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II PROCEEDINGS

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Session I: The Global Challenge and the Opportunity for Arkansas Moderator: Mary Good University of Arkansas at Little Rock Mary Good, a member of the National Academies Board on Science, Technology, and Economic Policy, opened the symposium at the William J. Clinton Presidential Library and welcomed the distinguished participants. She said that the symposium would address the opportunities and challenges of building a vibrant innovation economy in Arkansas. THE INNOVATION IMPERATIVE: GLOBAL BEST PRACTICES Charles Wessner The National Academies Dr. Wessner began by remarking that while Washington DC has a concentration of policy experts, it is in the regions, states, and cities where policy is implemented and tested. State and local leaders, he added, understand the realities of "locational competition" for jobs, companies, and facilities. Modern communications technology and transport systems mean that businesses have the opportunity to switch to suppliers and manufacturing sites around the world. To stay ahead in this competition, states and regions need to compete by offering fiscal, cost, and other incentives. Moreover, they must compete on the quality and training of their workforce. In this environment, he said, "we must break away from a pro-business or anti-business dialog" and find out what companies really need to prosper. Universities too must work more closely with industry to understand and meet their workforce needs. He cited a series of "global mega-challenges" faced by the United States and every other country, including fostering economic growth, developing new sources of energy, addressing climate change, improving and "personalizing" health care, and improving security. "The way we can meet these challenges is by innovating," he said. "The pace of competition is increasing, and we need to innovate through public-private partnerships that 49

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50 BUILDING THE ARKANSAS INNOVATION ECONOMY bring together our best institutions: businesses, universities, research institutes to cooperate in bringing new ideas to the marketplace. Partnerships are the new vehicles for innovation." Responses to the Innovation Challenge Leading nations everywhere are responding to the innovation challenge in similar ways, he said, seeking to provide four essential mechanisms for economic growth: (1) a sustained, high-level focus on innovation; (2) consistent support for R&D that leverages public and private funds; (3) support for innovative small and medium-sized enterprises (SMEs); and (4) new innovation partnerships that help bring new products and services to market. He pointed to the example of China, which "does all of these things with enormous focus and commitment," especially by making strong investments in education and training; a strategy to move rapidly up the value chain; effective requirements for training and tech transfer; and making productive use of a critical mass in R&D to generate autonomous sources of innovation and growth. "They are focused, committed, and willing to spend," he said. The United States, by contrast has neglected its infrastructure and, despite the ending of the Cold War nearly two decades ago, neglected to adapt its traditional ways of allocating resources to current realities of global competition. "What we have to do is shake things up a lot," he said, illustrating his point by citing R&D spending trends since 1999. The U.S. share of global R&D spending, he said, had dropped from 39 percent in 1999 to 34.8 percent in 2010; the shares of Japan and Europe had dropped in similar fashion. China's share, by contrast, had risen from 6 percent in 1999 to 12.2 percent in 2010. 1 Responses of U.S. Trading Partners He then described in more detail the innovation strategies of several U.S. trading partners. With a population of 4.5 million, Singapore has the ambitious goal of establishing itself as Southeast Asia's preeminent financial and high-tech hub. The stated task of Singapore's Agency for Science, Technology, and Research (A*STAR), with $5 billion in funding, is to: 1 Battelle, R&D Magazine, December 2009.

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PROCEEDINGS 51 Invest in and attract a skilled R&D workforce; Attract major investments in pharmaceuticals and medical technology; Invest in public-private partnerships (PPPs), including Biopolis and Fusionopolis ("two of the most advanced S&T parks in the world");2 and Develop new programs to address the early-stage funding challenge for innovative firms. Even so, he noted that Singapore continued to have difficulty generating local entrepreneurs and the growth of new firms. Spain, he said, had also adopted an innovation strategy and had moved rapidly in recent years to develop appropriate institutions and policies. It has approved the 6th National Plan for Research, Development, and Innovation (2008-11) with a priority of leveraging R&D and innovation. Its Ingenio ["Genius"] 2010 policy package includes many familiar elements: Public- Private Partnerships for innovation, venture funds, and programs to increase research capacity. This includes more money for R&D, an expanded R&E work force (growth of 7.8 percent per year from 2000 and 2006), and university reforms to increase administration, academics, and financial autonomy. Canada, too, has developed a formal innovation strategy to improve the business environment by reducing taxes, improving the regulatory environment, and supporting SMEs through an Industry Research Assistance Program. Other features include: New programs to support university research Research and experimentation tax incentives for businesses Attracting star faculty by offering special "Canada chairs" Reforming immigration rules to attract and integrate highly-skilled workers and pay them well A more direct focus on commercialization through centers of excellence, a Sustainable Development Technology Fund, and efforts to develop innovation clusters around federal laboratories. Finally, he said, Flanders (a region of Belgium with a population 6 million) has been a pioneer in supporting innovation and commercialization. Its primary strategy is consistent government support for imec the Inter-University Micro-electronics Center, a public-private partnership acknowledged to be one of the top semiconductor research centers in the world. Flanders also provides support for universities, incentives for patenting and commercialization, partnerships to support financing for early-stage technology firms; and sustained 2 Parenthetically, Dr. Wessner noted that Senator Mark Prior of Arkansas had introduced legislation to promote more S&T parks in Arkansas.

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52 BUILDING THE ARKANSAS INNOVATION ECONOMY outreach to the public to explain the advantages of a knowledge-driven economy. U.S. Initiatives While the overall growth in total absolute R&D spending in the U.S. is good news, the downward trend in federal spending as a percent of GDP is less propitious for it is investments in basic research that generate the discoveries that lie behind future innovation. The burden of funding basic research is increasingly falling upon the federal government as U.S. corporations focus more of their R&D dollars on later-stage development. Within this declining federal share of expenditure, Dr. Wessner noted, the Department of Defense, which accounts for more than half of the federal research budget, invests around 90 percent of its R&D funds on weapons systems development, rather than on basic or applied research. More positively, he added, there is a bipartisan recognition of the importance of R&D for the nation's continued prosperity and security. The America COMPETES Act of 2007, signed into law by President Bush sought "to invest in innovation through research and development, and to improve the competitiveness of the United States." Reiterating this commitment in a major address to members of the National Academy of Sciences, President Obama declared that science and innovation is "more essential for our prosperity, our security, our health, and our environment than it has even been,"3 and set a goal of raising R&D to 3 percent of GDP, and providing new incentives for private innovation and improvements in math and science education. He also urged a doubling of federal funding for basic research over 10 years at NSF, NIST, and the DoE's Office of Science, as well as new investments in S&T infrastructure, new financing for S&T and innovation, and permanent status for the R&D tax credit for businesses. Initiatives, promulgated through the American Recovery and Reinvestment Act of 2009 (ARRA) also seek to advance research and commercialization of new renewable energy technologies. The wind energy initiative, for example, extends the tax credit for wind-generated electricity through 2012. It provides $6 billion in loan guarantees for renewable energy projects and transmission projects, grants of up to 30 percent of the cost of building a renewable energy facility, and $11 billion in spending and loan guarantees to advance the "smart grid." Similarly, ARRA funding is directed toward research on other forms of "clean" energy, including $117 million to expand the development, deployment and use of solar energy in the United States, and $2.4 billion in new grants for advanced battery makers. 3 Presidential address at the National Academies, April 27, 2009.

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PROCEEDINGS 53 A History of Government-Industry Collaboration Dr. Wessner noted that such government support for new technologies is not new for the United States. The federal government has played this role for more than two centuries, he said, citing the following examples: In 1798, the government made a grant to Eli Whitney to produce muskets with interchangeable parts, leading to the first machine tool industry. In 1842, Samuel Morse received an award to demonstrate the feasibility of the telegraph. In 1903, the Wright Brothers fulfilled the terms of an Army contract by demonstrating the first airplane. In 1915, the National Advisory Committee for Aeronautics helped the rapid advance of commercial and military aircraft technology. In 1919, the Radio Corporation of America (RCA) was founded on the initiative of the U.S. Navy, with a dual commercial and military rationale. During the 1940s, 1950s, and 1960s, the federal government was a leader in developing jet aircraft, semiconductors, computers, satellites, and nuclear energy. From 1969 through the 1990s, the federal government invested in the forerunners of today's Internet and Global Positioning System (GPS). "Sometimes we forget how we got where we are," commented Dr. Wessner. "When people say it's really new for Washington to encourage a series of innovative industries, I would argue that the record is compelling in the other direction." One current strategy of the federal government, he said, is to join with states and regions to promote the formation of innovation clusters. "We think the concept is right," he said, "and that not enough money is being put into it." He noted that previous Academies' studies have shown that science and technology parks can jump-start the development of innovation clusters by bringing companies into closer collaboration with each other and with a university or federal laboratory. A cluster can also enrich the activities of universities by facilitating joint work with industry. He cited research of Professors Van Looy and Debackere of the Katholieke Universiteit Leuven, who demonstrated that that groups university research teams involved in tech transfer publish more, not less, basic scientific work.4 "These joint teams are both doing 4 According to Professor Debackere, "We found that groups that collaborate have a reinforcing effect and generate more fundamental scientific output as well as developmental research, as measured in

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54 BUILDING THE ARKANSAS INNOVATION ECONOMY interesting research," said Dr. Wessner, "and they're teaching their students how to work with industry." Suboptimal Investments and the Valley of Death A key challenge for the United States, he said, is how to capitalize on investments in research. A popular myth, he said, is that if an idea is a good one, the market will fund it. The reality is that potential investors have less than perfect knowledge, especially about innovative ideas. He noted that George Akerlof, Michael Spence, and Joseph Stiglitz had received the Nobel Prize in 2001 "for their analyses of markets with asymmetric information;" such information can easily lead markets to make suboptimal investments. Suboptimal investments, said Dr. Wessner, are also a primary cause of the "Valley of Death," in which many small firms perish for lack of funding before they are able to commercialize their products. During the early stages of developing a product, young firms need access to capital, such as from angel or venture financing. Angel sources are typically quite small, however, and venture capital firms have been moving farther downstream, away from risk. VC investments in 2009 shrank 37 percent from the previous year to $17.7 billion. Only 9 percent of that amount was going into seed-stage deals and 26 percent into early-stage deals. Three federal programs provide a path across that valley, he said the Technology Innovation Program (TIP), the Small Business Innovation Research (SBIR) program, and the Manufacturing Extension Partnership (MEP). Technology Innovation Program (TIP) The Technology Innovation Program at the National Institute for Standards and Technology seeks to accelerate innovation by supporting high- risk, high-reward research in areas of critical national need. TIP provides funding to universities, small and medium-sized businesses, and consortia for research on promising technologies. Awards are merit-based, with funding through cost-shared research grants, cooperative agreements, or contracts. The number of publications. And industrial R&D feeds academia R&D in providing real problems." See National Research Council, Innovative Flanders, C. Wessner, ed., Washington, DC: National Research Council, 2008. In particular, see Van Looy, Bart, K. Debackere, and T. Magerman. 2005. Assessing Academic Patent Activity: The Case of Flanders. Leuven: SOOS. See also Van Looy, Bart, Marina Ranga, Julie Callaert, Koenraad Debackere, and Edwin Zimmermann. 2004. "Combining Entrepreneurial and Scientific Performance in Academia: Towards a Compounded and Reciprocal Matthew-effect?" Research Policy 33(3):425-441.

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PROCEEDINGS 55 impact of the program has been limited, however, because of insufficient funding. SBIR The SBIR, initiated in 1982, is a competitive, double-gated innovation system providing merit-based awards to small companies to provide proof of principle and develop prototypes. Phase I awards of up to $100,000 are meant for feasibility and proof of principle research, and Phase II awards of up to $750,000 are to develop prototypes or products that are ready for market or other application. There has been much discussion of a Phase III, for product development and commercialization, but there is no SBIR funding for this. SBIR awards are financed by a 2.5 percent set-aside from federal agency budgets. The "certification effect" of SBIR funding often attracts private capital and/or increases the chance of winning a public contract. SBIR often provides the first money to help start projects, and may even help academic researchers who have no company. The owners of the Intellectual Property retain control, no repayment is required, and SBIR recipients retain IP. The program was recently evaluated by the National Academies, which reported positive impact on firm formation and growth.5 SBIR funding has also been used to hire academic consultants and to partner with other firms. Many states have leveraged the federal SBIR program to boost local growth. For example, North Carolina awards up to $100,000 in matching funds to each company that wins a federal SBIR grant, reinforcing support for high- potential small firms. Several factors affect a state's success in attracting SBIR awards. The key is that states with more applicants get more SBIR awards. The number of applicants is related to the number of high-tech companies, number of scientists and engineers in the state, state expenditures on R&D, private R&D expenditure in the state, and the number of universities. If an application is rejected, the firm can apply again without prejudice. MEP Arkansas can also leverage the federal Manufacturing Extension Partnership (MEP), he said. MEP, part of the Department of Commerce, is a national network of specialists in business and manufacturing that offers help in many forms to small and medium-sized manufacturers. Its 440 centers across the 5 National Research Council, Early-Stage Capital in the United States: Moving Research Across the Valley of Death and the Role of SBIR, Washington, DC: The National Academies Press, forthcoming.

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56 BUILDING THE ARKANSAS INNOVATION ECONOMY U.S. team with industry, as well as state and local organizations, and leverage over $100 million of federal investment into nearly $300 million in benefits to fast-growing businesses. In conclusion, said Dr. Wessner, "Innovation is the key to how regions and nations compete in the 21st century. It is the key to the growth, prosperity, and security of our nation's states and regions. Resource inputs are essential, but not sufficient. Incentives shape the cooperation required for innovation and this involves institutional change. Innovation policy should not be an afterthought. It is a central mission of government at every level and our children's future depends on it." INNOVATION INFRASTRUCTURE AT THE STATE AND REGIONAL LEVEL: SOME SUCCESS STORIES Richard Bendis Innovation America Mr. Bendis, President and CEO of Innovation America, began by commenting on the high level of innovation activity in Arkansas. In defining innovation, he noted that it was not limited to technology. "Innovation," he said, "is the creation and transformation of knowledge into new products, processes, and services that meet market need." Crucial to this process is making the transition from product-based economic development to innovation-based economic development (IBED). "Innovation is not just about products," he said. "It's about ways to do things more effectively." The goals of innovation, he continued, begin with "intervening at the margins between the public sector and private sector flows of capital." Key steps include addressing this economic transition and capturing the benefits of investments in research and development and in higher education. For every innovative idea or firm, he said, it was essential to reach out to other markets. "When you're working with entrepreneurs," he said, "it's important that they are introduced to the global markets even when there are just one or two people in a firm." Sector Roles in Innovation Each sector has a slightly different but essential role in innovation, he said. For the federal government, that role included long-term vision and planning, and the ability to identify gaps and trends in science, technology and innovation. It was also to serve as a catalyst in making strategic investments in under-supported areas and in building partnerships with industry. And it

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PROCEEDINGS 57 included the use of mechanisms designed to encourage innovation in the private sector. In academia, he said, the role is more straightforward, focusing on the creation, integration, and transfer of knowledge. The most direct way a university transfers knowledge is through the students who graduate and become innovators. Another way is to develop inventions with commercial potential that become the basis for new firms or may be acquired by existing firms. He said that within the process of innovation, the role of industry was essentially to create wealth. He quoted Joseph Schumpeter, who wrote in 1942: "The interaction of technological innovation with the competitive marketplace is the fundamental driving force in capitalist industrial progress." 6 For a region to have its own driving force, he said, requires a "three- legged stool": first, it has to attract companies from other regions; second, it has to retain companies already in the region; and third, it has to create new companies. Where most economies fall short, he said, is in the difficult process of creating new companies. They may also have difficulty attracting companies from other regions, because the only solution to the challenge of small-firm development is to apply "patience, persistence, and consistency." He turned to the model of public-private partnerships, which drew its effectiveness from the integration of three "inseparable missions": (1) the mission of the university to promote research, public service, and lifelong learning; (2) the mission of industry to create products, processes, and profits; and (3) the mission of government to promote economic benefit, return on investment, and sustainable development for society. The Effectiveness of Technology Clusters Some public-private partnerships are situated within technology or business clusters, where innovation may be catalyzed by the proximity and face- to-face opportunities of many actors from diverse sectors. Except for a few notable clusters that have grown and evolved over several decades, such as Silicon Valley, the Rt. 128 community outside Boston, and the Research Triangle Park in North Carolina, the cluster phenomenon has been widely pursued and studied only for a decade or so.7 Many states have recently attempted to develop their own variation of the cluster model designed to 6 Joseph A. Schumpeter. Capitalism, Socialism and Democracy, New York: Harper, 1975 [orig. pub. 1942]. 7 A cluster is defined by Michael E. Porter of Harvard University, a leading student of clusters, as a "geographic concentration of competing and cooperating companies, suppliers, service providers and associated institutions." "Clusters of Innovation," an investigative initiative of Porter and the Council on Competitiveness from 1998 to 2001, developed a framework to "evaluate cluster development and innovative performance at the regional level."

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132 BUILDING THE ARKANSAS INNOVATION ECONOMY personalized medicine, and new materials and software related to computer chip and aerospace sectors. Some specific examples of new R&D partnerships were: The Institute for Mineral Resources at the University of Arizona, which has 15 significant industry partners The Solar Technology Institute, which has initiated programs ranging from concentrated solar energy to energy storage A joint investment with Arizona State University to transform algae into jet fuel and a spin-off company to demonstrate the value of the fuel for private airlines and the Department of Defense; The Critical Path Institute (C-Path) to transform drug development through the work of its three consortia, which include more than 500 scientists from 30 global pharmaceutical companies, the FDA, and its European counterpart, EMEA. In June 2009, after about two years of SFAz activities, Battelle evaluated its return on investment, and found $2.18 in new monies were leveraged from each $1 awarded in university grants. It also found other outcomes: a "STEM education impact" on 54,000 students and 680 teaches, 11 spin-off companies, 757 jobs created or retained, 50 patents filed or issued, and 292 scientific publications. STEM K-12 Education "While the federal government has the prime responsibility for our research infrastructure, the states and localities have prime responsibility for the K-12 system. Although the K-12 education system is a key to our competitiveness and well-being, U.S. high school graduates do not rate highly in science and mathematics compared to our global trading partners. Many Asian countries are producing extraordinarily able scientists and engineers; we can no longer count on their top talent moving here." An expressed state R&D investment strategy will inform state legislators about the need to focus on STEM in K-12. SFAz has invested in connecting education to hands-on experience so students understand the "what and why" that is behind course work. The state focuses on growing its own talent pool, and supports a program with area businesses to improve science and math teaching and gives teachers real-world experience" in the summer. "Our pilot programs are successful," he said, "because of the concern the business community has for the region's future." Dr. Harris closed with a proposal for Arkansas and for the federal government. "Though many things have changed," he said, "we continue to believe that R&D is an `endless frontier' for the United States. An alternative world, in which the frontier is closing, is unacceptable. Yet to expand our horizons and to gain ground will require bold experiments at every level. We have the potential to retain our strength in education, research, and innovation

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PROCEEDINGS 133 but we need to suit up and compete in the 21st Century global system and not accept mediocrity. The nation would be well served by a Federally initiated series of competitive pilot programs perhaps in 10 to 15 states to encourage innovation by linking the business community with the universities and other strategic assets of the states in new ways. Arkansas seems well prepared to do just that."

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134 BUILDING THE ARKANSAS INNOVATION ECONOMY Session V: Arkansas R&D Capacity: Universities Research Labs and Science Parks Infrastructure for High-Performance Computing Amy Apon High-Performance Computer Center University of Arkansas, Fayetteville Division of Computer Science, Clemson University Dr. Apon, then a professor of computer science and Founding Director of the Arkansas High-Performance Computing Center, said that her work had been strongly supported by the state of Arkansas and by the NSF.40 The focus, she said, was cyberinfrastructure, which she said could be defined as the "IT infrastructure that enables scientific enquiry." A statewide task force had developed a plan for cyberinfrastructure, with three entities: The first was ARE-ON, the Arkansas Research and Educational Optical Network, an initiative to connect all the four-year public institutions in the state to a 10Gb network and provide access to state resources for anyone at any four- year institution. ARE-ON was scheduled to be fully operational at the end of the current semester, providing full access to national cyberinfrastructure resources. "The key message," she said, "is that we are part of a national ecosystem." She showed a list of collaborators in Texas, Louisiana, Pennsylvania, and elsewhere. "We can all share resources from our desktops at our four-year institutions." A Correlation between Federal Funding and Computational Capacity Second, the Star of Arkansas was the state's largest computational resource, she said, funded through an NSF grant that provided about 11 million computing hours per year. "There is a lot of research in Arkansas that can benefit from computation," she said. "One area is complex data analysis using emerging technologies to analyze data much more rapidly." She added that there is an 80 percent correlation between a state's level of federal funding for computation and the state's ranking in computational capacity. Another field in which computation is central is the accurate description of large molecules. She mentioned the work of Peter Pulay, a 40 Dr. Apon is currently affiliated with the School of Computing at Clemson University.

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PROCEEDINGS 135 distinguished professor of chemistry at the University of Arkansas, Fayetteville, who studies the interaction of chemicals on human protein and DNA structure. Pulay's research requires 4 million hours of computing time each year. Another computing challenge is found in nanotechnology, where scientists have already reached fundamental limits in computer technology. Research by Laurent Ballaiche has the potential to create nanotechnology devices that can build memory 10,000 times denser than anything currently manufactured, and his research requires 70 million hours of compute time per year. This is more than can be supported in Arkansas, she said, which is "why it's important to have access to national resources." In materials science, the challenge is to model plasticity and failure in metal alloys, with applications in aeronautics and other fields. Doug Spearot, assistant professor of mechanical engineering, creates 3-dimensional models of alloys that do not yet exist, using 20 million or more atoms. The computers evaluate variations of the alloys before they are fabricated in a laboratory. This modeling study requires 6 million hours of compute time a year. The Most Important Instrument of Science She emphasized the importance of supercomputing with a quote from Jay Boisseau, director of the Texas Advanced Computing Center: "Over the past 60 years, computing has become the most important general-purpose instrument of science." Dr. Apon added, "My dad used to tell me, mathematics is the language of science. Well, computing is the most important general purpose instrument of science." In addition to ARE-ON, she said, NSF now funds a new EPSCoR Track 2 project called CI Train, or Cyberinfrastructure for Transformational Scientific Discovery. The intention is to provide campus cyberinfrastructure "champions" to serve as liaisons between the physical resources and the researchers and educators who need access to them. It also provides visualization resources and supports research in a wide spectrum of computational and visualization domains. In Arkansas, she said, the CI Train project has made education a "key deliverable," with partners across the state. It supports initiatives at the high school, undergraduate, and graduate levels with professional information technology staff and research faculty. It shared nationally competitive visualization resources and large-scale computational resources. Re-thinking our Campus Environments These new resources required unprecedented levels of sophistication for computer data visualization, she said. "We need to seriously rethink our campus environments and how they can support new data-driven modalities of research, collaboration, and education. She credited Rob Pennington of the NSF

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136 BUILDING THE ARKANSAS INNOVATION ECONOMY Office of Cyberinfrastructure for bringing this perspective, and also demonstrating how technologies can help scholars and students talk to each other and leverage all the resources across the state. She closed with several examples from the NSF that pair problems with solutions. For example, recent computer science PhD training is disconnected from what scientists need; similarly, recent physics PhDs are not trained in software engineering. An example of a solution: create post-doc-to-professoriate programs to encourage them to apply their knowledge (and protect them). "There are many needs," she said in closing. "We must educate students at all levels in collaborative computational science. This is hard. Computer scientists don't necessarily want to do chemistry, and the chemists don't necessarily want to learn how to write programs on emerging technologies. It has to be a first-class, joint effort. We also have to encourage and support researchers moving into these areas, and we have to catalyze cultural changes in academics and agencies to better support interdisciplinary activities not just by the faculty but also by the administration." RESEARCH PARKS IN ARKANSAS Jay Chesshir Little Rock Chamber of Commerce "We are trying," Mr. Chesshir began, "to take a state that has not necessarily been known for technology and innovation and move it into a brand- new world." With that, he said, he wanted to talk about research parks in Arkansas and what the state is doing to grow them. There were currently two science parks: the Arkansas Research and Technology Park, adjacent to the University of Arkansas in Fayetteville, and the Arkansas Bioscience Innovation and Commercial Center at Arkansas State University in Jonesboro, which is completing its Phase I business incubator. A new park was being constructed in central Arkansas. The Arkansas Research and Technology Park (ARTP) used innovative techniques to nurture technology-intensive companies. It attempted to stimulate the formation of a collaborative community of companies, together with university faculty and students at Fayetteville, linked interdependently around a set of core R&D research competencies at the university. Growing our own Expertise "We learned in the last several years," he said, "that people are not coming here in search of expertise. We're going to have to do a better job of growing it ourselves. We're not going to Boston, Ireland, or India to recruit that

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PROCEEDINGS 137 type of technology and innovation to come here and blossom. We are going to have to grow our own." The ARTP is an example, he said, of a community that has begun to create the next generation of electronic and photonic devices for biotechnology and related areas. These areas include transportation and logistics, in which Arkansas is a leader; materials and manufacturing; database software; telecommunications; and applied sustainability. Those are areas in which the ARTP is successful in terms of grants attracted and progress toward becoming a center of excellence. The State's Primary Knowledge Community A major advantage for the ARTP, he said, was its location in northwest Arkansas, near the main university campus. As the state's primary knowledge community, the Fayetteville area provided valuable fuel for the innovation and technology development activities of the ARTP. Two affiliates had received the prestigious Frost and Sullivan Award for excellence in technology, and another affiliate won the Tibbetts Award for the most innovative small business. Earlier in the year, another affiliate won an R&D 100 award, which cites Washington County as one of the most innovative in the country. ARTP affiliates, he said, continue to advance the frontier of product development in many specialty areas. The reason that is important, he said, is that "what's going on up there in northwest Arkansas permeates the state, and provides a sense of innovation for folks in the other universities." In central Arkansas, a group had engaged a consultant to review activities at the University of Arkansas for Medical Sciences and the University of Arkansas at Little Rock. The question they asked was: How can we take the research and innovation that is already here and make it stronger? For so long, he said, the state had suffered from brain drain as its best and brightest young scientists, engineers, and medical researchers sought opportunities elsewhere. How, they asked, could the region take advantage of local innovative talent and turn it into jobs for the area and the state as a whole. In 2007, this effort was rewarded when the General Assembly voted to create a research park authority, a legislative opportunity that would permit anyone in the state to create a research park and design it for sustainability. That effort had moved forward, he said, and at the end of the month, the authority was scheduled to be finalized with the city of Little Rock and its partners in central Arkansas, with the goal of beginning construction by 2012. "This is a very ambitious schedule and investment," he concluded. "It is something that has never been done in central Arkansas. Only when we have all our state, academic, and government partners working together are we going to be as successful as we need to be."

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138 BUILDING THE ARKANSAS INNOVATION ECONOMY UNDERSTANDING THE BATTELLE STUDY Jerry Adams Arkansas Research Alliance Mr. Adams, who had founded the Arkansas Research Alliance after retiring from Acxiom Corporation, said that Battelle was asked to do a thorough study of economic development in Arkansas, primarily to provide evidence- based insight into the core competencies of the research universities. He said that at Acxiom, he had received many calls from people asking for funding for research that was unrelated to Acxiom's core activities. One lesson the company had learned, he said, was that it made sense to pay only for research that could move the country ahead. "So a key issue we discussed with Battelle," he said, "was what are we good at in Arkansas? What can move us ahead?" Battelle did a qualitative review based on field interviews with 85 of the top researchers in the state, and a quantitative review based on the journal publications and research grants of faculty members during the last five years. "In other words, by looking in the rear-view mirror."41 Core Competencies and Economic Benefits Nonetheless, he said, the study turned out to be a living document that revealed more than a dozen core competencies in Arkansas. But it also presented the challenge of finding the best way to derive more economic benefits from those 18 core competencies and 12 niche competencies. "This was surprising to Battelle," he said, "but 30 turned out to be too big a number. So we rolled them up into nine strategic focus areas." Those were multi-disciplinary fields of research that were likely to enable the state to leapfrog more traditional universities that have more strength in narrow academic fields. The focus areas were also designed to engage multiple institutions, rather than be limited to individual universities or geography. The focus areas were: Enterprise systems computing, Distributed energy network systems, Optics and photonics, Nano-related materials and applications, Sustainable agriculture and bio-energy management, 41 Battelle Technology Partnership Practice, "Opportunities for Advancing Job-Creating Research in Arkansas, A Strategic Assessment of Arkansas University and Government Lab Research Base," 2009. Access at http://www.aralliance.org/__data/assets/pdf_file/0017/1682/Job-Creating-Research- in-Arkansas.pdf.

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PROCEEDINGS 139 Food processing and safety, Personalized health research sciences, Behavioral research for chronic disease management, and Obesity and nutrition. Increasing Multi-Campus Collaborations "A reality of being a small southern state," he said, "is that we're about $106 million below where we should be on a per capita basis in attracting federal research dollars to the state. Part of that is due to a lack of multi-campus collaboration, Battelle learned, so that a theme adopted by the ARA was to raise the number and level of multi-campus collaborations around those core competencies." The study looked at the competencies in terms of whether they were emerging, limited, or established, and examined the level of federal funding. "That is the accelerator," he said. "State funding can help support talent, but federal funding is the key." The next question was about market potential, the pull from industry, and whether there were already existing industries in Arkansas in these areas. He noted that Tom Dalton, of Innovate Arkansas, tried to "validate the technology: is this a business likely to stay in Arkansas, or will we create something that will move to Boston?" He noted that the Arkansas Biosciences Institute already engaged in three of the core competencies, but that "we're not in competition with ABI, we're a partner with them." He said that nine areas would eventually be too many to focus on, but that "we needed an evidence-based roadmap like Battelle's, as opposed to hearing researchers tell us how terrific their research is. Self-reported results have bias." A `Crucial Roadmap' for Recruiting Talent He said that the ARA had found the Battelle study to be a "crucial roadmap" to use in recruiting talent into the state, and into the core focus areas. For example, he said that Arkansas was in the process of launching an eminent scholars' program, modeled after one in Georgia. The ARA was also trying to elevate the level of multi-campus collaboration, with funding from the Winthrop Rockefeller Foundation, the Walton Family Foundation, and the ARA board. With the help of administrative and research leaders of each of the five campuses, they had planned three conferences on (1) smart infrastructure, including the smart grid, (2) "smart information," and (3) nanotechnology. They were also planning a conference on "healthy Arkansas," and another based on bio-production and clean energy. The conferences would cover the nine focus areas during an 18-month period, with the goal of helping planners decide which to institutionalize in the state.

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140 BUILDING THE ARKANSAS INNOVATION ECONOMY He closed by affirming that the "Battelle study has been a gift to this state. It's been absorbed into the EPSCoR conversation, and in the effort to focus the state's research resources. My hope is that we will use it as our investment roadmap going forward." CLOSING REMARKS John Ahlen Arkansas Science and Technology Authority Dr. Ahlen closed the symposium by exhorting his audience to go beyond the discussion stage and move into action. He observed that the Science and Technology Authority had a family of core programs and was managing two federal projects: an MEP project, with NIST, and an EPSCoR project, with NSF. The state and federal managers talked several times a week about these projects and other state activities. He asked, "How do we streamline these relationships?" NSF is primarily a research organization, he said, but it wants to see the results of research commercialized. "They tell the state we have to do that, and we do it through EPSCoR. But so do the state agencies that have been doing economic development for decades. The MEP would like to see more innovation in manufacturing. We applaud that, but we've also been trying to do that for 30 years. "So it is time to look at these relationships, streamline them, and realize that we're all trying to move to the same place. We have multiple rules at the state and federal levels, and for those of us trying to execute, it's very difficult. All these rules are designed for transparency and accountability, but to different bosses in different places. "I will remind some of us that 12 years ago, the National Science and Technology Council at the White House had its first interagency task force meeting on innovation partnerships, and after a couple of years the momentum came to a grinding halt. Here we are 12 years later having that same discussion. We don't have another decade to sit on this and wait for another discussion. We need to pick up the phone and call those friends in Washington who have told us to call. "So," he concluded, "go forward and collaborate."

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III APPENDIXES

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