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Egils Milbergs

Executive Director

Washington State Economic Development Commission

The Washington Innovation Economy

Recovery or Reinvention?

Ten Year Vision

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• Make Washington State the most attractive, creative and fertile investment environment for innovation in the world as a means of achieving long term global competitiveness prosperity and economic opportunity for all the state’s citizens.

www.wedc.wa.gov

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$787 BillionFederal Stimulus Innovation

$8+ Billion State

Deficit= Crisis

OrOpportunity?

"never allow a crisis to go to waste,"Rahm Emanuel

3 Washington Economic Development Commission

“Fasten your seat belts. Its going to be a bumpy night.”Bette Davis

All About Eve, 1950

Context

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Shifting of Competitive Advantage

1960s & 1970s Advantage is CostStrategy is “Making it cheaper”

1980s & 1990s Advantage is Quality Strategy is “Making it better”

2000s Advantage is InnovationStrategy is “Making something new”

WEDC 4

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Nature of Innovation is Changing

WEDC 5

Development

Linear Model Ecosystem Model

Research

Commercialization

• Single discipline• Hierarchical governance• Closed system• Internal talent• Controlled process• IP hoarded• Product centric• Forecasting demand

• Multidisciplinary• Self organizing

relationships• Open innovation • Access talent everywhere• IP commons• Customer centric • Sense and respond

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Researchers and Entrepreneurs Create New Ideas

Firm Creation and Innovation Success

Transforming Ideas into Applications

No Capital

The Double “Valley of Death”

Dead Ideas

No Capital

Creating Business Models

Dead Firms

Graphic concept adapted from Dr. Charles Wessner, National Academies

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New Model for Economic Development

Traditional Model Innovation Driven Model

Attracting companies Investing in talent and infrastructure

Jobs Quality of jobs, per capita incomes

Lowest cost of business inputs Higher value inputs, increasing productivity

Focus on skills and single occupation Focus on learning and career flexibility

Large corporations, economies of scale Entrepreneurs, agile businesses, free agents

Top down economic development Bottom-up partnerships and organic growth

Investing in technology inputs--Linear Investing in innovation outcome--Ecosystem

Competing regions: zero sum game Collaborating regions: value creation game

Closed innovation system Open innovation systems, networks

Locally focused clusters Globally focused clusters

Washington Economic Development Commission

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Talent Investment & Entrepreneurship

Infrastructure

Grow talent in strategic industries and high demand

occupations

Diversify R&D base, ignite local innovation and

entrepreneurship

Invest in smart, clean, and green infrastructure

Develop home-grown talent and continue attracting talent globally

Coordinate economic and workforce development

Reduce K-12 drop-outs

Strengthen post-secondary pipeline

Adult learning skills

Market life-long learning, discovery, creativity and entrepreneurship

Facilitate job transitions

Strengthen apprenticeship programs

Compete for federal R&D Funds

Expand STARS Program and entrepreneurs in residence

Strengthen Innovation Partnership Zones

Create innovation awards

Implement real-time innovation dashboard

Increase access to risk capital

Focus on infrastructure for innovation

Leverage transportation stimulus

Implement “”smart utility” services

Accelerate transition from oil

Deploy next generation broadband

Enhance air and marine facilities

Ensure infrastructure financing tools

Streamline regulatory process

Define criteria for innovation projects

“Make Washington State the most attractive, creative and fertile investment environment for innovation in the world”

WEDC Vision

Education

EconomicDevelopment

Companies Government

Funders

Innovation Ecosystem

R&D

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Deepening Relationships in Washington’s Innovation Ecosystem

IPZs

ADO

ADO

ADO

ADO

ADOADO

ADO

Talent• Supply of middle skills• S&E attainment

• Verbal, math, science proficiency• Educational attainment• R&D personnel• Life long learning

InnovationDrivers

BusinessPerformance

EconomicGrowth andCompetitiveness

allows investment in

leadsto

necessaryfor

InvestmentEntrepreneurship• University R&D• Private R&D intensity• Intellectual property generated• Company startupInvestment• Equity investment• Federal investment• Foreign capital attracted

InfrastructureTransport• Freight• Information delivery• CommutingBusiness Climate• Cost of business• Business attractiveness

Competitive Companies• Market share• Productivity growth• Trade growth• High impact firms•Profitability

Increased, Better 

Employment• Income growth

• Employment• Reduced income disparity

Increased State Revenue• Aligned policy & investment• State revenue generated

Wealth Generated• GDP by state• Standard of living

Economic Growth and VitalityMetrics for Washington state

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The Innovation Ecosystem Shifts the Debate

WEDC

Federal R&D

Offshoring

Entrepreneurship

Workforce Training

K-12 Education

Higher EducationBroadband

Business- University

Collaborations

TransportationRegional

Economic Development

Taxes & Regulations

Intellectual Property

ManufacturingHealth

INNOVATION STRATEGY

Policymaking Tends to Focus on Discrete Issues With Narrow Constituencies

Alternative is Single Innovation Policy with a Broad Constituency

Energy Trade

Cultural AssetsTechnology

Transfer

BusinessStart-ups

SeedCapital

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SummaryNo one factor independently leads to superior economic performance--rather it is the interaction of policies and processes that lead one region to outperform others. Many are well known—sound macro fiscal and monetary conditions, flexible labor markets, access to capital.What is new is the growing role of knowledge, human talent, entrepreneurship, technology investment and rise of innovation ecosystems. And other states and nations are giving innovation top level policy attention as the driver of future growth.

Implication: A Washington innovation strategy is needed to come out of the “Great Recession” more stronger, innovative, competitive and prosperous.

WEDC

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It is not the strongest of the species that survive, nor the most intelligent,

but the ones most responsive to change.— Charles Darwin