by Christine Hansen for MDBizMedia
DBED Secretary Christian Johansson listens as roundtable experts weigh in on building Maryland's innovation economy.
Like many states across the country, Maryland recognizes that in order to compete and succeed in the global economy, it has to attract global talent, grow organically, invest in high performing companies and provide the necessary infrastructure for growth. But developing a strategy on how Maryland can accomplish those goals is a daunting task. On Friday, May 20, DBED Secretary Christian Johansson convened a dozen area thought leaders over lunch at the Silver Spring Civic Building to discuss the best directions in which Maryland can approach the new innovation economy for prosperous economic development.
Getting Great Output
Rob Atkinson, President of The Information Technology & Innovation Foundation, a non-partisan research and educational think tank, believes that Maryland – and the country as a whole – should invest in government-funded university research and business-funded university research.
“No matter how good Maryland is – and Maryland is good: it has all the right assets and all the right pieces in place – it will be very hard for the state to thrive unless we have a robust national policy that gets it right,” Atkinson said.
His organization, which issued a report on the topic, aims to help policy makers at the federal and state levels better understand the nature of the new innovation economy. The think tank has a book coming out in January 2012 called The Race for Global Innovation Advantage and Why the U.S. is Falling Behind.
“Increasingly, what we’ve seen around the country is that lots of states are getting this and putting money into innovation based investments – up to $5 billion dollars – up from maybe a billion a decade ago,” Atkinson said. “But one of the challenges for states is translating this into real results. This is a particular challenge for Maryland. Maryland has great inputs — but not so great outputs.”
Maryland ranks third in the State New Economy Index but 33rd in Entrepreneurial Activity. The State also ranked second overall in the Milken Institute State Technology and Science Index, but 42nd in business starts.
Atkinson cited Utah as a U.S. example of how their investments are creating technological output.
“Utah is able to take their inputs and crank them out into new businesses and new entrepreneurs, licenses and patents. This tells me this isn’t some magical thing – that you don’t have to be an M.I.T. or a Caltech to make this happen,” Atkinson said.
Rob Atkinson, President of The Information Technology & Innovation Foundation, believes that Maryland - and the country as a whole - should invest in government-funded university research and business-funded university research.
Atkinson said that his think tank has also seen that states, like Michigan, are placing venture capitalists right in the universities.
“They are not somewhere in some office park, they are housed right in the university. It’s too early to tell whether that model has worked, but it is an interesting new way of thinking,” he said.
Swedish-born Johansson was pleased to hear Atkinson cite Sweden as a model regarding incentives. Sweden, Atkinson says, has begun tying a portion of their higher education funding to results. If a university doesn’t produce results, then the University gets less funding. Canada, he said, has restructured their R&D tax credit to give a bonus credit of you’re doing collaborative research in a university or federal lab. If you’re a small business in Canada, he said, and doing collaborative research in a university or federal lab, you’re eligible for a 55% tax credit.
Entrepreneurs Drive Economic Development Outcome
Erik Pages, President of EntreWorks Consulting, an Arlington, Virginia based economic development consulting and policy development firm, said that the way innovation and technology becomes economic development outcomes is through entrepreneurs and new companies. He encourages states to provide resources to create more entrepreneurs, so that it also reaches out to the less populated areas.
“A lot of states have very sophisticated business help lines that help new businesses and entrepreneurs get through the process of a start-up,” he said.
Linking small businesses into corporate or government agency networks or supply chains has an almost immediate bang to the buck, Pages said. He cited a survey done by an organization in New York that found that once a small firm gets linked in a corporate supply chain, after two years it gets a 250 percent growth rate on an annual basis. Pages also said that most small businesses aren’t export ready – but if they get out to a trade show, or get involved in a national trade or regional network, they are much more likely to enter export markets. “States that invest in their small businesses and entrepreneurs – and improve access to services – will drive their economic development further than those who don’t,” Pages added.
Kenneth Poole executive director of the Center for Regional Economic Competitiveness and President of the Council for Community and Economic Research takes notes during the discussion.
Changing the Mindset
“We are the number one public education system in the country and we have held that for the last three years. We are number one per capita in research, and number two in total research dollars. A lot of things are here in Maryland– but it’s been mentioned a number of times that culturally, as a country, we are programmed not to be entrepreneurs. How do we de-program ourselves from that way of thinking?” Secretary Johansson asked the roundtable.
Much to the delight of Secretary Johansson, Sweden was again cited as a model for how to change mindsets on entrepreneurship. Pages suggested that in order to change the mindset of what an entrepreneur is and how to create an entrepreneur driven economy, the state has to approach as it if it were a public service campaign.
“In Maryland, the image of entrepreneurship is very technology heavy – it’s largely associated with the high-tech and biotechnology industries,” Pages said.
“I think you almost have to democratize the message for lack of a better term, and treat it as a public service campaign – and get it out on bus kiosks if you have to. Sweden has done a good job of this, in terms of messaging and strategizing to the general populace, in showing that they can be an entrepreneur.”
Steve Dubin, President & CEO of Martek Biosciences (Nasdaq: MATK), a start-up biotechnology company in Columbia, said that the State should publicize entrepreneurial success stories.
“Celebrating the success of innovation and entrepreneurship will naturally incentivize people to start something on their own,” he said.
His organization received an innovation of the year award, which helped his company obtain sponsors and ultimately helped him launch new products. His company, which started out as an incubator in 1985, was recently acquired by DSM for $1.1 billion.
Atkinson suggested that the State create an innovation award to be granted to the entrepreneurs and start-up companies across Maryland to help publicize entrepreneurship in Maryland.
Investing in the Future
Thought leaders from the roundtable take notes on the discussion.
Kenneth Poole, executive director of the Center for Regional Economic Competitiveness and President of the Council for Community and Economic Research, pointed out that the State should continue funding community colleges and offering courses for the biotechnology, information technology and healthcare industries.
Steve Silverman, Economic Development Director for Montgomery County agreed, also suggested state and local leaders shape higher education courses according to the needs of the key industries.
In the end, the group agreed that the State must learn to bolster its assets to create results.
“We all know that this can take a long time. The biggest charge for all States is not how successful you are at importing growth – even though that is important to everyone in economic development – it’s how successful how you are at providing an environment that grows the next big companies,” Johansson said.