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How Do You Turn Innovation Into Jobs?

How Do You Turn Innovation Into Jobs?. Driving U.S. Competitiveness through Regional Clusters. Karen G. Mills kmills@mmpgroupinc.com. Council on Foreign Relations November 28, 2006. How does innovation translate into jobs?. Basic Research. Invention. Job Creation & Economic Growth.

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How Do You Turn Innovation Into Jobs?

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  1. How Do You Turn Innovation Into Jobs? Driving U.S. Competitiveness through Regional Clusters Karen G. Millskmills@mmpgroupinc.com Council on Foreign Relations November 28, 2006

  2. How does innovation translate into jobs? Basic Research Invention Job Creation & Economic Growth Commercialization Innovation • R & D • Marketing/Product Innovation • Small and Midsize Business • Clusters

  3. Current competitiveness strategy focuses on the inputs Macroeconomic Levers Inputs Economic Ecosystems Fix Healthcare Fix Patent System Infrastructure fixes and relies on the market environment to transform the economic ecosystem

  4. The U.S. is a job machine Millions Source: Bureau of Labor Statistics, U.S. Department of Labor It creates and loses over 7 million jobs each quarter

  5. Small and medium-sized firms create most new jobs Source:Michael Porter, Competitiveness Index 2006 and Office of Advocacy, U. S. Small Business Administration

  6. Larger enterprises have been losing share of employment Source: 2003 County Business Patterns

  7. The emerging innovation led firms will be the smaller traded companies U.S. Employment by Firm Size and Type of Cluster Illustrative Traded 30% Type of Cluster Local 70% Small 51% Large 49% Size of Firm Source: Michael Porter

  8. Small and medium sized firms are the key to growth and don’t receive enough focus

  9. Cluster strength is correlated with prosperity GDP per Capita 2002 (€) Clusters in E-10 New Member Countries Number of stars per region 2000 Source: Ketels, Clusters in the E-10 new Member Countries, Page 36

  10. Cluster example—composite technology and Maine’s boat building industry The North Star Alliance

  11. Maine Built Boats

  12. North Star Alliance: The four pillars Workforce Development Research And Development Market Development Capital and Business Support • Branding Maine • Built Boats • Maine Technology • Institute • Venture Capital • Access • Community College • Apprenticeship • Programs • Connection to • workforce boards • University of Maine • Maine Composite • Technology Center

  13. Clusters Example:The California Wine Cluster Winemaking Equipment Barrels State Government Agencies (e.g., Select Committee on Wine Production and Economy) Grapestock Bottles Fertilizer, Pesticides, Herbicides Caps and Corks Growers/Vineyards Wineries/ Processing Facilities Grape Harvesting Equipment Labels Public Relations and Advertising Irrigation Technology Specialized Publications (e.g., Wine Spectator, Trade Journal) Tourism Cluster California Agricultural Cluster Educational, Research, & Trade Organizations (e.g. Wine Institute, UC Davis, Culinary Institutes) Food Cluster Sources: Michael Porter, California Wine Institute, Internet search, California State Legislature. Based on research by MBA 1997 students R. Alexander, R. Arney, N. Black, E. Frost, and A. Shivananda.

  14. The Houston Oil and Gas Cluster Upstream Downstream Upstream Downstream OilTrans-portation Oil Retail Marketing OilWholesale Marketing OilTrading OilRefining OilDistribution Oil & Natural GasExploration & Development Oil & Natural Gas Completion & Production GasTransmis- sion GasGathering GasTrading GasMarketing GasProcessing GasDistribution Oilfield Services/Engineering & Contracting Firms Equipment Suppliers (e.g. Oil Field Chemicals, Drilling Rigs, Drill Tools) Specialized Technology Services (e.g. Drilling Consultants, Reservoir Services, Laboratory Analysis) Subcontractors (e.g. Surveying, Mud Logging, Maintenance Services) Business Services (e.g. MIS Services, Technology Licenses, Risk Management) Specialized Institutions (e.g. Academic Institutions, Training Centers, Industry Associations) Source: Michael Porter

  15. Clusters in Developing CountriesThe Ecuadorian Shrimp Farming Cluster Hatcheries Energy(electric util, fuel) Banking & Finance Insurance Fertilizers Farms Security Food Processing Equipment Construction Processing Packaging TechnicalAssistance Freezer Containers Export Transportation &Shipping Fishing Cluster Source: Michael Porter

  16. The Norwegian Maritime Cluster Fisheries andFishingEquipment Ship owners Shipyards Ship brokers and agents Boat builders Shipping MaritimeEquipmentSuppliers Maritime Services Banking and Finance Ship equipment Maritime lawyers Maritimeauthorities Underwriters and maritime insurance OffshoreExploration and OilProduction Maritime R&D Classification societies Maritime consultants Maritime education Fixed platforms Pipelines Processingequipment Norway has 0.1% of the world’s population, represents 1.0% of the world’s economy, yet accounts for 10% of world seaborne transportation Source: Michael Porter, Sven Ullring, presented to M.I.T.

  17. Evolution of ClustersThe Role of Anchor Companies in San Diego Biotech HybritechSan Diego Gen-Probe 1983 IDEC1985 Clonetics1985 Pac Rim Bioscience1985 Gensia1986 Cortex1986 Immune Response 1986 Biovest1986 Viagene1987 Lipotech1987 Ligand1987 Corvas1987 Amylin1987 Cytel1987 Pyxis1987 Vical1987 Biosite1988 Medmetric1989 Forward Ventures 1990 Kimmel Cancer Inst. 1990 Dura1990 Columbia HCA1990 Birndorf Biotech-nology 1990 Genesys 1990 Nanogen 1991 Cypros1992 Novadex1992 Sequana1992 Somafix1992 Kingsbury Partners1993 Gyphen1993 Cyphergen1993 Chomagen1994 DigiRad1994 Novatrix1994 Combi-Chem1994 Coxixa1994 Applied Genetics1994 Urogen1996 GenQuest1995 First Dental Health1995 Triangle Phar-maceuticals 1995 Source: Michael Porter, CONNECT, University of California, San Diego

  18. Innovation hubs attract new and growing companies Scientific Stars and New Biotechnology Enterprises 1990 Example Source: Zuckeretal Human Capital and Biotechnology Enterprises; Page 295 Also, Salter / Martin, The Economic benefits of publicly funded basic research, Jaffe, Real Estate Effects of Academic Research

  19. Policy Recommendations

  20. Karen Gordon Mills Karen Gordon Mills is a Founder and Managing Director of Solera Capital, a private equity fund based in New York City. She has been in the industry since 1983 and is an expert in investing and growing companies in traditional U.S. based industries such as food, textiles, media and industrial components. Some of these companies and brands include Telex Communications, Mrs. Fields Cookies, Bruce Hardwood Floors and Annie’s Macaroni and Cheese. Her background also includes consulting for McKinsey & Co. and product management at General Foods. Ms. Mills received her A.B. from Harvard University in Economics in 1975 and her MBA from Harvard Business School in 1977, where she was a Baker Scholar. She currently serves on the Boards of the Scotts Company and Arrow Electronics.

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