Overview
What policies and organizations are helping to drive innovation-based business formation, employment, and economic growth in Illinois? To address this question, the National Academies STEP Board, in cooperation with the National Cancer Institute and the International Institute for Nanotechnology at Northwestern University convened a conference of state business, academic, and political leaders as well as high-level U.S. government officials to highlight the accomplishments, challenges, and opportunities of the Illinois innovation ecosystem. The conference highlighted the contributions of Illinois universities in generating research, creating new businesses, and attracting talent to the state. Participants also considered how national and international models for innovation and cluster development could be adapted in Illinois.
In his welcoming remarks, Dr. Chad Mirkin, George B. Rathmann Professor of Chemistry at Northwestern and director of the International institute for Nanotechnology (IIN), noted the particular relevance of innovation given ongoing efforts to enhance the effectiveness knowledge-based economic development in Illinois. The attendees, he said, ranged from Governor Pat Quinn, who has worked hard to support pro-innovation policies, to academic researchers who have translated their scientific discoveries into successful businesses.
Dr. Mirkin noted that the conference would review the available innovation resources at the state level, as well as examine how these resources might be strengthened by closer cooperation with federal programs. He expected that there would be both complementarities and differences between national and state policies, and that these needed to be identified and developed to enhance the competitiveness of the region.
Specifically, he urged that Illinois strive to take advantage of federal initiatives; especially those that help establish and strengthen innovation hubs. This would include forming alliances with innovative companies able to make use of new technologies and advancing existing technologies through partnerships with academia, government, and private sources of capital.
A. THE NATURE OF AN INNOVATION ECOSYSTEM
Conference participants focused on the challenge of innovation, which involves not only creating a new idea, but also commercializing that idea into a new product or service.1 They further noted that innovation is inherently risky; neither the ultimate value of the product, nor the state of possible competition, nor the ultimate appetite of the market place can be fully known in advance.
Robert Easter, President Designate of the University of Illinois, described innovation as pertaining “not only a discovery or intention, but a technology that been developed to the point where it has value to humanity. I’m glad the word innovation is being used in proper context today,” he said, “because I think it’s what we have to do to translate ‘discovery science’ into products that have value.” In his keynote remarks, Illinois Governor Pat Quinn offered a more succinct definition of an innovation: “It is people seeing something, and seeing how to do it better.”
To describe a successful environment for innovation, Dr. Mirkin used an analogy from chemistry: “The challenge is to create an innovation ecosystem,” he said, “that has enough ‘collisions’ to expose all good ideas to the free market.2 That is when entrepreneurs can identify which ones are likely to be winners and make the investments that lead to success.”
What are the essential elements of a successful innovation ecosystem? According to Dennis Roberson of the Illinois Institute of Technology, key ingredients include a skilled workforce, modern infrastructure, responsive community services, adequate venture financing, and an effective and enabling government.
Dr. Mirkin added that sustaining such an “ecosystem,” requires supportive policies that incentivize entrepreneurship. Twenty or thirty years ago, he said, scientists had little interest in innovation. “Their view was that technology was a bad word, and business was an even worse word.” Today, the professors of the 21st century are concerned not only with their traditional responsibilities of teaching, research, and outreach, but also with the world of
____________________________
1The most basic definitions of innovation reflect its etymology: in = “into” + novus =“new.” For example, one dictionary calls it “The introduction of something new; a new idea, method or device.” <http://www.merriam-webster.com/dictionary/innovation>. Beyond this, notes Wikipedia, is the distinction between innovation and invention. “Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different (Lat. innovare: “to change”) rather than doing the same thing better.” <http://en.wikipedia.org/wiki/Innovation>.
2The term, “innovation ecosystem” is an elaboration of “national innovation system,” which was popularized by Christopher Freeman in the 1980s, and was soon applied to regional and state innovations systems as well. See C. Freeman, “The ‘National System of Innovation’ in Historical Perspective,” Cambridge Journal of Economics 19:5-24, 1995. Freeman emphasized that while globalization is a profoundly important macro phenomenon, innovation actually occurs within regional and state economies. See C. Freeman, ‘Japan: A new national innovation system?’, in G. Dosi, C. Freeman, R. R. Nelson, G. Silverberg, and L. Soete (eds.) Technology and Economy Theory, London: Pinter, 1988.
inventions, patents, and commerce. Thanks in large part to the Bayh-Dole Act of 1980, he said, academic scientists are encouraged to translate their research into a marketable product and perhaps even a new business opportunity.3 Many of these, including several of Dr. Mirkin’s own initiatives, have been successful.
A robust innovation ecosystem also depends on a supportive environment that encourages collaboration and shares risks. While popular culture often celebrates the “lone inventor,” real-world innovation is more likely the result of active collaboration among partners, mentors, and financers. Innovation happens, said Dr. Mirkin, with “willing participants and great talent, within innovation hubs consisting of great universities and government laboratories, and a population of students, post doctoral researchers, faculty members, and business leaders.”
B. BUILDING THE ILLINOIS INNOVATION ECOSYSTEM
Are these elements of a successful innovation ecosystem in place in Illinois? The conference drew a variety of perspectives on the accomplishments, challenges, and opportunities facing the region.
Norbert G. Riedel, corporate vice president and Chief Science and Innovation Officer of Baxter International, averred that the region has done “an excellent job in building an ecosystem here in Illinois that is technology based.” He said that he also found “an impressive new spirit of community among academic centers of excellence, industry, small and large companies, and also the governments of the state and city. “ Dr. Riedel observed that repeated physical interaction and communication are important to facilitate cooperation. “Fluidity matters,” he said—“the flow of people and ideas between academia and industry.” In the United States, he added, we have a number of opportunities to form close partnerships between academic centers of excellence and industry. “We meet so often through joint appointments, academic visits to our laboratories, students working in our laboratories. I believe we need to nurture these opportunities. I see it as a genuine competitive advantage over most of the world.”
Key Challenges
Describing the region’s challenges, William Testa of the Federal Reserve Bank of Chicago, said that “what we know about Chicago is that there is a yawning gap between our capacity and what we produce in new start-ups and businesses. In the last decade, we were in the top eight cities in NIH
____________________________
3For a review of the structural factors underpinning the effectiveness of this legislation, see David C. Mowery and Bhaven N. Sampat, “The Bayh-Dole Act of 1980 and University–Industry Technology Transfer: A Model for Other OECD Governments?.” The Journal of Technology Transfer 30(1-2): 115-127, 2004. See also National Research Council, Managing University Intellectual Property in the Public Interest, Stephen Merrill and Anne-Marie Mazza, eds., Washington, DC: The National Academies Press, 2010.
funding, but we had very few biotech start-ups.” Similarly, David Miller, leader of the Illinois Biotechnology Industry Organization, (iBIO), observed that the region has always been strong in generating research, but it has lacked a corresponding ability to translate that research into companies that remain in Illinois. Instead, he said, Illinois companies would leave for the coasts, and even for Wisconsin, Indiana, Michigan, and other places that had “more jobs, a good tax base, greater wealth creation, taxpayer-financed resources, and more excitement.”
Offering a cultural explanation for the relative slow rate of start-ups in the state, John Fernandez, a former Administrator of the Department of Commerce’s Economic Development Administration and a former mayor of Bloomington, Indiana, observed that successful innovation depends on a positive culture of entrepreneurship. “I grew up in the Midwest,” he said, “where entrepreneurial failure was not okay: You were ostracized; you had huge problems with your next funding. We still penalize risk-taking in the Midwest to a much greater degree than in other parts of the country; in California, if you have not failed at least once, you are not an entrepreneur. It is a cultural mindset [prevalent] through the region’s banking and the industrial community.”
These perceptions about failure may be reinforced by policy. According to David Miller, another reason for the small-company exodus has been the state’s reliance on a “big-company strategy.” The state of Illinois has traditionally sought to attract large companies to site new facilities or expansion facilities in Illinois. “I compare this to trying to win a baseball game by hitting only home runs—or by hitting only grand-slam home runs. What we’re looking for is a more diversified economy that includes a small-business strategy.” This, he added, would include a more supportive business ecosystem, including what the Brookings Institution calls “catalytic organizations” and a modest amount of state assistance. “With all the advantages here, we don’t need the biggest, richest, fattest set of investments,” he said. “We just need to be competitive.”
New Public-Private Partnerships
Several participants noted that the Illinois innovation ecosystem has strengthened and developed over the past decade. They described the emergence of new kinds of public-private partnerships, some of them non-profit spinoffs from the largest companies and universities. They expressed enthusiasm about working together, and optimism about innovative designs of the programs themselves.
David Miller noted that iBIO, founded in 2003, supports multiple sectors of the Illinois biotechnology industry, including strong companies and start-ups in medical, agricultural, and bio-industrial areas. Norbert Riedel of Baxter, a strong supporter of iBIO, noted that his organization has expanded its reach by providing more than 500 teachers with professional development, problem-based learning, and the stronger ability to teach science—a pressing regional and national need. iBIO, working with the state and the city
government, had also helped locate the Annual International Convention of the Biotechnology Industry Organization in Chicago in 2006 and 2010, and to repeat as host in 2013 and 2016.
Similarly, the Illinois Science & Technology Coalition (ISTC) has a mission “to cultivate and attract research and technology-based investment, talent and job growth in the state.” Its member organizations include Argonne National Laboratory, University of Chicago, Northwestern University, University of Illinois, Illinois Institute of Technology, Abbott Laboratories, Baxter, industry groups, and non-profits. According to Mark Harris, ISTC’s president, the value and the strength of this organization lie in its ability to build bridges across sectors, disciplines, and institutions. He noted, for example, that ISTC had recently helped Argonne Laboratory prepare a $100 million proposal for a storage hub. It had also worked with the University of Illinois to join the national Network of Advanced Manufacturing.
One of the ISTC’s priorities has been to increase the space available for innovators. Mr. Harris said that he was especially proud of “1871,” a 50,000-square-foot digital technology incubator launched in May 2012 in the Merchandise Mart. “Everybody can have a presence in 1871,” he said. “And it’s not just an incubator. The old incubator model was, ‘Give him a copier, he can share the copier.’ I’m seeing the development of an ecosystem now that is becoming more vital and connected.”
Closely related to the ISTC is the Illinois Innovation Council (IIC). In his keynote address, Governor Quinn told the conference participants that that the primary focus of the Council is to showcase “the innovation excellence of Illinois in both academia and industry”—not only in health care, but also across agricultural, industrial and other applications of technology.
Dr. Riedel of Baxter said he took a keen interest in collaboration. Advancing academia-industry partnership was clearly foremost in his activities (he holds both biotech and engineering positions at Northwestern University), but he took pains at several points during the conference to highlight the development of a broad network of participants. He noted in particular “a community spirit that is very important in building this infrastructure,” reflected in the new tech parks in adjacent Skokie, the Illinois Institute of Technology, the Illinois Medical District, and the University of Illinois Technology Park, which “for the most part, are filling up to capacity. “This clearly shows that we are building jobs, companies, and a technology-based industry. The industry has first-class IP law firms, and a relatively large number of start-ups and new companies.”
Dr. Riedel also observed that technology transfer is improving “as university offices become more adept at interfacing with industry and creating transparency to the vast portfolios of intellectual property.” Without transparency, he said, a person in industry has little access to research projects that might have potential value for industry. At Northwestern, the Innovation and New Venture Organization is not only a tech transfer office, he said, but
“really an organizational framework that recognizes and finds innovation and spins that innovation into new start-ups.”
Expanding Skills
Another innovative mingling of activities is the effort of Chicago’s Museum of Science and Industry to expand the science skills of teachers. “We teach science teachers—especially in middle school—how to teach science,” said museum director David Mosena. ”About 70 percent of the middle-school science teachers in Chicago have no background in science. It’s hard to be inspiring if you’re not comfortable in the subject.” Over the last five years, some 8,500 teachers have attended this program, and about 500 have taken masters-level coursework offered in partnership with the Illinois Institute of Technology. One result is that about 25 percent of the Chicago Public School System’s K-8 schools now have teachers of science whose skilled have been upgraded.
Robert Wolcott of Northwestern’s Kellogg School of Management saw further grounds for optimism. “We are moving into a more complex and rewarding world,” he said, “with diverse innovation ecosystems, networks of mentors connected to those who are new, and the ability to envision in our state a community where people together can make innovation happen.”
C. CREATING INNOVATION UNIVERSITIES
Universities with active missions to educate, conduct research, and commercialize new technologies are an important part of a regional innovation ecosystem. Several speakers highlighted how Illinois universities support the efforts of faculty members to reach out to partner organizations and expand their own activities in the market.
Northwestern University: Preparing for the Future We Cannot See
A single research professor—along with graduate students and a few colleagues—can bring a new idea to the marketplace. At Northwestern University, Richard Silverman, a professor of biochemistry, did just that. In the 1980s, he began studying an enzyme that seemed to block the mechanism of epilepsy and other neurological disorders, and the activity of the enzyme convinced him that it should have clinical applications. He approached the staff of the then small Technology Transfer Office at Northwestern, and the office helped him attract the interest of a major drug company.
Although the enzyme, later marketed in 2005 as Lyrica, turned out to be a blockbuster, Dr. Silverman described the technology transfer process as challenging. As a researcher, he had actively sought—but was initially denied—information and data about the experimental work being conducted by the drug company on his discovery. Today, Northwestern’s Technology Transfer Office—now the Innovation and New Ventures Office (INVO)—demands a full
two-way sharing of information between companies and Northwestern laboratories.
At Northwestern’s new Chemistry of Life Processes (CLP) Institute, the goal, according to director Thomas O’Halloran, is to “break down the silos that typically separate many classic academic disciplines.” This impulse, he said, is “part of Northwestern’s ‘genetic code’—to find ways to bring in new students as they’re learning chemistry or engineering, to have them see how to integrate these subjects by watching others do it, and to help them start companies by participating in team research.” The CLP, he added, is both an institute, a common playground for many disciplines, and an effort to lower the hurdles in getting scientists to work across their chosen disciplines.
Innovative ideas come from other directions at Northwestern University. Participants heard from Julio Ottino, dean of the McCormick School of Engineering, about a new model for educating young engineers. “We know that analytical skills are essential for problem solving,” Dr. Ottino said. “But there is no big prize if the problem itself turns out to be the wrong one.” In order to educate the engineers who are truly prepared to deal with future challenges, he said, “we need to instill two additional skills. The first is divergent thinking; right-brain thinking; metaphorical thinking; intuition.” The goal is to produce leaders who “thrive at the intersection between disciplines,” between theory and application, and between global problems and the knowledge needed to solve them. “The second class of advice,” he said, “is not to attack the obvious—the future that is five feet in front of you. True—some of this needs to be done to solve real-world problems. But preparing to solve real-world problems presupposes we know what they are going to be. We should prepare people for the future that we cannot see.”
The University of Illinois: Reaching out to Industry
Like Northwestern, the University of Illinois at Urbana-Champaign has broadened its approach to innovation. Caralynn Nowinski, Vice-President for Innovation and Economic Development, referred to the Morrill Act as a pivotal measure that has given rise to the nation’s great land-grant universities. As part of their mission, these universities emphasize technology as well as science. “If President Lincoln didn’t make it clear in 1862 when he signed the Morrill Act,” she said, “our state legislature made it very clear in 2000 when they established economic development as the fourth mission of the University of Illinois.”
In approaching the economic development portion of the mission “comprehensively,” she said, the university tries to “enable research, transfer it into people’s daily lives, incubate young companies that grow out of research, and invest in those companies.” For example:
• I-STEM brings in public funding for pre-school education, middle and high school education, and experiences for college and graduate
students. Its goal is to recruit groups on the U of I campuses to teach students to apply STEM learning to entrepreneurial experiences.
• The Innovation Living Learning Community, or Innovation LLC, is a dormitory with 130 students from different disciplines who are interested in entrepreneurship. Facilities include a garage with a 3-D printer where they can work on prototyping.
• The university sponsors Business Plan Competitions “that have been successful in rewarding students and in providing state funding for their companies.” The program introduces students with business skills to students with engineering and science skills and helps them combine skill sets and potentially find a commercial application.
• Tech Ventures encourages students from the business school to partner with the tech transfer office, create a business plan, and try to identify a commercial application for new technologies.
• ThinkChicago brings 100 college students from across Midwest to Chicago to learn about technology entrepreneurship and understand how companies function.
• Several programs are designed for faculty, including IP Coffee Breaks, where faculty and grad students discuss such topics as protecting IP. The Proof of Concept program in Urbana and Chicago provides up to $75,000 to faculty entrepreneur teams.
• EnterpriseWorks, part of the University of Illinois Research Park, is an incubator that offers SBIR consultation and a Mobile Development Center.
The University of Chicago: ‘Academic Entrepreneurship’
To address the call for stronger interdisciplinary partnerships between universities and national laboratories, University of Chicago and Argonne National Laboratory have created a partnership that includes a new engineering program, built from scratch, that replaces the old silo structure of departments with themes, said Matthew Tirrell in his conference remarks. The new Institute for Molecular Engineering, which he directs, has begun construction of new facilities and has hired its first three faculty members. The near-term goal, he added, is to hire 25 faculty members, who will be chosen “by imagining the kinds of skills needed to do engineering at the molecular level.”
“The idea of molecular engineering is to connect with molecular-level science and to develop solutions to problems that society cares about in energy, information, environment, health care,” he said. “A major new strategy will be a more cooperative research relationship with industry, with incentives to develop innovations with commercial promise. We want to be a better partner across the whole spectrum of activities.” He added, “This is entrepreneurship on the academic side, and it is risky. We won’t worry about what we call our engineering disciplines, but we worry about what they can do.”
D. BUILDING INNOVATION PARTNERSHIPS
With the growing globalization of research, manufacturing, and provision of services, regional innovation systems now compete internationally. U.S. Government support for research grew substantially following World War II, said University of Illinois President Designate Robert Easter, when federal agencies discovered the power of the universities to do basic and applied research. By the 1960s, the nation was spending more than 2 percent of its GDP on federal funded research, mostly in university laboratories.
This research provided the platform for new technologies and economic growth. “One could argue that science-based innovations led to economic growth and opportunity for our nation,…but with the end of the Cold War, that priority declined, and since the fall of the Berlin Wall, our investment as a nation has been modest—around 1 percent of GDP.”
By contrast, Dr. Easter continued, other nations are investing steadily more in innovation. China, Taiwan, South Korea and others are increasing their research investments about 10 percent each year, and those investments are yielding “technologies and concepts that are world class.” For China, a key strategy is to build innovation clusters through the development of large S&T parks and acquire technologies and talent from abroad.4
The response of the University of Illinois to global competition is to expand and strengthen its partnerships with both industry and government. The university has established a venture fund to enable faculty to commercialize their technology. A research park, which provides a physical locus for university-industry interaction, was built on the campus in Urbana in the late 1990s.5 In 2011, this park was named the outstanding research park in the United States.
Dr. Easter also highlighted three university partnerships—with BP, Abbott Laboratories, and the Department of Energy—that together have increased the University of Illinois’ research budget by nearly 50 percent in the past decade to nearly $1 billion. “We have done quite a lot,” he said. “And we have ambitions to do quite a bit more.”
E. SUPPORTING INNOVATION AT THE STATE HOUSE
In his keynote remarks, Governor Quinn noted that Illinois offers strong support for innovation. He described the State’s Pathways Initiative, which seeks to encourage young people to embrace science, technology, engineering, and mathematics. Emphasizing broadband access and the
____________________________
4Mu Rongpin, “China,” in UNESCO Science Report 2010, Paris: UNESCO Publishing, 2010, Chapter 18.
5For a review of the strategies and scope of several leading parks around the world, see National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices—Report of a Symposium, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2009.
development of digital educational tools, the initiative allocates more than $8 million for a “gigabyte competition” that challenges communities in Illinois to submit ideas on how they would take advantage of hyper-fast broadband.
Through the initiative of the Governor’s Innovation Council, the state has also created an Open Data Initiative. The goal of this initiative is to put all state government data on-line and make it freely available, along with data of the city of Chicago, Cook County, and eventually other local governments.
F. DRIVING INNOVATION AT FEDERAL AGENCIES
The conference also reviewed how federal efforts to promote research, education, and entrepreneurship could yield tangible benefits for states and regions. Belying the widespread image of federal agencies as siloed, inflexible bureaucracies, senior representatives from the Economic Development Administration, the National Cancer Institute, the National Science Foundation, the Advanced Research Projects Agency for Energy, and the Office of Naval Research described novel and cross-disciplinary approaches to the generation and translation of new knowledge. These approaches represent new opportunities for the state’s universities and research centers to participate in a wide range of federal research and to develop the regional innovation ecosystem.
Economic Development Administration
John Fernandez, formerly Assistant Secretary for Economic Development at the Department of Commerce, noted in his conference remarks that a new element in the past few years is the federal government’s interest in not only studying clusters but actively participating in planning and supporting them. This shift has been gradual, he said, and slower than he would like, but nonetheless significant. “In context of the global economy,” he said, “the only way you can compete is as regions. The federal government is in a unique position to finance and be a catalyst to help groups work across state or other political borders.” Recognizing this need and opportunity, EDA has launched a variety of initiatives including the i6 Challenge, the Jobs and Innovation Accelerator Challenge, the U.S. Cluster Mapping project, and the Regional Innovation Accelerator Network.6
National Cancer Institute
In his conference presentation, Dr. Jerry Lee of the National Cancer Institute described an innovative experiment to accelerate progress on analyzing growing mountains of cancer data. “We reached out to the community 10 years ago and asked for their key needs as researchers,” he said. “What we got back
____________________________
6For a description of these programs, see <http://www.eda.gov>.
was a little surprising. First, everybody wanted standards and protocols. They also wanted real-time, public release of data. They wanted large, multidisciplinary teams and a pilot-friendly team environment to share failures as well as successes with each other. Finally, they wanted team members who themselves have trans-disciplinary training.” Dr. Lee and the NCI leadership decided to put exactly those bullet points into their mission. Over the next few years, they found several genes never before associated with brain cancer, as well as a new subset of glioblastoma that occurs in younger patients.
He added that new insights in the flow and handling of data have generated an experiment that takes the concept of interdisciplinarity to a new level: to combine the insights of cancer biologists and physical scientists, such as physicists, engineers, and mathematicians. “Physical scientists have very different ways of interpreting data,” Dr. Lee said. “We gave them the difficult charge not to do just better science, but paradigm shifting science. We asked them to build new fields of study based on their perspective of how the disease works.”
Another perceived failing of federal agencies is the complexity and wasteful slowness of the grant process, said Dr. Mirkin. Dr. Lee responded that the NCI was examining ways to push projects “as we want to.” The physical sciences program of the CSSI was funded in one year, he said, and our goal is “to accelerate that funding between the gaps.”
National Science Foundation
The National Science Foundation is also working toward speed, said Thomas Peterson. I-Corps, one of its newest programs, he said, “operates on a quarterly basis, so that the typical time from identifying a potential project and giving a decision on a grant is a matter of weeks. It is an important experiment. The challenge is doing it at large scale, so that we are not accused of picking winners by shortening the classical review process.”
Dr. Peterson also observed that NSF has been innovative in a broader sense—in funding projects more directly aimed at useful applications. “You may be surprised to learn,” he said, “that the charter establishing the NSF in the 1950s contained a clear mandate to focus on activities with societal benefit.” The agency supports many center-like programs that fund not only the principal investigator, but also teams of universities partnering with teams from industry. i-Corps, for example, which began in 2011, leverages small amounts of money to help researchers to push their results to the proof-of-concept or prototype stage, and from there to persuade a VC firm or other partner that the technology is worth substantial investment. The program, even though small, has been “wildly successful,” he said.
Advanced Research Projects Agency for Energy
A new agency almost totally dedicated to innovation is ARPA-E, the Advanced Research Projects Agency for Energy. ARPA-E, said Deputy Director Eric Toone, differs from most federal funding agencies in seeking to identify and support “over-the-horizon” technologies that have the potential to transform some aspect of energy science or engineering. The agency’s job is not to improve existing technologies, or drive them along their natural price or learning curves. “That is important,” he said, “but it’s not what we do. We try to identify fundamentally new technologies.”
Office of Naval Research
Another innovative way to perform at the federal level was designed by the Office of Naval Research (ONR). In order to stimulate innovation, the fundamental structure of the ONR was revised by the Defense Authorization Act of 2001. The act added a “new and critical layer of management to create three virtually equal directors,” said Chris Fall: the Director of Research, Director of Innovation, and Director of Transition. Virtually the entire budget now flows through these three offices, which have to compete with one another for funds. “ONR,” he said, “is structured to be an innovation machine. The tension among the three directors works very well, and makes for an interesting model that is being copied by others. I don’t think we ask often enough the basic question of how to structure an agency for optimal efficacy.”
G. FOSTERING INNOVATION HUBS AND CLUSTERS
A pervading theme at the conference was the need for not only interdisciplinarity, but also inter-sectoral partnerships that drive innovation. Speakers agreed that such activities require the proximity afforded by various forms of technology hubs and clusters, and that these have been vital to regional innovation across the country. Dr. Mirkin said that Illinois leaders had learned to make convincing arguments in favor of its innovation hubs, and that the region was becoming better at promoting technology transfer, helping scientists secure intellectual property, and establishing relationships with companies and startup organizations.
In forming innovation hubs, Dr. Mirkin said, a region needs not only an entrepreneurial culture, but also state-of-the-art infrastructure. The infrastructure, which is required to do the initial basic research, requires funding at a level that is seldom available locally. This is where government participation is essential in the form of federal and sometimes state support for the physical innovation environment, from broadband to real estate to highways.
Box A
Powering the Internet
Innovation hubs thrive on state-of-the-art infrastructure. While a robust broadband network is widely seen as critical for innovation, supporting this network is a major engineering challenge. “We have a huge need for power to maintain the Internet and the web. Information technology is the biggest user of electrical power in the United+ States now; the big databases of Google and Amazon and Microsoft and government are the modern steel mills. They absorb power to run the electronics and then more power to cool it. Having reliable power, which is hopefully green, is essential to the IT industry.”
Dennis Roberson
Vice Provost, Research Professor
of Computer Science
Illinois Institute of Technology (IIT)
The Role of the Economic Development Administration (EDA)
John Fernandez, formerly of EDA, observed that the idea of clusters as part of economic development strategy is not new but noted that its importance has never been greater. For example, EDA has supported research in this area for almost 20 years to better understand what is needed, what works, and what needs to be adapted to the new information-technology based ecosystem of today. He added that a new element had been introduced in the America Competes Reauthorization Act of 2010, where the federal government and Congress agreed on the value of regional strategies and embedded in the Act new authorities that actually drive those strategies. The Act provided a definition of a regional cluster as a geographically bounded network of similar, synergistic, or complementary entities engaged in a particular industry sector.
Mr. Fernandez made an important distinction between the government’s cluster strategy and an industrial strategy. “We’re not picking any winners,” he said; “the applicants and people are. Based on the strength of our economy or the DNA of our regional economy, they are saying that these are the areas where we think we have the best opportunities; provide us with the investments to help us accelerate what we’re doing.”
H. ENCOURAGING INNOVATIVE START-UPS
Although innovation clusters provide helpful seed beds and incubators for new firms, they still face the “valley of death,” the period of transition when a developing technology is deemed promising, but too new to validate its commercial potential and thereby attract the capital necessary for its continued
development. In his comments at the conference, Neil Kane of Illinois Partners Executive Services identified two challenges facing firms seeking to commercialize research ideas: The first is the technology risk, and the second is that investors are funding only companies with revenues. “It’s the biggest impediment I see now,” he said, “for getting these companies off the ground.”
In his presentation, Charles Wessner of the National Academies drew attention to the role of the Small Business Innovation Research program (SBIR) in bridging the valley of death. . A recent comprehensive assessment of the program by the National Research Council found that SBIR, which provides over $2.5 billion in scarce pre-venture capital funding on a competitive basis, encourages the entrepreneurship needed to bring innovative ideas from the laboratory to the market.7 He added that small firms in the state could benefit from coaching on how to apply for SBIR and on how to develop their businesses.
Norbert Riedel of Baxter described the role of corporate seed funds. Baxter, he said, has partnerships with Northwestern and the University of Illinois to create a seed fund with about $200 million for biotechnology innovations; Abbott Laboratories has a similar fund. When asked if such a modest fund could make a difference, he replied that healthy start-ups could thrive on amounts as small as $1 to $5 million.
Eric Isaacs of Argonne cautioned that some fast-growing firms, like hungry lions, require more than seed funding to stay healthy. “Lions are capable of capturing mice, one after the other,” he said. “But if a lion tried to live exclusively on mice, it would eventually die. A lion needs to find an antelope or buffalo to serve its needs.”
Dr. Riedel said that start-ups also need to draw on a flow of ideas and innovation. These can be encouraged by either a potential acquirer or continuing university research. Another advantage for young firms, he said, is proximity to potential funders and partners. “Proximity matters,” he said, “because it enables face-to-face contact.”
Conference participants attested that the path to profitability is seldom easy—even for the best-positioned start-ups. In his presentation, Roger Moody of Nanosphere, a company that emerged from Northwestern’s International Institute of Nanotechnology, said that years of hard work were needed to approach profitability—even with a promising technology. In his presentation, AuraSense vice president, Van Crocker, identified the four factors most important to successful commercialization:
• the core technology;
• employee and advisory talent;
• real estate and hardware infrastructure; and
• equity and other financial resources.
____________________________
7National Research Council, An Assessment of the SBIR Program, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2008.
I. TRAINING A SKILLED WORKFORCE
A strong theme throughout the conference was the need for improved training, especially at the levels of K-12, vocational and technical instruction, and continuing education. Several participants voiced concerns about students’ low level of interest in careers in science and technology. One questioner posed that “If students could see this pathway, where you go through college, come to graduate school, and then have a choice of the academic route or an entrepreneurial route, it could be a major draw for students.”
Dr. Mirkin advocated exposing students earlier to laboratory work “where the hands-on excitement begins.” By Illinois tradition, he said, students are not exposed to laboratory work until the third or fourth year of college. “Up to that point, we tell them to read about it, and we’ll test you on it; then read some more we’ll test you on that. It’s like setting out the bases for a baseball game and saying, Okay, for the next nine years we’re going to study each of the positions. Once you’ve learned all those, we’ll play a game. How many people will want to go into baseball?”
While nanotech laboratories typically employ PhD-level technicians, this workforce model is not scalable for private companies, where a skilled laboratory technician could do the work at half the salary. Michael Rosen of the Illinois Science and Technology Park spoke of a comprehensive effort to fill such gaps in the workforce. “They don’t all have to be PhD scientists,” he said. “Our goal is to interest students in many different jobs, such as nanotechnician, where they can see interesting employment. We work with Oakton Community College, nine local high schools, the village of Skokie, the State of Illinois, the Illinois Science and Technology Coalition, and technicians from the company NanoInk to create a curriculum for high school students and community college students.”
Dr. Roberson of the Illinois Institute of Technology felt strongly that every sector in the innovation ecosystem has training responsibilities. These include the continuing education programs of universities, the partnerships between cities and community colleges, “and the obligation of companies to support the continuing education of their own employees.”
J. BUILDING INNOVATION COMMUNITIES IN ILLINOIS
A number of speakers extolled the diversity of forces behind the emerging innovation ecosystem of the Chicago area and the state of Illinois more generally. Dr. Isaacs of Argonne stressed the essential elements of teamwork and community, “because that’s how innovation gets done. Many people still believe falsely that in universities, and places like Argonne, and even in industry, the single inventor, like Thomas Edison, does things on his own. He has a dream, he creates the thing, and all of a sudden, we have a product that spreads across the globe. While Edison himself liked to burnish this image,
Edison’s laboratory in Menlo Park, New Jersey in fact had over 40 scientists working on his ideas, including the light bulb.”
Mr. Fernandez offered a more specific recipe, pinpointing innovation clusters as the loci for action and concluded by highlighting the role of industry. “Economic development today,” he said, “is about the global economy. It requires aligning human capital with job needs; developing enabling infrastructure; increasing spatial efficiency; creating effective public and civic culture and institutions; and enhancing regional clusters. I believe that to build an ecosystem, you need an intermediary, and the best kinds are public-private partnerships organized around industry sectors. And industries are the agents that classically drive regional clusters.”
Entrepreneurship, Communities, and Trust
Mr. Wolcott, of the Kellogg school, suggested that as such new ideas spread, the “innovation mindset” is starting to take root in Illinois. More potential entrepreneurs are choosing to stay there, and more people are creating an environment where entrepreneurs can meet mentors, partners, and investors. Finally, he said, change is emerging “at ground level where things actually happen.”
He concluded by praising the power of community. “This is different than an ecosystem, which is the world of attorneys, entrepreneurs, technologists, university, and government. It is the places where people actually connect with an affinity and a level of trust. When you’re new to things, you make mistakes. You need spaces where people feel comfortable to try an idea, to explore, to find their mission, and make things happen. I see a particular role here for larger communities, especially for universities and government, because they can act as convenors. A university is a neutral platform with spaces where people can come together. I think that is one of the most important missions we have, to help people connect with others in the community, find their mission, and then achieve it.”
K. OPPORTUNITIES AND CHALLENGES
The final Roundtable session of the conference addressed the need to attract students to careers in science and technology and to encourage entrepreneurship. It also addressed the challenge of sustaining public support for these initiatives.
Growing the Workforce
Dr. Mirkin asserted that the science curriculum at the secondary and tertiary educational levels should be designed so that students are exposed early on to the excitement of laboratory work. Acknowledging that this would require additional supervision of students, Dr. Mirkin noted that such experiences “changes their view of science and maybe their lives.”
Michael Rosen of the Illinois Science and Technology Parks called for an effort to develop a more diverse science and engineering workforce. “They don’t all have to be Ph.D. scientists,” he said. “Our goal is to interest them in many different jobs of the future.”
Encouraging Innovation and Entrepreneurship
Citing the success such as the X-Prize, the DARPA Grand Challenge for driverless vehicles, the GAO’s Dr. Persons said that he favored the use of prizes as incentives to innovators. These prizes, he said, provide a high return on investment and serve as an inspiration for students around the world.8 In his roundtable remarks, Dr. Wessner suggested introducing students to ‘local heroes”: successful innovators from the community who could speak firsthand about the challenges and rewards of innovation and entrepreneurship. Dr. Mirkin agreed that local successes—from Midwestern universities and regions—ought to be more widely celebrated. Referring to a major nerve pain medication that was developed at Northwestern University, he said, “Here, Lyrica is the biggest deal, and no one knows about it,” while “people brag about the things that Harvard and MIT have done. On the West Coast, it’s the same. We [in the Midwest] don’t understand how important it is to communicate about these local achievements.”
Sustaining Support
The participants in the roundtable panel noted that Illinois’ investments to improve its education, investment and research infrastructure, and capacity to leverage existing areas of strength to create new knowledge-based companies, will determine the region’s future competitiveness and economic well-being. In his concluding remarks, Andy Ross, Governor Quinn’s Chief Operating Officer, asserted that he was in full agreement on the need for the state to invest in the infrastructure—both physical and human—for innovation. However, citing the state’s $83 billion in unfunded pension liabilities, he noted that key programs, including the Pathways Initiative, were “on hold” until the state took strong measures to resolve its pension crisis. “Right now,” he said, “we have to get our fiscal house in order, and then we can make the investments we need to help spark new companies.”
____________________________
8For a review of the efficacy of innovation prizes, see National Research Council, Innovation Inducement Prizes at the National Science Foundation, Stephen A. Merrill, ed., Washington, DC: The National Academies Press, 2007. This study finds that “Inducement prize contests are clearly not well suited to all research and innovation objectives. But through the staging of competitions they are thought to have in many circumstances the virtue of focusing multiple group and individual efforts and resources on a scientifically or socially worthwhile goal without specifying how the goal is to be accomplished and by paying a fixed purse only to the contestant with the best or first solution.”
L. BUILDING ON SUCCESS
As seen in this overview, this conference report captures a rich sample of initiatives underway in Illinois to develop its innovation ecosystem, and develop and diversify the state’s economy. The state, for example, is home to many of the nation’s largest firms. Baxter’s initiatives, described in this report, show how large companies can effectively partner with universities and small innovative firms.
While this report includes perspectives on university technology transfer from some of Illinois’ leading universities and draws attention major successes like Lyrica, it also highlights participant discussion on the need for technology transfer offices to better support the diffusion of intellectual property and to stimulate the development of disruptive technologies.
This report also highlights the role of development of public-private partnerships in knitting together high technology skills, strong professional networks, and access to high-risk capital. Intermediating institutions, like iBio, show how leveraging existing assets can create the new high growth companies that can accelerate the growth of the state’s innovation economy.
Finally, this conference report also identifies a number of “best practices.” For example, Northwestern’s Julio Ottino and of the Illinois Science and Technology Coalition’s Mark Harris underscored the importance of entrepreneurship courses at universities and the need for inter-disciplinary approaches to teaching engineering, science, and business.
The proceedings, found in the next chapter, provide detailed summaries of the conference presentations and deliberations by the state’s business, political, and academic leaders, along with those of senior U.S. government officials and national experts. They draw attention to the challenges, accomplishments, and opportunities facing Illinois today.
