Luncheon Address

Gary Locke
Secretary of Commerce

Introduction:
Ralph J. Cicerone
National Academy of Sciences

Dr. Cicerone, president of the NAS, noted that before he was confirmed as Commerce Secretary, Gary Locke had been a “very popular, respected, admired, effective, and dynamic” governor of the state of Washington. Prior to that, he had been an elected state representative.

Secretary Locke came to Washington “to be one of the champions of innovation and entrepreneurship and the jobs and growth they bring,” Dr. Cicerone said. He noted that President Obama has described Secretary Locke as “a tireless advocate for economic competitiveness and an influential ambassador of American industry.” Secretary Locke, Dr. Cicerone said, “recognizes that innovation and entrepreneurship are proven paths to more and better jobs, to economic growth, and to national competitiveness.”

Underscoring this commitment, Dr. Cicerone noted, Secretary Locke opened the new Office of Entrepreneurship and Innovation within the Department of Commerce and launched the National Advisory Council on Innovation and Entrepreneurship. The secretary also was at the NAS building the previous day, February 24, 2010, participating in a lively group discussion about research universities and their role in the innovation economy. When President Obama addressed the NAS annual meeting in April 2009, Secretary Locke was with him.



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Luncheon Address Gary Locke Secretary of Commerce Introduction: Ralph J. Cicerone National Academy of Sciences Dr. Cicerone, president of the NAS, noted that before he was confirmed as Commerce Secretary, Gary Locke had been a "very popular, respected, admired, effective, and dynamic" governor of the state of Washington. Prior to that, he had been an elected state representative. Secretary Locke came to Washington "to be one of the champions of inno- vation and entrepreneurship and the jobs and growth they bring," Dr. Cicerone said. He noted that President Obama has described Secretary Locke as "a tireless advocate for economic competitiveness and an influential ambassador of Ameri- can industry." Secretary Locke, Dr. Cicerone said, "recognizes that innovation and entrepreneurship are proven paths to more and better jobs, to economic growth, and to national competitiveness." Underscoring this commitment, Dr. Cicerone noted, Secretary Locke opened the new Office of Entrepreneurship and Innovation within the Department of Commerce and launched the National Advisory Council on Innovation and Entre preneurship. The secretary also was at the NAS building the previous day, February 24, 2010, participating in a lively group discussion about research universities and their role in the innovation economy. When President Obama addressed the NAS annual meeting in April 2009, Secretary Locke was with him. 97

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98 CLUSTERING FOR 21ST CENTURY PROSPERITY Gary Locke Secretary of Commerce Mr. Locke thanked the National Academy of Sciences and added, "It's great to see you again." The previous day, Mr. Locke explained, he was at the NAS "talking with a group of businesses and university leaders about the urgent need to move great ideas more quickly from university labs into the market place." He said that the group also discussed how "government, business and academia can better collaborate and take steps to make the country's innovation ecosystem more focused and efficient." We all know "that America is not lacking for groundbreaking ideas in this country," Mr. Locke said. "Nor are we short on smart entrepreneurs willing to take risks. What we need to do is get better at connecting the great ideas to the great company builders." That is why this symposium is so important, he added. "Regional innovation clusters have a proven track record of getting good ideas more quickly into the marketplace," Mr. Locke said. "When businesses, government, academia and nonprofits are situated in one place pulling towards similar goals, good things happen." He cited Silicon Valley, Boston's Route 128 corridor, and North Carolina's Research Triangle as striking examples of innova- tion clusters done right. "The burning question then comes: `How do we create more of them?'" he said. Mr. Locke said the answer to this question isn't just important to him or those at the symposium. "It's important to the millions of Americans who--even before this recession began--were falling behind," he said. Since 2000, he said, most families have seen their wages stagnate or decline, while the costs of necessities such as health care and tuition have skyrocketed. The prime culprit of America's economic problems has been "the decline in the type of good, skilled, well-paying jobs that once helped America build the strongest middle class in the history of the world," Mr. Locke said. "America's challenge, therefore, isn't just to emerge from recession. It is to lay a new foundation for sustainable long-term economic growth," he said. Mr. Locke said that the place to start is by promoting the creation of new businesses. America has always celebrated "those pioneers who were willing to mortgage their houses, work 100-hour weeks, and throw caution to the wind in the pursuit of an idea," he said. "That story is at the very heart of America's economic success." Over the years, however, "we fell in love with another type of risk that extolled short-term thinking and speculation," Mr. Locke said. "Instead of working to engineer a breakthrough technology or build a great company, too many of our brightest minds were busy engineering credit-default swaps. America can't afford to inflate another bubble that enriches a select few while putting everyone else in peril." The United States no longer can count on Wall Street's version of innova- tion to drive its economy. "We know how that story ends," he said. "Instead,

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LUNCHEON ADDRESS 99 we need to encourage the right kind of risk-taking--the type of risk-taking that allows successful entrepreneurs to build companies and discover breakthrough technologies that allow people around the world to live wealthier, healthier, and more productive lives." Companies that have solid foundations and a lot of growth potential are known as "gazelles," Mr. Locke noted. "Gazelles" can thrive in science and technology parks, laboratories, and business incubators. These are "places where entrepreneurs, scientists, product developers, and venture capitalists are clustered together and can work together." They are places where innovations are developed and brought to market, and where new businesses have a chance to grow. They are places, he said, "where entrepreneurs--even the ones who at first don't succeed-- have a chance to try, try, and try again." They also are places where workers have the security of knowing that if one employer closes its doors, another will emerge to take its place. These dynamics already are at work not only in well-known innovation clusters such as Silicon Valley and Research Triangle. Despite the difficult job picture, Mr. Locke said, these approaches also are working in places like the New Mexico Technology Corridor, the Arizona Bioscience Park in Tucson, Virginia Tech University's Institute for Advanced Learning and Research in Danville, and many other places around the United States. "For all the missed opportunities of the past decade, and for all the challenges of the present moment, there are great American success stories to tell," he said. "And every one of these success stories has a common theme: place matters." Innovation clusters yield results because entrepreneurs, researchers, and inno vators want to be around each other, Mr. Locke said. "They want to feed off the shared creative energy. They want access to a shared talent pool. They want to build relationships." If a local community can create the climate for innova- tion and build critical mass, then private investment will follow, he said. So will innovation and jobs. Mr. Locke said there are numerous examples of innovation hotbeds, such as Rochester, New York; Dubuque, Iowa; Saginaw, Michigan; and San Jose, Cali- fornia. But clusters should not only be seen as belonging to a single city. Iconic zones like Research Triangle and Silicon Valley are regions, he noted. That is why Harvard Business School's Michael Porter began calling them "regional inno vation clusters." In such regions, he noted, groups of companies, educational institutions, municipalities, and even state agencies work together to create the best possible business climate. "They work together because they are stronger that way," he said. One problem is that most of the United States remains outside the borders of clusters. If one took a map of the United States and colored in all the established regional clusters, Mr. Locke observed, the clusters would be dispersed across the nation. But most of the U.S. map would remain white space. "These regional clus- ters aren't quite exceptions," Mr. Locke said. "But they're certainly not the rule."

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100 CLUSTERING FOR 21ST CENTURY PROSPERITY To change this map so that innovative clusters spring up in new regions, there must first be consensus that the growth of such clusters are a national priority, Mr. Locke said. There also must be a commitment that regions be "dedicated to creating ecosystems where universities, venture capital, entrepreneurs and skilled workers are all amplifying each other's talents," he added. At the federal level, "President Obama is doing just that," Mr. Locke said. At the Commerce Department, the Economic Development Agency is taking the lead. He noted that the President's 2011 budget includes $75 million for the EDA to implement a federal clusters strategy. "Region by region, EDA is helping to speed the transition to a more entrepreneurial, innovation-driven society," he said. To fulfill this mission, the EDA is "fostering regional innovation that builds on an area's competitive advantages." The agency is "encouraging business ex- ports and competitiveness in a way that leverages private investment." Despite these federal efforts, Mr. Locke stressed that local governments must take the initiative in any cluster strategy. "Let me underscore how critical it is that regions take a leadership role in this process," he said. "The federal government can facilitate and encourage stakeholders to work together. But regions will know where their unique strengths and abilities lay." While the federal government can "shine a spotlight on the importance of clusters," he said, "it can't replace a region's knowledge of what it does best." He cited New Orleans and New Mexico as examples of "how the federal government can support regional initiatives." The EDA "helped fund the New Orleans Regional Planning Commission's plan to link new medical research cen- ters and a new bioscience district with medical centers at Tulane and Louisiana State University. New Orleans is not merely re-building from Katrina," Mr. Locke said. "It's redeveloping a large portion of the city into a world-class medical corridor." In New Mexico, he added, the EDA is "working with a regional council to help create more robust alternative-energy production, grow artisanal manufactur- ing, and fund new micro and nano-engineering centers." "The genius of regional innovation clusters," Mr. Locke said, "is that different parts of the country can leverage their regional strengths to accomplish a common goal: creating well- paying, sustainable jobs and growing the country's economy." "And at the end of the day, job growth is the metric that is most important to most Americans," Mr. Locke said. "It's the metric that is most important to the Obama Administration." He called regional innovation clusters a key part of the nation's long-term strategy for economic growth. Mr. Locke thanked the audience and said he looks forward to working with the symposium's participants in the years to come.