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Charles W. Wessner, Rapporteur Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives Board on Science, Technology, and Economic Policy Policy and Global Affairs NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by: Contract/Grant No. DE-DT0000236, TO# 28, (base award DE-AM01-04PI45013), between the National Academy of Sciences and the Department of Energy; and Contract/Grant No. N01-OD-4-2139, TO# 250, between the National Academy of Sciences and the National Institutes of Health. This report was prepared by the National Academy of Sciences under award number SB134106Z0011, TO# 4 (68059) from the U.S. Department of Commerce, National Institute of Standards and Technology (NIST). This report was prepared by the National Academy of Sciences under award number 99-06- 07543-02 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the National Institute of Standards and Technology, the Economic Development Administration, or the U.S. Department of Commerce. Additional support was provided by the Heinz Endowments, the Association of University Research Parks, Acciona Energy, Dow Corning, IBM, and SkyFuel, Inc. International Standard Book Number 13: 978-0-309-26643-7 (Book) International Standard Book Number 10: 0-309-26643-2 (Book) Additional copies of this report are available for sale from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu/ . Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives Mary L. Good, Chair Michael G. Borrus, Vice Chair Dean Emeritus, Donaghey College Founding General Partner of Engineering and Information X/Seed Capital Management Technology Special Advisor to the Chancellor David T. Morgenthaler for Economic Development Founding Partner University of Arkansas Morgenthaler Ventures at Little Rock and STEP Board Edward E. Penhoet Director William C. Harris Alta Partners President and CEO Science Foundation Arizona Tyrone C. Taylor President W. Clark McFadden II Capitol Advisors on Technology Senior Counsel Orrick, Herrington & Sutcliffe LLP. v

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PROJECT STAFF Charles W. Wessner Sujai J. Shivakumar Study Director Senior Program Officer Alan H. Anderson David E. Dierksheide Consultant Program Officer McAlister T. Clabaugh Adam H. Gertz Program Officer Program Associate (through June 2010) David S. Dawson Senior Program Assistant Thomas R. Howell (from June 2010) Consultant vi

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For the National Research Council (NRC), this project was overseen by the Board on Science, Technology and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the Board on Science, Technology, and Economic Policy is to advise federal, state, and local governments and inform the public about economic and related public policies to promote the creation, diffusion, and application of new scientific and technical knowledge to enhance the productivity and competitiveness of the U.S. economy and foster economic prosperity for all Americans. The STEP Board and its committees marshal research and the expertise of scholars, industrial managers, investors, and former public officials in a wide range of policy areas that affect the speed and direction of scientific and technological change and their contributions to the growth of the U.S. and global economies. Results are communicated through reports, conferences, workshops, briefings, and electronic media subject to the procedures of the National Academies to ensure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below: Paul L. Joskow, Chair Mary L. Good (NAE) President Dean Emeritus, Donaghey College Alfred P. Sloan Foundation of Engineering and Information Technology Ernst R. Berndt Special Advisor to the Chancellor Louis E. Seley Professor for Economic Development in Applied Economics University of Arkansas Massachusetts Institute at Little Rock of Technology William H. Janeway John Donovan Partner Chief Technology Officer Warburg Pincus, LLC AT&T Inc. Richard K. Lester Alan M. Garber (IOM) Japan Steel Industry Professor Provost Head, Nuclear Science Harvard University and Engineering Founding Director, Industrial Ralph E. Gomory (NAS/NAE) Performance Center Research Professor Massachusetts Institute Stern School of Business of Technology New York University *As of November 2012. continued vii

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William F. Meehan III Kathryn L. Shaw Lecturer in Strategic Management Ernest C. Arbuckle Professor Raccoon Partners Lecturer of Economics in Management Graduate School of Business Graduate School of Business Stanford University Stanford University and Laura D'Andrea Tyson Director Emeritus S.K. and Angela Chan Professor McKinsey and Co., Inc. of Global Management Haas School of Business David T. Morgenthaler University of California, Berkeley Founding Partner Morgenthaler Ventures Harold R. Varian Chief Economist Luis M. Proenza Google, Inc. President The University of Akron Alan Wm. Wolff Senior Counsel William J. Raduchel McKenna Long & Aldridge LLP Chairman Opera Software ASA STEP Staff Stephen A. Merrill Charles W. Wessner Executive Director Program Director Paul T. Beaton David S. Dawson Program Officer Senior Program Assistant McAlister T. Clabaugh David E. Dierksheide Program Officer Program Officer Aqila A. Coulthurst Sujai J. Shivakumar Program Coordinator Senior Program Officer viii

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Contents PREFACE xiii I. OVERVIEW 1 II. PROCEEDINGS 47 DAY 1 Session I: The Global Challenge and the Opportunity for Arkansas Moderator: Mary Good, University of Arkansas at Little Rock 49 The Innovation Imperative: Global Best Practices 49 Charles Wessner, The National Academies Innovation Infrastructure at the State and Regional Level: 56 Some Success Stories Richard Bendis, Innovation America Innovation and Commercialization Successes in Oklahoma 63 David Thomison, Innovation to Enterprise (i2E) California's Innovation Challenges and Opportunities 65 Susan Hackwood, California Council on Science and Technology Evolution of Innovation in Arkansas 70 Watt Gregory, Accelerate Arkansas Session II: Cluster Opportunities for Arkansas Moderator: Paul Suskie, Arkansas Public Service Commission 75 Arkansas and the New Energy Economy 75 Paul Suskie, Arkansas Public Service Commission Federal-State Synergies 78 Gilbert Sperling, Energy Efficiency and Renewable Energy (EERE), U.S. Department of Energy ix

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x CONTENTS The Wind Energy Industry in Arkansas: 85 An Innovation Ecosystem Joe Brenner, Nordex USA Arkansas's Role in Energy Transmission Management 87 Nick Brown, Southwest Power Pool DAY 2 The State of Technology and Innovation in Arkansas 90 The Honorable Mike Beebe, Governor of Arkansas Session II: Cluster Opportunities for Arkansas (continued) Moderator: Charles Wessner, The National Academies 93 Research in Advanced Power Electronics: Status and Vision 93 Alan Mantooth, National Center for Reliable Electric Power Transmission (NCREPT), University of Arkansas at Fayetteville Regional Initiation Clusters (RIC) 96 Ginger Lew, National Economic Council, The White House Agriculture and Food Processing 99 Carole Cramer, Arkansas Biosciences Institute, Arkansas State University Information Technology 101 Jeff Johnson, ClearPointe Nanotechnology 104 Greg Salamo and Alex Biris, University of Arkansas at Fayetteville Session III: Federal and State Programs and Synergies 107 Department of Commerce The Role of the Economic Development Administration 107 Barry Johnson, Economic Development Administration, Department of Commerce Initiatives of the Manufacturing Extension Program 110 Roger Kilmer, Manufacturing Extension Partnership, National Institute of Standards and Technology

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CONTENTS xi University-Industry Partnerships 113 Marc Stanley, National Institute of Standards and Technology University-Federal Government Partnerships 119 Donald Senich, Division of Industrial Innovation and Partnerships, Directorate of Engineering, National Science Foundation From University Research to Start-ups: 121 Building Deals for Arkansas Michael Douglas, UAMS BioVentures, University of Arkansas Medical Services Session IV: Universities and Regional Growth Moderator: John Ahlen, Arkansas Science and Technology Authority 125 Arkansas STEM Coalition Activities 125 Michael A. Gealt, University of Arkansas at Little Rock State Initiatives for Research Funding and 128 Their Role in Economic Development William Harris, Science Foundation Arizona Session V: Arkansas R&D Capacity: Universities, Research Labs, and Science Parks Moderator: John Ahlen, Arkansas Science and Technology Authority 134 Infrastructure for High-Performance Computing 134 Amy Apon, High-Performance Computer Center, University of Arkansas at Fayetteville, and Division of Computer Science, Clemson University Research Parks in Arkansas 136 Jay Chesshir, Little Rock Chamber of Commerce Understanding the Battelle Study 138 Jerry Adams, Arkansas Research Alliance III. APPENDIXES A Agenda 143 B Participants List 147 C Bibliography 151

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Preface Responding to the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as attract the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include significant resources, often with a sectoral focus and often in partnership with foundations and universities. These are being joined by recent initiatives to coordinate and concentrate investments from a variety of federal agencies that provide significant resources to develop regional centers of innovation, business incubators, and other strategies to encourage entrepreneurship and high-tech development. PROJECT STATEMENT OF TASK An ad hoc committee, under the auspices of the Board on Science, Technology, and Economic Policy (STEP), is conducting a study of selected state and regional programs in order to identify best practices with regard to their goals, structures, instruments, modes of operation, synergies across private and public programs, funding mechanisms and levels, and evaluation efforts. The committee is reviewing selected state and regional efforts to capitalize on federal and state investments in areas of critical national needs. This review includes both efforts to strengthen existing industries as well as specific new technology focus areas such as nanotechnology, stem cells, and energy in order to better understand program goals, challenges, and accomplishments. As a part of this review, the committee is convening a series of public workshops and symposia involving responsible local, state, and federal officials and other stakeholders. These meetings and symposia will enable an exchange of views, information, experience, and analysis to identify best practice in the range of programs and incentives adopted. Drawing from discussions at these symposia, fact-finding meetings, and commissioned analyses of existing state and regional programs and technology focus areas, the committee will subsequently produce a final report with findings and recommendations focused on lessons, issues, and opportunities for complementary U.S. policies created by these state and regional initiatives. xiii

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xiv PREFACE THE CONTEXT OF THIS PROJECT Since 1991, the National Research Council, under the auspices of the Board on Science, Technology, and Economic Policy, has undertaken a program of activities to improve policymakers' understandings of the interconnections of science, technology, and economic policy and their importance for the American economy and its international competitive position. The Board's activities have corresponded with increased policy recognition of the importance of knowledge and technology to economic growth. One important element of STEP's analysis concerns the growth and impact of foreign technology programs.1 U.S. competitors have launched substantial programs to support new technologies, small firm development, and consortia among large and small firms to strengthen national and regional positions in strategic sectors. Some governments overseas have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.2 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of technical expertise, underscore the need for national R&D programs to support new and existing high-technology firms within their borders. Similarly, many state and local governments and regional entities in the United States are undertaking a variety of initiatives to enhance local economic development and employment through investment programs designed to attract knowledge-based industries and grow innovation clusters.3 These state and regional programs and associated policy measures are of great interest for their potential contributions to growth and U.S. competitiveness and for the "best practice" lessons they offer for other state and regional programs. STEP's project on State and Regional Innovation Initiatives is intended to generate a better understanding of the challenges associated with the transition of research into products, the practices associated with successful state and regional programs, and their interaction with federal programs and private initiatives. The study seeks to achieve this goal through a series of complementary assessments of state, regional, and federal initiatives; analyses of specific industries and technologies from the perspective of crafting supportive public policy at all three levels; and outreach to multiple 1 National Research Council, Innovation Policies for the 21st Century, Report of a Symposium, C. Wessner, ed., Washington, DC: National Academies Press, 2007. 2 For example, a number of countries are investing significant funds in the development of research parks. For a review of selected national efforts, see National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices, Report of a Symposium, C. Wessner, ed., Washington, DC: National Academies Press, 2009. 3 For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2010 State New Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and ITIF, November 2010.

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PREFACE xv stakeholders. The overall goal is to improve the operation of state and regional programs and, collectively, enhance their impact. THIS SUMMARY The symposium reported in this volume convened state officials and staff, business leaders, and leading national figures in early-stage finance, technology, engineering, education, and state and federal policies to review challenges, plans, and opportunities for innovation-led growth in Arkansas. The symposium included an assessment of Arkansas' natural, industrial, and human resources; an identification of key sectors and issues; and a discussion of how the state might leverage national programs to support its economic development goals. This summary includes an introduction that highlights key issues raised at the meeting and a summary of the meeting's presentations. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what occurred at the workshop. The planning committee's role was limited to planning and convening the workshop. The statements made are those of the rapporteur or individual workshop participants and do not necessarily represent the views of all workshop participants, the planning committee, or the National Academies. ACKNOWLEDGMENTS On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants of this meeting. We are indebted to Alan Anderson for summarizing the proceedings of the meeting and to Tom Howell for preparing the draft introduction. We are also indebted to Sujai Shivakumar and David Dawson of the STEP staff for preparing the report manuscript for publication. NATIONAL RESEARCH COUNCIL REVIEW This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies' Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process. We wish to thank the following individuals for their review of this report: John Ahlen, Arkansas Science & Technology Authority; Edward Malecki, Ohio State University; Lora Lee Martin, California Council on Science and Technology; and Eric Sandgren, University of Arkansas, Little Rock.

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xvi PREFACE Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final content of this report rests entirely with the rapporteur and the institution. Charles W. Wessner Mary L. Good