Nashville Innovation Project: Increasing the City's Innovation Capacity

NASHVILLE INNOVATION PROJECT increasing the city’s innovation capacity JANUARY 2018

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Prepared by Brian Phelps, ASLA

n About the Nashville Innovation Project The Nashville Innovation Project is a grassroots organization dedicated to increasing the city’s innovation capacity. www.nashvilleinnovationproject.com © 2018 Nashville Innovation Project

increasing the city’s innovation capacity : Nashville Innovation Project

TABLE OF CONTENTS

THE CITY AS A PLATFORM FOR INNOVATION

I

INNOVATION ECOSYSTEM MODEL 4 ENABLING ENVIRONMENT 6 PHYSICAL INFRASTRUCTURE 8 CAPITAL 10 NETWORK 12 TALENT 14 ENDNOTES 16 APPENDIX A: MAPPING 18

Nashville Innovation Project : increasing the city’s innovation capacity

Figure 1.0 Nashville Innovation Ecosystem Network Graph (interactive version available @ www.nashvilleinnovationproject.com)

THE CITY AS A PLATFORM FOR INNOVATION

N ashville has experienced tremendous growth over the last decade and continues to attract people from all over the country at an unprecedented

rate. The city’s hospitality industry, construction boom, and business support services have been and continue to be the primary drivers of these gains. Our low-cost and high quality of life environment has given us a clear advantage when attracting the back offices of successful companies. As local firms provide services and construct new offices and homes for these businesses and residents, they have further accelerated the city’s economic surge. It is easy to get caught up in the limelight of the accolades and praise Nashville continues to receive and lose sight of the changing economic landscape.

During this boom, our core industries that serve as the foundation of the region’s economy such as healthcare, music, publishing, and advanced manufacturing are experiencing incredible market changes and are under a sustained threat of disruption.

Our success has overshadowed the reality that the ecosystems of our competitive peers Austin and Denver have created over twice as many funded startups and have attracted over twice as much venture capital investment per capita.1 Between 2011-2015, Nashville has generated a fraction of patents compared to our peers.2 Even with our high growth rate in technology talent, we consistently ranked below our peers and had considerably fewer jobs than would be expected for a city our size. Our peers aren’t slowing down. All of the selected peer cities are posting over three times the amount of absolute job growth in tech jobs as compared to Nashville. 3

“Serendipity is not luck.”

-Joi Ito

Additionally, we are not taking advantage of the incredible research happening at the city’s local universities. With almost $700 million in R&D funding pouring into these institutions (of which Vanderbilt University received the bulk at 94%), very few local companies have been created to take advantage of this research. Nor has a significant cluster been built around these institutional assets. Much of this knowledge and know how remains confined to the campuses and in the labs.

The continued accelerated business cycles and digitization of all industries have put a premium on a region’s capacity to provide a platform for companies to collaborate and innovate. As solutions are increasingly becoming more complex and the speed of change increases, organizations Nashville Innovation Project : increasing the city’s innovation capacity

1

Austin, TX 1.17 (1,072 Total)

Nashville, TN 0.42 (288 Total)

Charlotte, NC 0.21 (166 Total)

Indianapolis, IN 0.16 (141 Total)

Denver, CO 0.87 (582 Total)

Executive Summary.The City as a Platform for Innovation

FIGURE 1.1 TOTAL FUNDED STARTUPS PER 1,000 POPULATION (2012-2016)

Denver, CO 7.1 (4,716 Total)

Charlotte, NC 2.6 (2,076 Total) Indianapolis, IN 3.8 (3,245 Total)

Nashville, TN 1.7 (1,133 Total)

Austin, TX 14.6 (13,297 Total)

Source: Pitchbook

FIGURE 1.2 TOTAL UTILITY PATENT GRANTS (2011-2015) PER 1,000 POPULATION

Source: U.S. Patent and Trademark Office

2

need to have access to the best talent inside and outside their walls. Nearly 50% of companies report their most valuable product innovations originate from external sources. As firms expand the use of external knowledge, the economic landscape is becoming more horizontal than vertical. This evolution values the flow of information and is making the highly functioning innovation ecosystem a significant regional advantage for cities. For our future prosperity to continue, it is critical that we remain stewards of our advantages and provide an ecosystem that fosters the formation of new innovative companies and enables existing firms to thrive in this new economic landscape. It is about: •

Creating leading companies that export their products and services to the world rather than only providing regional services to the local economy;

•

Homegrown companies that are more likely to invest in the community, and;

•

Realizing our potential.

The truth is the city shapes our social networks upon which innovation is dependent. It relies on the density, diversity, and effectiveness of these networks. Our proximity with one another and the overlap of our daily routines have a profound effect on the generation of new ideas, and with whom we collaborate and develop social ties between. The frequency of availability and awareness of one another further increases the probability of these connections forming, passively maintaining relationships, and building trust within the network. All essential ingredients to innovation.

The Nashville Innovation Project recognizes every organization has a unique innovation culture. The project’s focus is on the external factors that shape and reinforce these strategies. Nashville’s scattering of innovation infrastructure and isolated clusters (Figure 1.0) has diluted us of our potential by making it harder to connect. As a result, we have to work harder to ensure a diverse resource-sharing network between the various clusters. Innovation is at these intersections and to mine them we must find solutions that knit the community together and create an ecosystem greater than the sum of its parts.

The Innovation Atoll strategy and other recommendations proposed in this report offer a way forward. The strategy seeks to accomplish this by strengthening the invisible networks through strategic and frequent programming, more efficient transportation that relies on transit, walking, and bicycling, and the utilization of public space to foster meaningful engagement.

Nashville’s economic future will depend upon the city’s ability to innovate and adapt. Even during this period of historic strength, it is crucial to ruminate on the direction and future of our city. We must decide if we are content with being only the best place for back offices of the world’s most innovative companies, or if we’re willing to foster the creation of those leading companies ourselves.

To realize our region’s full potential and export our ingenuity and creativity to the world we need to ensure the essential components of a successful innovation ecosystem are present and working. increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

This report is the culmination of over two years of exploration into Nashville’s innovation ecosystem and deep dive into the mechanics of innovation. The following is a summary of our findings and recommendations.

It’s a journey of exploration into what it means to be an innovative city, and the beginning of a conversation about the future of our own city - one which we hope you’ll join.

Germantown Marathon Village Tennessee State University

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East Nashville Church Street

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Rolling Mill Hill Wedgewood-Houston

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Vanderbilt University Medical Center

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The Gulch

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Belmont University

Trevecca Nazarene University

Tech Hill Craighead

Harding Green Hills Lipscomb University

Sidco Drive

Figure 1.3 Nashville Districts: Innovation Infrastructure Clusters Source: Nashville Innovation Project Additional maps available in Appendix A. (interactive version available @ www.nashvilleinnovationproject.com)

Nashville Innovation Project : increasing the city’s innovation capacity

1/2 Mile 1/4 Mile CLUSTER

3

Executive Summary.The City as a Platform for Innovation

INNOVATION ECOSYSTEM

TALENT

This report examines the state of our current innovation ecosystem based on the following five components of a healthy innovation ecosystem. Together they serve as a platform to empower human capital to commercialize innovation.

NETWORK

The model is based on the World Bank’s innovation framework.

CAPITAL PHYSICAL INFRASTRUCTURE ENABLING ENVIRONMENT

TALENT

Talent is comprised of the individuals within which all the skills and knowledge are stored.

• Tacit knowledge & skills • Education

The physical infrastructure provides the environment where business and interactions between individuals take place and the tools to support the talent within the ecosystem.

NETWORK

The network is the invisible web of social ties between individuals, companies, and institutions. It is the conduit through which knowledge and know-how flow through the ecosystem.

• Informal & formal networks • Strong ties • Weak ties

$

• • • •

Urban design Architecture Public realm Utilities

ENABLING ENVIRONMENT

CAPITAL

Access to financial capital is essential to bringing innovations to market.

• Research, unsecured loans, proof of concept funding, & challenges • Government commercialization funding Angel funding • Seed capital • Early stage funding • Large stage funding

4

PHYSICAL INFRASTRUCTURE

The enabling environment is the legal and cultural environment that regulate activities, inspire the talent to bring their innovations to market, and facilitates connections throughout the ecosystem.

• • • • • •

Laws & government polices Level of trust Common purpose Expectations Social code of conduct Core and emerging industry clusters

increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

MECHANICS OF INNOVATION

Innovation is more than creative ideas. It is in large part the execution of the ideas. Too often innovation is only associated with the moment of inspiration. The commercialization of a creative solution is a critical part of the innovation process. The five components of the innovation ecosystem work together to facilitate the generation and commercialization of new ideas. The fuel for innovation is new knowledge, experience, and relationships within the network. To ensure these inputs are available within the ecosystem and each actor is prepared to recognize and act on them, the following characteristics and operations are essential.

INFORMATION HARVESTING

DIVERSE DENSE NETWORKS

PREPARED MIND • Engender an open mindset & expectation of innovation • Be curious • Dedication to finding solutions • Seek challenges & new knowledge • Immerse oneself in a richly stimulating environment • Scan the periphery

NETWORK DEVELOPMENT

• Build bridges between diverse clusters • Increase diversity of network to inject new information • Ensure the development of strong and weak ties • Cultivate open high trust environment • Increase frequency REFLECTION & of overlap in daily ENGAGEMENT routines

• Allow time to connect dots • Induce mental wandering • Provide opportunities for exercise & access to nature • Evaluate new knowledge and know-how gained through exploration with strong ties.

• Boost exposure to innovation within the ecosystem by making it accessible & visible • Encourage walking, biking, & transit • Embrace turbulence & friction within public realm • Improve programming of public and common spaces to spawn meaningful engagement • Bring people in closer proximity to one another

EXPLORATION & SERENDIPITY

Nashville Innovation Project : increasing the city’s innovation capacity

• Maximize trust within the ecosystem • Ensure overlap and visual availability in buildings & public space • Value face-to-face communication over other forms • Instill an expectation of collaboration • Incorporate design elements within spaces to facilitate collaboration

COLLABORATION

5

Executive Summary.The City as a Platform for Innovation

ENABLING ENVIRONMENT

•

The community’s culture is a product of time and values of its citizens.

Nashville’s ecosystem doesn’t have the rich history and connections between entrepreneurs that characterize more mature ecosystems.

•

High trust is critical to building networks quickly by reducing transaction costs.

•

While Nashvillians are more welcoming and willing to collaborate with individuals, there is less cooperation between organizations. The open innovation model is not commonly embraced by firms as a part of their innovation and growth strategy.

•

The common purpose of making Nashville a great city is present throughout the city. It is this sense of common purpose and confidence in ourselves that further reinforces the foundation of the city’s innovation ecosystem. Nashville is an optimistic city.

•

The City’s low-cost business environment is attractive to companies and lowers the cost of starting new ones.

•

The entrepreneurial support system is primarily focused on the healthcare, music, and digital media at the expense of other emerging industries.

Others feel left out.

•

The Nashville region has seen significant growth in advanced manufacturing. The city has an opportunity to build and draw upon this knowledge and know-how to support innovation.

•

The emerging sectors of artificial intelligence (Digital Reasoning) and blockchain (Hashed Health) offer an opportunity to expand the city’s economic diversity and nurture new clusters. These sectors create new competitive platforms and establish exportable products and knowledge.

•

Ecosystems that have less non-compete agreement enforcement are at an advantage because they allow for more movement between companies and the formation of new ones.

Nashville is fortunate to have a high trust culture. Most Nashvillians are willing to extend their social capital to existing and new residents making it easier for them to connect to the city’s social network. While there is competition, Nashvillians seek fairness rather than advantage.

This Nashville Ethos creates a highly cooperative and welcoming environment. The legacy of the music industry’s presence and culture has contributed to the community’s capacity and willingness to collaborate.

RECOMMENDATIONS: EE1.0 Promote a culture where innovation and entrepreneurial exceptionalism are expected. The language, attitudes, and action of city leaders should consistently promote an environment where innovation is expected, and citizens are inspired to take calculated risks. Much of New York City’s transformation into a center of innovation has been attributed to Mayor Michael Bloomberg’s relentless promotion of the city and the importance of

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increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

entrepreneurship and his presence within the entrepreneurial community.

In San Francisco, the success of the cities urban manufacturing renaissance was due in large part to the city leaders elevating it along side the tech companies successes. As a part of promoting a culture of innovation, the ecosystem should not only celebrate its successes but also understand its failures. By doing so, it can instill a higher acceptance of risk-taking, moderate expectations, and help others learn from these failures. It can also establish the necessary heroes and role models for others in the ecosystem.

EE1.1 Reinforce and celebrate the Nashville Ethos. Nashville ethos of trust, openness, and collaboration is the foundation of the innovation ecosystem and the city’s prime advantage. It must be nurtured in order for it to endure.

Clearly articulating the expectations of the community and celebrating the culture is critical to accomplishing this. This message should be an integral part of Nashville’s recruitment and promotion strategy.

EE1.2 Develop growth strategies for clusters. Clear and bold strategies need to be developed to ensure the growth of the city’s core industries. They should focus on navigating the disruptive market forces these industries are facing. The work the Nashville Healthcare Council is doing to realize Nashville’s potential for becoming one of the leading healthcare IT clusters in the country is an example of the types of initiatives that are needed for all of our core industry clusters.

EE1.3 Encourage more cooperation between companies.

The extension of the Nashville Ethos between firms is critical for developing more competitive clusters. Open innovation should be encouraged to create platform driven solutions that benefit the city’s industry clusters.

Music Healthcare Healthcare IT Automotive

Media Advanced Manufacturing Fashion

Artificial Intelligence

EE1.4 Widen the peripheral view. The growth strategies for core competencies should also widen the peripheral vision to foresee potential transposition of the city’s core skills and knowledge into other new and emerging industries. The first step in understanding the opportunities is to inventory the knowledge and know how within ecosystem through a deep dive of the industries. In addition, the creative talent within the city will also continue to develop new ideas. As they emerge, developing a system of tracking their evolution would enable more proactive nurturing of them. Figure 1.4 illustrates the ecosystem’s radar to ensure focus on core competencies and their potential transposition as well as emerging clusters of knowledge.

EE1.5 Examine impact of non-compete enforcement. The impact of enforcing non-compete agreements on innovation should be further examined to determine what if any steps should be taken to address this issue. The State of California’s Civil Code is an example that allows talent to move throughout the ecosystem.4

Nashville Innovation Project : increasing the city’s innovation capacity

Hardware

Blockchain

Figure 1.4 ECOSYSTEM INDUSTRY RADAR

Diagram illustrates the examples of core industries within the Nashville ecosystem (dark purple) and emerging clusters (light purple). Connections represent the potential of symbiotic support to strengthen and expand the regional economy.

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Executive Summary.The City as a Platform for Innovation

PHYSICAL INFRASTRUCTURE

The Top 5 Nashville Innovation Clusters by Innovation Index Score (I3) 1. Vanderbilt University and Vanderbilt University Medical Center (97)

•

Proximity and overlap of daily routine have a significant impact on the probability of serendipitous engagement and collaboration between individuals and companies. The probability of collaboration between individuals drops offs precipitously beyond a half mile within clusters and 30ft within offices. There is a 20% increase in the chance of a connection forming with every 100ft of overlap in daily routines.5

•

Exploration outside the firm or department is an essential ingredient to the most innovative and productive teams. Exposure to new knowledge can ensure fuel for new ideas. Innovative employees spend nearly twice as much time out of the office or department than less innovative employees. 6

•

Existing Nashville clusters do not include a high density of funded startups. Startups are scattered across the city. They have typically clustered around co-working spaces. (Figure 1.4)

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The scattered clusters of innovation assets across the city are a result of the cost of office space and the lack of a focus on proximity as a component of wider economic development strategy and organizational innovation strategy.

•

Our peers are developing innovation districts to maximize proximity between anchor institutions to maximize collaboration, increase network density, and improve their overall innovation capacity.7

•

The public realm (i.e., public spaces, streetscapes, common spaces) is not designed to maximize connection between individuals and companies and are often not present within clusters. As an example, East Park in the East Nashville cluster has no opportunities for individuals to gather.

Its primary role is to serve as an active recreation and event destination.

Additionally, clusters like the Gulch have no public space in the form of parks or plazas.

2. Church Street (91) 3. East Nashville (82) 4. The Gulch (72) 5. Rolling Mill Hill (47) Refer to page 3 for cluster locations

RECOMMENDATIONS: PI1.0 Establish innovation atoll. The innovation atoll approaches the city as an innovation ecosystem. It acknowledges the unique role of each cluster while strengthening them through the creation of an interconnected network both physically and socially. Each cluster should concentrate their assets as much as feasibly possible.

PI1.1 Maintain a map of innovation assets. A map of innovation assets should be maintained to monitor growth, distribution, and density of assets.

The resource would provide a key metric for understanding the success and failure of the startup community and effectiveness of initiatives to increase the density of startups.

PI1.2 Ensure efficient transportation choices. A comprehensive, convenient, and efficient transportation network is essential to ensuring exploration and collaboration between clusters. In particular transit, walking, and biking offer

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increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

the highest potential for fostering meaningful serendipitous engagement and passively maintaining existing social network.

PI1.3 Develop innovation pass. To further motivate individuals to explore, move between clusters, and encourage engagement within them, an innovation pass program should be developed in conjunction with coworking and other alternative workspaces within each cluster. The program would allow members to use a wide range of facilities and be eligible for limited promotions of product and services.

PI1.4 Establish Innovation districts for specific objectives.

Establish innovation districts around specific strategies such as healthcare IT, blockchain, or artificial intelligence to increase the density of actors around anchor companies and institutions. This proximity and density will increase the probability of meaningful and sustained collaboration.

PI1.5 Maximize use of public space. Each district should include a signature public space that can serve as the central meeting space for the cluster.

Design guidelines should be developed utilizing latest engagement research to magnify their impact. Miller Plaza in Chattanooga’s innovation district is an example of the utilization of public space to connect the district’s ecosystem.

PI1.6 Recognize real estate’s role as innovation infrastructure. Real estate needs to become a part of the conversation when it comes to economic development strategy. Unconventional options and affordable strategies should be explored to increase options for office space.

PI1.7 Increase access to advanced manufacturing and laboratory tools.

Augment existing facilities with more advanced tools through partnerships or developing independent facilities that include access to tools and training.

16 TECH

Indianapolis, IN credit: 16tech

A new 60-acre mixed-use campus anchored by Indiana Biosciences Research Institute (IBRI). The first building is expected to begin construction in 2018. The $360 million dollar plan includes over one million square feet of incubator and startup space for new companies.

PI1.8 Allow co-working and maker spaces to qualify for job incentives. Qualifying jobs that are housed within coworking and maker spaces after 12 months should qualify for up to the $50,000 maximum incentive.

PI1.9 Make Room for Urban Manufacturing. With the push toward increasing advanced manufacturing, it is important space is available to encourage and accommodate the demand.

PI1.10 Utilize the Power of the Arts. All forms of the arts are an important ingredient to the innovation ecosystem and should be incorporated within clusters. Art has the power to spark dialogue, foster engagement, offer new perspectives, and promote creativity.

Nashville Innovation Project : increasing the city’s innovation capacity

Co-working in Miller Plaza Chattanooga, TN

credit: River City Company

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Executive Summary.The City as a Platform for Innovation

CAPITAL

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•

Nearly 80 percent of all venture capital investment is concentrated in only a few zip codes within the United States. The remaining 20 percent is divided across the rest of the country. In 2016, Nashville and peer cities, included in this report totaled less than 4% ($2.2 billion) of the venture capital raised. Nashville only accounted for 0.6% of the national venture capital raised in 2016. 8

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Since 2016, annual venture capital invested in local companies has increased from $198 million in 2012 to $350 million in 2016. Per capita, Nashville is significantly behind its most competitive selected peers Austin, TX and Denver, CO. 9

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Tennessee’s TNInvestco and Incite Co-Investment Fund have been significant sources of venture capital within the ecosystem. However, they have been expended. TNInvestco focused on early seed funding for startups throughout Tennessee and was a significant source of funding within the ecosystem. 10

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In 2016, unlike our leading peers Austin, TX and Denver, CO, the Nashville region bucked the national trend of contraction in venture capital investment. Despite this increase, Nashville experienced a 56% percent decline in the number of investment deals since 2014. 11

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The attention in growth stage capital by outside firms and seed-stage funding has left a funding gap for early-stage level investment. 12

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According to National Center for Science and Engineering Statistics (NCSES) the four main academic institutions receiving R&D funding within Nashville accounted for $690 million dollars in 2015 of which Vanderbilt University and Vanderbilt University Medical Center received $647 million. 13

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The Vanderbilt University Center for Technology Transfer and Commercialization licensed technology to a total of 31 companies. Of these companies, fourteen are based in Nashville. Many of the companies based in the region were started by Vanderbilt University faculty and students. 14

•

Of all money awarded by the Small Business Innovation Research (SBIR) program and Small Business Technology Transfer (STTR) program, Nashville small businesses received less than one tenth of a percent (0.07%). 15

RECOMMENDATIONS: C1.0 Encourage commercialization of research. The research campuses within the ecosystem offer a tremendous opportunity to attract additional capital to the region by encouraging faculty to commercialize their ideas.

Vanderbilt University is ranked 42nd of 225 universities by the Milken Institute in their 2017 Technology Transfer rankings.16 In Thomas Reuters’ recent ranking

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increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

of 100 most innovative universities, Vanderbilt ranked 10th.17 Unlocking this potential and maximizing the commercialization of this research would be a significant boost to Nashville’s ecosystem. Stanford, MIT, and others have built a culture around the expectation of commercializing research and discoveries. The Global Action Platform’s Tennessee University Business Showcase is working toward improving the commercialization of research by strengthening the connection between Nashville’s universities and the business community.

C1.1 Continue to expand investment focus. The ecosystem must widen its view of potential business opportunities beyond healthcare and music in order to diversify and retain talent within the ecosystem. This perspective will require venture capital to broaden their knowledge and build relationships with advisors in other industries.

AUSTIN, TX

$1,072 ($979M)

C1.2 Get high net worth individuals off the sidelines. It is important to instill a sense of community pride in nurturing the ecosystem particularly in early stages as angel investors. A strong and consistent message around the importance of these investments to the city’s success should be instilled within the ecosystem’s leadership and their peers. Tennessee’s Angel Tax Credit has begun to gain traction and help nudge these investors off the sidelines. In 2017 it raised nearly $5.5 million.

C1.3 Instill a culture of reinvestment. As the ecosystem continues to mature, a culture of reinvestment should be encouraged in order to support the next wave of entrepreneurs.

C1.4 We don’t always have to swing for the fences. Too often there is a focus on finding the next billion dollar idea. The overall ecosystem suffers if there is too much focus on massive scaling of innovation at the expense of numerous other viable ideas. A healthy ecosystem includes a wide range of companies.

C1.5 Fill the early-stage investment gap. As local venture capital companies continue to grow and outside companies come into the market, there is a tendency of focusing only on larger investment rounds for more mature companies. As a result, there is a considerable gap between early seed funding and growth stage investing. In order to counter this, it is important to continue to have a diverse range of venture capital options within the ecosystem.

C1.6 Integrate venture capital companies within clusters. Local venture capital is primarily isolated within their own clusters. Bringing venture capital companies in closer physical proximity to the startup community will help strengthen relationships between companies and the overall network.

It will also enable venture capital to keep a closer pulse on the market for opportunities and have a better understanding of them. The informal serendipitous relationships created through proximity will further enable the flow of knowledge within the ecosystem and reinforce mentorship.

Nashville Innovation Project : increasing the city’s innovation capacity

NASHVILLE, TN

$515

($350M)

CHARLOTTE, NC

$154

($125M)

DENVER, CO

$1,078 ($716M)

$119

($102M)

INDIANAPOLIS, IN FIGURE 1.5 TOTAL VENTURE CAPITAL RAISED IN 2016 PER CAPITA

Source: Pitchbook 11

Executive Summary.The City as a Platform for Innovation

NETWORK

•

Maximizing the flow of information is critical to building innovation capacity within the ecosystem. It requires a robust and diverse network of actors across communities.

•

There is a heavy reliance on a few organizations to support the innovation ecosystem.

•

The entrepreneur support network is limited by their current programs and resources. They have less time to nurture the network beyond those they attract to their programs making it difficult to scale the system.

•

Frequency is an essential ingredient in increasing trust, establishing new connections, and maintaining existing relationships within the network. Most programming within ecosystem is too infrequent.

RECOMMENDATIONS: N1.0 Connect beyond leadership. The ecosystem’s network needs to foster a dense web of connections beyond the leadership of major organizations and companies. Increased density creates redundancy that strengthens the network but also allows it to function independently of the network’s central nodes. The central nodes have a limited capacity. By nurturing the organic growth of the network, the capacity within the system can grow exponentially without taxing the resources of the central nodes. It also improves the efficiency and effectiveness of these organizations. This new capacity ensures the injection of a diverse range of knowledge and know-how into the network.

A reliance on a small pool of individuals as representative connections within the network isolates the rest of the actors in the network and the organizations for which these leaders are responsible. This isolation reduces the flow of information and creates potential of new insights this information can stimulate.

These relationships are primarily built outside of formal programs and events.

The need for informal serendipitous engagement is a key driver in the scaling of the network. Proximity and density of individuals coupled with common third places are a key component in facilitating this engagement. It is also important to intentionally look beyond the leadership when developing participation in programming.

N1.1 Increase frequency of interaction. There is a wide range of great programs and events that bring the network’s actors together. The frequency of events and programs should be increased to the greatest extent possible.

This increase in frequency will lead to stronger connections and encourage new ones. Establishing a signature weekly program that bring together the network can establish more meaningful and lasting engagement within the ecosystem. Cambridge Innovation Center’s Venture Cafe which attracts over 500 people a week is a great example of how a weekly event can bring together innovators within the community. The diverse group of individuals interested in entrepreneurship and innovation

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increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

comprising their community is the focus of their programs. In conjunction with short formal presentations, the weekly program includes “office hours” with various mentors, experts, and organizations.

N1.2 Diversify participation. There is a need to expand the audience of current programming to include a more diverse set of participants. The diversity of the participation within the network is important for innovation and is one of the most significant reasons cities produce more unconventional innovation on a continuous basis. Expanding the expertise available can promote cross disciplinary solutions.

N1.3 Expose innovation. There are an enormous amount of innovative activities happening within the city that are hidden from the network. The ecosystem must do a better job at exposing and promoting these innovations.

Doing this can inspire the network to utilize and combine this knowledge into new products and services.

N1.4 Utilize challenges. Challenges are organized events focused around soliciting solutions to specific problems or issues. Using challenges is an effective way to bring together a diverse group of people. They can act as a triangulating element that fosters meaningful engagement among participants, accelerate the formation of new ties, and increase the flow of knowledge within the ecosystem. New York City’s Big Apps Challenge is a good example of a challenge that helps bring the community together.

Developing a local challenge platform like Innocentive would help companies access the greater knowledge within the ecosystem.

N1.5 Align corporations and startups. Aligning corporate strategies with startups can foster symbiotic relationships between them. Companies need the energy and innovations being developed within startups and startups need access to customers and the experience corporations offer. Bringing both of these communities closer together physically can help establish the informal communication channels and ties between them. Illinois Corporate StartUp Challenge is an example of this strategy.

N1.6 Establish Nashville Innovation Council. The establishment of a Nashville Innovation Council would ensure accountability and bridges between structural holes within the network. The NIC’s responsibilities would include: • • • • • • • •

Establishing metrics and data collection methodology Publishing innovation annual scorecard Maintaining innovation ecosystem network graph and asset map Developing and funding programs for delivery by ecosystem partners Organizing and maintaining challenge platform Management of Innovation Pass Program Publication of local innovation website, podcast, and magazine Management of content of interactive kiosk

Nashville Innovation Project : increasing the city’s innovation capacity

Four Stages of Social Tie Formation Step 1: Awareness/availability Step 2: Frequency of physical overlap of daily routines Step 3: Interaction/Engagement Step 4: Establishment of Trust (after repeated positive interaction) Based on Rick Grannis’ stages of neighborhood tie formation, The Ground Up: Translating Geography into Community through Neighbor Networks. 2009.

Structural Holes Network include:

within

the

1. University Research 2. Business Community 3. Arts and Business Community 4. Large Companies and Startups 5. Healthcare and Technology Companies 6. Local government and Startups 7. Highly Skilled Immigrants 8. Low-income communities

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Executive Summary.The City as a Platform for Innovation

CHARLOTTE, NC (5,600)

DENVER, CO (5,400)

INDIANAPOLIS, IN (5,000)

NASHVILLE, TN (1,700)

AUSTIN, TX (11,100)

TALENT

FIGURE 1.6 TOTAL TECH JOB GROWTH(2013-2015) Source: Brookings Institution

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The talent within the ecosystem is the key driver of economic value. Talent not only embodies the knowledge within the ecosystem, but it is also the generator of all new ideas.

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Talent is looking for environments that continue to inspire them and enable them to bring their ideas to market.

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For major occupation categories associated with innovative activities, Nashville ranks well below its selected peers when not including production-related occupations. Nashville in 2016 had 170 jobs per 1,000. Austin had nearly 36% more per 1,000 at 219.3. Indianapolis was only slightly higher at 178.9. 18

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Brookings’ Healthcare IT 2016 report concluded: “Nashville has 4,100 fewer IT workers than would be expected given the size of the Region’s IT and software industries which also rank among the smallest across the peer metro areas.” 19

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For tech job growth, Brookings ranked Nashville 30th nationally with a compound annual growth rate of 6.7% between 2013 and 2015. The city added approximately 1,700 technology jobs during this period.

Unfortunately, this growth was behind all selected peer cities who more than doubled Nashville’s growth rate. (Figure 1.6) 20

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Advanced manufacturing is one of Nashville strongest sectors and is a focus of the cities economic development strategy. Brookings ranked Nashville first in annual average job growth for the period between 20132015. This growth equated to 7.8%. The region ranked 44th in its share of advanced manufacturing jobs of all jobs at 8.8% growth in this same period. Advanced manufacturing accounted for 82,206 jobs which ranked Nashville at 31st in the country. 21

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Approximately 37% of the Nashville population that is 25 years or older has a bachelor’s degree or higher. When comparing education levels with the selected peer cities, Nashville trails all of the selected peer cities except Indianapolis, IN. 22

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Graduates who received non-STEM majors also contribute to the innovation ecosystem. It isn’t the sole domain of traditional STEM majors.

A report by Endeavor Insight published in 2014, revealed over 60% of founders of technology firms in NYC had non-STEM related majors. 23

RECOMMENDATIONS: T1.0 Ensuring quality of life. As the enabling environment is necessary to the innovation ecosystem, the quality of life is necessary to attract and retain talent. The city’s prosperity has put pressure on traffic congestion and the affordability to live and work in the city. These issues have fostered unintended inequities and tensions within the community. City leaders are addressing these foundational issues. Their efforts must continue.

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The City as a Platform for Innovation.Executive Summary

T1.1 Connect talent. The density of the city’s social network plays an essential role in the flow of ideas and the innovation capacity of the ecosystem. Individuals must feel they are part of the community and establish roots. Implementing the network recommendations for strengthening the social ties within the ecosystem can facilitate these connections. In particular, focusing on the talent graduating from local universities will build stronger ties between graduates and the community, local organizations, and companies. These connections will increase the likelihood of retaining students. The Wond’ry’s Innovation Garage program is an example of partnering with the private sector and the university to establish stronger connection between graduates and local companies. Ensuring local firms engage graduates during their years in the community promotes the establishment of roots in the ecosystem. Nurturing the talent will both keep them in the community and also increase the knowledge flow within the system. Additionally, the Wond’ry’s entrepreneur programs help enable graduates to fulfill their entrepreneurial goals and start local companies that benefit the entire ecosystem.

T1.2 Establish Nashville embassies. To attract talent, establishing physical embassy spaces within key markets would build global pipelines and connect Nashville’s ecosystem with larger pools of talent. A Nashville embassy would entail placing a recruitment outpost within these markets. Their purpose would be to expose people to the culture of Nashville as well as the innovative activities happening within the city. Utilizing one of Nashville’s unique assets, music, these facilities could include a concert venue to help fund them and attract talent. Embassies would also involve events focused on particular targeted industries and Nashville companies.

T1.3 Connect to resources. Besides the social ties with the ecosystem, providing information in the form of a comprehensive website about the resources available within the city. The target audience for the site would be individuals who are deciding whether to move to Nashville to start their company or local entrepreneurs. The Swedish Innovation Compass24 provides a simple yet powerful example of organizing existing information into a single point of entry for entrepreneurs, inventors, researchers, company leaders, and others innovation oriented individuals.

T1.4 Utilize local hospitality hubs for recruitment. Nashville’s tourism and hospitality sector is often the first exposure many have to Nashville. The city often leaves a positive first impression. As with the Nashville embassy concept, local tourism, and hospitality hubs, such as the airport and Music City Center could be used to promote Nashville’s innovation activities and encourage visitors to move to Nashville. Other places could include window displays along 3rd Avenue streetscape at the Chamber of Commerce or outdoor public spaces. Sponsored interactive kiosks and staffed outposts at these locations focused on recruitment could facilitate the attraction of more talent within the ecosystem. The more exposure people have to the city’s innovative activities the greater the chances talent will connect, utilize, and combine it to create innovations within the city.

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Executive Summary.The City as a Platform for Innovation

ENDNOTES

story/35772599/16-tech-announces-first-leader

1. Pitchbook 2. U.S. Patent and Trademark Office 3. Liu, Mark Muro and Sifan. “Tech in Metros: The Strong Are Getting Stronger | Brookings Institution.”

Brookings (blog), March 8, 2017. https://www. brookings.edu/blog/the-avenue/2017/03/08/techin-metros-the-strong-are-getting-stronger/.

4. DeVore, Chris. “Silicon Valley Keeps Winning Because Non-Competes Limit Innovation.” TechCrunch (blog). Accessed November 30, 2017. http://social. techcrunch.com/2016/02/18/silicon-valley-keepswinning-because-non-competes-limit-innovation/.

5. Kabo, Felichism W., Natalie Cotton-Nessler, Yongha Hwang, Margaret C. Levenstein, and Jason OwenSmith. “Proximity Effects on the Dynamics and Outcomes of Scientific Collaborations.” Research Policy 43, no. 9 (November 2014): 1469–85. doi:10.1016/j.respol.2014.04.007 6. Hoskins, Diane, Janet Pogue, Christine Barber, Tim Pittman, Amrapali Agarwal, Isabel Kraut, Chandra Lapsley, et al. “U.S. Workplace Survey 2016.”

Gensler, August 2016. https://www.gensler.com/ research-insight/workplace-surveys/us.

7. Baum, Stephanie. “Push to Develop Austin’s Healthcare Innovation Zone Makes Key Hire.”

MedCity News (blog), July 13, 2017. https:// medcitynews.com/2017/07/push-develop-austinshealthcare-innovation-zone-makes-key-hire/.

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Burns, Hilary. “A Look at the Public-Private Push to Build an Innovation Campus in Charlotte.”

Charlotte Business Journal, June 21, 2016. https:// www.bizjournals.com/charlotte/news/2016/06/21/alook-at-the-public-private-push-to-build-an.html.

Aiello, Chloe. “Catalyst HTI Aims to Make Denver Best in the World for Digital Health.” Denverite, October 25, 2016. https://www.denverite.com/ catalyst-hti-aims-make-denver-best-world-digitalhealth-20514/.

8. Pitchbook 9. Pitchbook 10. Chambless, Sid, and Hayley Hovious. “Nashville Venture Capital Report 2005-2015.” Nashville Capital Network & Nashville Health Care Council, 2015. https://healthcarecouncil.com/wp-content/ uploads/2015/06/2016_HealthCareCouncil_ NashvilleVentureCapital_Report_ForDigitalUse.pdf.

11. Pitchbook 12. Chambless, Sid, 2015.

13. National Center for Science and Engineering Statistics (NCSES) 14. Vanderbilt University Center for Technology Transfer and Commercialization Database 15. National Center for Science and Engineering Statistics (NCSES)

Greenberg, Sherri. “Austin Anchors & The Innovation Zone: Building Collaborative Capacity.” Lyndon B. Johnson School of Public Affairs, August 29, 2015. http:// austincityup.org/wp-content/uploads/2015/10/ Austin-Anchors-Innovation-Zone-pdf.pdf.

16. Ross DeVol, Joe Lee, and Minoli Ratnatunga.

“Concept to Commercialization The Best Universitites for Technology Transfer.” Milken Institute, April 2017. http://www.milkeninstitute.org/publications/ view/856.

Ober, Andy. “First CEO Announced for ‘Transformational’ 16 Tech,” June 29, 2017. h t t p : / / w w w. i n s i d e i n d i a n a b u s i n e s s . c o m /

17. “Top 100 World Innovative Universities Profile.”

Accessed November 30, 2017. https://www.reuters. com/innovative-universities-2017/profile?uid=10.

increasing the city’s innovation capacity : Nashville Innovation Project

18. U.S. Bureau of Labor Statistics 19. Andes, Scott, John Ng, and Mark Muro. “From Health Care Capital to Innovation Hub: Positioning Nashville as a Leader in Health IT.” Brookings Institute, August 2016. https://www.brookings.edu/ wp-content/uploads/2016/08/metro_20160824_ nashvillehealthit.pdf.

20. Andes, Scott, John Ng, and Mark Muro. 2016.

21. Hart, Mark Muro, Siddharth Kulkarni, and David M. “America’s Advanced Industries: New Trends.”

Brookings (blog), August 4, 2016. https://www. brookings.edu/research/americas-advancedindustries-new-trends/ 22. U.S. Census Bureau 23. Goodwin, Michael. “The Power of Entrepreneur Networks: How New York City Become the Role Model for Other Urban Tech Hubs.” Endeavor Insight, November 2014. http://endeavor.org/ impact/insight/.

24. http://swedishinnovationcompass.com/

Executive Summary.The City as a Platform for Innovation

APPENDIX A: MAPPING

NASHVILLE

BRENTWOOD

FRANKLIN

Nashville Regional Innovation Infrastructure Heat Map Source: Nashville Innovation Project (interactive version available @ www.nashvilleinnovationproject.com)

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increasing the city’s innovation capacity : Nashville Innovation Project

The City as a Platform for Innovation.Executive Summary

GERMANTOWN EAST NASHVILLE DOWNTOWN

MIDTOWN

WEDGEWOODHOUSTON

GREEN HILLS

Nashville Innovation Infrastructure Heat Map

Source: Nashville Innovation Project (interactive version available @ www.nashvilleinnovationproject.com)

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www.nashvilleinnovationproject.com © 2017 Nashville Innovation Project

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