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OPENING REMARKS Susan Crawford National Economic Council The White House Ms. Crawford said that the Obama administration was “committed to the idea of regional economic clusters and their role in economic growth and innovation.” Together with colleagues at the Office for Science and Technology Policy, she said she had worked to initiate an interagency innovation group. The meetings had been attended by many representatives of key federal agencies, especially the Department of Commerce, and marked by bilateral discussions about how best to advance the administration’s innovation agenda. She praised the new Commerce secretary, Gary Locke, for whom “innovation is a core pursuit.” It is, however, “a lot to get your arms around, because it’s nothing in particular and everything at once,” and would require a great deal of work. In her remarks, she said, she would examine the role of clusters and the role that federal policies can play to support them. Innovation, she said, “cannot happen top-down alone, or bottom-up alone.” The government’s role, she suggested, may be to provide a kind of trellis, adding that “biological and gardening metaphors come up all the time in discussing clusters.” She supported the use of evaluation metrics, saying that these might be considered both fertilizer and “a kind of goal. What kinds of outcomes do we want to see from these clusters?” she asked. “It’s all extraordinarily difficult, the idea of providing targeted strategic funding that leads to a sustainable effort.” A Cluster Can Begin with “Something Successful on the Ground” She said that an effective cluster “seems to require the preexistence of something successful on the ground that needs to be encouraged.” She continued with the gardening metaphor, saying that the green shoots from a great university might need some fertilizing, and perhaps some trellis structure if they are to find productive uses. Like a living process, innovation has significant features that must be supported: it is always 35

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36 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY continuous, evolutionary, and inclusive. “It’s not just about invention,” she said, “but about dispersing those inventions into the world.” While universities can be at the heart of innovation clusters, she said, so too can private firms, which bring the dual approaches of fierce competition and collaboration. “We’ve seen that the success of Silicon Valley has a lot to do with the easy flow of information and people between and among firms. Cooperative attitudes can allow these informal networks to emerge.” The cooperation among firms and universities creates knowledge spillover, which is essential to economic engines. It allows “iterations and repeated modifications so that nothing is stuck. This is again biological, very dynamic, moving constantly.” She said that it is easier to describe successful clusters after they happen than to predict or create them. Silicon Valley, she notes, is exhaustively studied—the quality of its elements and how they work together. But such analyses are of little help in showing the federal government how it can best facilitate the next Silicon Valley. Coordinating Regional and Federal Initiatives She then made a suggestion, and asked the participants’ help. She said that more than 200 programs across the federal government are involved to varying degrees with local and regional economic development. A challenge, she said, is to make the best use of these scattered programs. She proposed selecting two or three elements of those programs to create a one-stop shop, or “mall of programs,” to help clusters move through their life cycle. This was not a suggestion to create another federal agency, but might only require “the work of a few purposeful people with White House assistance in coordination.” Such a plan, she said, might make funding strategic, targeted, and effective. Regional programs would know where to direct queries and how to reach out for funding. The question she posed was how to select the most appropriate candidate for a pilot effort. “No one wants to see centralized control of all 200+ programs,” she said. “The whole system would come to its knees.” She said that a handful of programs “could be drawn into this easy availability for regions that have their act together and are looking for better interaction with government.” She noted that her suggestion reflected the administration’s priority to improve the interface between government and its constituents. “The effort is on transparency,” she said, “so people see how government works and can gain access to it.” She added that cluster policy should mimic the qualities of clusters themselves—for example, the policy should gain efficiency by targeting efforts, breaking down silos, and combining elements of agencies that overlap. Another crucial element of policy, she said, is to recognize the balance between top-down decree and bottom-up leadership. “It’s so

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37 SUMMARY OF PRESENTATIONS important to find that local leader who makes things go,” she said. “The person who is tightly networked and understands how community works.” She closed with an additional question for the symposium: What outcomes can we expect from healthy clusters, and what metrics should be used to evaluate them? “It seems to us,” she said, “that outcomes should be tied to national priorities. This will give clusters a greater chance of success.” She cited as an example the administration’s engagement in clean energy policy and reducing the nation’s carbon footprint. Clusters focusing on those areas would be more likely to find support in federal agencies, as would clusters helping to lower the costs of health care and increasing access to improved educational resources for both young people and adults. What outcomes in cluster policy, she asked, should be desirable in helping to achieve these and other objectives? “That’s my introduction,” she concluded. “We are all in this together. Our doors are open. I’m very interested in engagement with you and through the Academies to you.” Discussion Jane Siegel of the International Trade Administration, Department of Commerce, recalled the example of a group in San Antonio, Texas, which had attempted in 2004 to develop an innovation cluster. She said that many people needed language training to participate fully, and asked whether a bottom-up competition with proposals on how to use federal money would be considered. Ms. Crawford replied that the idea of competition was a priority for this administration, but that any cluster proposals should have clear goals and outcomes. “There are risks that you end up dribbling money all around and not understanding what you’ve gotten out of it,” she said. “Be very purposeful. Clusters to what end? Competition might be a great idea, and certainly that notion is in the air.” Scott Sklar of the Stella Group said that he worked with medium- sized and small businesses that were trying to develop clean energy technologies. He said that these firms benefited from the new emphasis of the administration on clean energy and encountered many excellent government federal programs, but that these programs did not cooperate with each other. He asked what might be done to better blend those programs with business and scientific expertise “so they can be more agile and hand off to one another.” Ms. Crawford replied that the Small Business Administration was working closely with the National Economic Council and with science and agriculture agencies. “This is exactly the direction we want to take,” she said. “We don’t want the science ideas over here and business over there. We want to get people to work together.”

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38 GROWING INNOVATION CLUSTERS FOR AMERICAN PROSPERITY Ed Penhoet of the Academies STEP Board added that it is “hard to overstate” the importance of a university in a cluster. He noted that much of the nation’s biotechnology activity is located in five regions—San Francisco, Boston, San Diego, Research Triangle Park, and Seattle—and that each of them includes one or more major research universities. “One of our challenges,” he said, “is to think about the timing of the university’s role. NIH funding started in a significant way in 1950, but biotech did not grow significantly until 25 years after that. A challenge is to find ways to stimulate innovation from university research that don’t have a 25-year lag.”