecosystem, not the other way around.

The strength of regional knowledge ecosystems is that they can adapt faster than national systems, which are dictated by federal politics, and they can scale up successful enterprises much more effectively that individual research parks or municipalities. This is one reason why major policy think tanks in Washington – the Brookings Institution, the Center for American Progress, and the Information Technology and Innovation Foundation – are all advocating that federal research grants be targeted to regional partnerships of federal labs, universities, companies and entrepreneurs.

 

What Can I Do?

The challenge of building regional knowledge ecosystems is enormous, and will not be accomplished without significant, sustained and coordinated investment and effort by every level of government over the next decade. But individual agencies and organizations can start to prepare for, and the foundations for future growth by taking steps today:

Get Foresight. Start a conversation in your community, and connect it to others in the region, about the long-term opportunities and threats to technology-based development. By thinking systematically about the future, you’ll be preparing yourself to make decisions today.

Recognize Dilemmas. In all professions, but especially economic development, challenges rarely appear as well-defined problems with simple solutions. Successful managers recognize dilemmas as challenges that need sustained attention.

MapYour Networks. The most interesting things going on in your region happen between institutions, but you probably haven’t measured them. Map the pipelines of people, ideas and money moving through. When you talk about these networks, you can be specific about what they are and what they do.

Sell Community, Not Place. The attractiveness of successful regional knowledge ecosystems like Silicon Valley is not the place, but the community and social and business networks there. Find the success stories (including the bold failures!) and connect them to your local strengths and assets.

Build for Flexibility. If anything defines success to today’s economic climate, it’s flexibility, resilience and agility. Regional partnerships provide more choices for you in designing programs and create buffers to rapid economic shifts. Instead of new buildings, think about how to make technology spaces mobile, temporary, open and accessible. Why should incubators only be for startups and not students? Be flexible, even if that means not being permanent.

Be Bold With Universities. Universities are likely to remain the hub of all successful regions, but that doesn’t mean they can’t be equal partners. As their importance in economic development grows over the nextdecade and beyond, they have the potential to place their interests above your community’s.

Further Information

The full results of the future of science parks forecast will be released at the XXVI Annual World Conference of the International Association of Science Parks in Raleigh, North Carolina, June 1-4, 2009. We hope to see you there! For more information please visit www.iasp2009rtp.com