The Next Twenty-Years of Economic Development
Achieving Serendipity Management: Creating a Knowledge Ecosystem
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Concept Paper Overarching Goal: The Iowa City area becomes recognized and branded as a leader in innovation commercialization due to the ease by which “sticky” knowledge is obtained, gathered and shared. Action Step: Create a civic space and social networking framework (physical and virtual) designed for primary sector innovation development. This space would serve as the office of the Iowa City Area Development (ICAD) Group and strategic partners to become the epicenter for knowledge management. Logic: Research by the Institute for the Future and the Research Triangle Park (Report SR1236) “Future Knowledge Ecosystems: The Next Twenty Years of Technology-Led Economic Development” discusses how “regional knowledge ecosystems will emerge as a new strategic frame, providing scale, efficiency and global platforms for economic development” (p. 22). This paper, a collaboration between academia and economic developers, provides a framework for how successful regions will embrace the need for connections of people and knowledge to create stability, growth and wealth in the new age of global economics. Successful areas will go beyond traditional approaches of economic development and academic research parks to purposefully develop and offer: “…new kinds of spaces for entrepreneurship and collaborative research…. Rather than warehousing workers, they will meet a need for communal, collaborative meeting space in a world of increased mobility within and between workplaces. They will be neutral places where networks of investors, entrepreneurs, hackers and customers converge for collaborative knowledge creation and trust-building, cementing relationships initiated and cultivated online. Overlaid grids of social software will enhance serendipitous discovery inside these spaces and knit them together in local, regional and global networks of collaborations” (p. 28). “The collaborative magic of [these spaces] depends heavily upon the ability of managers to ‘produce’ and ‘direct’ the space like a ‘show’ on a daily basis. This involves coordinating events, both formal and informal, ensuring a steady flow of new people and ideas through the space, and making connections between participants. This is a very different set of skills than the typical research park manager or economic developer today. The shift from managing land use and real estate to managing activity (or both) will require a fundamental shift in perspective” (p. 29).
In our area, ICAD Group is the most logical entity for creating and driving this innovation zone concept as its mission is not limited exclusively to academic pursuits but to comprehensive growth of primary sector companies both new and existing. Working with area communities, the University of Iowa, building owners, and partners, ICAD Group will take the lead in developing a physical and virtual spoke and hub model, comprised
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of “digitally connected networks of small spaces‌ providing more collaborative, more flexible and less costly homes for inventionâ€? (p. 7). Our model will be more inclusive and will compliment our existing, traditional efforts to assist in the development of job and wealth creation by existing companies, firms recruited to locate in our area and emerging, entrepreneurial ventures.
Ed Morrison: http://edmorrison.com/the-regional-transformation-toward-open-innov Need: Despite the high number of innovative ideas created in our area, we have not realized the full potential of the talents and opportunities they might create in a more open environment. If our area is to advance to higher horizons there is a definitive need to catalyze connections between ideas, people and companies. This creates the scenario in which individual purpose (profit) is enhanced through a common systems approach to information sharing and problem solving. ICAD Group can create and foster open innovation and drive these connections by creating the civic space and network platforms of value to emerging and existing local companies. The increased effectiveness of these networks will also provide further incentive for outside companies to relocate to this market. Page 3
At its full potential, this space becomes the epicenter of innovation where people, creative ideas and capital converge to create long term investment, employment and related benefits to the region. These benefits would be measured by a combination of traditional (capital investment/jobs) metrics and novel benchmarks to understand the impact of the organization and the space. Our initial challenge will be to drive the narrative shifting necessary for the area to embrace the need to move to the next horizon where networks can begin to form via this civic space.
Today’s Reality (three hypothetical scenarios): 1. Connections not connecting Ellen and Sarah, recent UI graduates, have developed a business plan for a graphics company which will provide an enhanced layer of animation for video game developers. Their process has been one of “hurry up and wait.” Their quest is focused on obtaining funding, a match with temporary executive talent, and, when the time is right, a physical location befitting their desired culture without breaking their meager initial budget. They have bounced from one office to another around the area gathering bits of information. While they have acquired a stack of business cards, they feel as though they are swimming up a disconnected stream. If asked, they would be hard pressed to consider this area “supportive and collaborative.” To complicate matters, during this process they learn a potential customer is willing to send a representative to meet with them. Their options for hosting this guest are a semi private meeting in a coffee shop or the corner of a large meeting room at the public library. They begin to wonder if they should move back to the suburbs of Chicago, where Sarah is from, and launch their business from different environs. 2. Older institutions retooling for relevancy with next generation workers John’s company has been in the community for decades. To remain relevant he understands the need to embrace new and different thinking and technologies. He is open to exploring new revenue streams and creating an entrepreneurial culture within his business at a conceptual level. His challenge is how to take this thinking beyond strategic planning sessions into real action. He has hired a young marketing person to create a company profile on all the major social networking sites, yet this has not translated to any real revenues. He encourages the new hire to attend area networking events, but these offer little substantive interaction with other local companies. John can sense the new hire, like several before, is uncomfortable and constrained within the traditional culture of the office and unable to fully engage in his work. 3. Which one was Iowa City? ACME Data Service provides data solutions and support to the renewable energy industry. The Iowa Department of Economic Development (IDED) has convinced the executives of this
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firm to spend a day touring Iowa in hopes they will locate their new 80 person headquarter expansion within its borders. IDED staff informs ICAD Group they will bring the company through at 11:30 a.m. the next morning for lunch and meetings, but the company must be on the road to the next community by 1:30 p.m. On the day of the visit, the company arrives a little behind schedule, closer to noon. ICAD Group hosts a lunch at a downtown restaurant and is joined by representatives from the University of Iowa College of Engineering as well as several key community members with an understanding of this company and renewable energy. Following lunch, the group walks back to the ICAD Group office and spends just a few short minutes in the small conference room viewing a PowerPoint presentation. This abbreviated meeting is meant to quickly highlight the vibrancy and innovative spirit of the Iowa City area and its benefits as a place to do business. The harried and tired executives review the materials before stuffing them into their binders. The IDED group and ACME Data representatives load back into their vehicles for a similar experience in the next community. They leave knowing the area has some quality people, a strong university and a unique downtown. And though we have some strengths in the wind energy industry that we share with them, nothing overly significant stands out in their mind about why the area is different from several other Iowa communities or the university environments they are visiting in other states.
What does this new space look like? Physical Features: Reception area (Monitors with daily events/current occupants, headline news, business news, sports, weather) Common area – the open ‘coffee shop’ type area where people can work in an free flow environment Conference rooms with video conferencing capabilities Audio/Video Production Studio Single office rental spaces Small (2-3 occupant) rental spaces ICAD Group staff offices and offices for logical partners Service kitchen/break area Technology Capacities and Resources for Members Social networking platform with message boards Talent/interest matching portal Event planning calendar Internet access Web/Email hosting Secure data storage (offsite)
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Video conferencing Printers /copy machine Reference library of digital, video and print materials Laptops with common software available for temp use
This physical space will connect to other incubator like spaces throughout our service territory and region (hub and spoke model).
But what makes people want to be in this space and part of this network? The space alone is meaningless without significant effort made to create activity and cultivate a culture of openness and connection. ICAD Group staff, and other partners, will be tasked with developing programming that engages participants to begin rethinking traditional boundaries and acting in more collaborative ways. It is not enough to house a few incubator firms and become the working home for the ‘nomads.’ Events and communication flow must be of interest and accessible to a wide spectrum of stakeholders and done in a seamlessly organized manner. Sample of Activities (all activities are focused on driving interstate commerce expansion, creation and retention) Roundtables (manufacturing, simulation/animation, green tech, bio tech, etc) Presentations (variety of business topic based, angel/venture capital) Daily “TED” viewings and discussions ICAD Group Board and committee meetings Networking lunches, cocktail hours, tweet ups, speed networking and various social events throughout the year Our challenge from a technical level is to make as much of this in house content and action available online such that an executive can participate in a discussion from his desktop if unable to physically attend. The web portion of the space is critical as we work to make the space vibrant and interactive in real time and blur the boundary of presence. We think an integrated mix of existing social networking tools (facebook, twitter, linked in) bundled with some customized features (talent/interest matching, instant messaging, Skype/video conference portals) we can provide users with numerous engagement points such that they feel connected to this larger community of thought and collaboration regardless of their location.
Value Propositions / Evaluation Metrics How does this model benefit: Emerging Companies Emerging companies benefit by moving from a place of isolation into a community network of peers and mentors. This space will work to augment traditional entrepreneurial
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development programming by becoming the place where ideas are work shopped, business plans analyzed by different sets of eyes and linkages to capital are formed. Entrepreneurs can make presentations to venture firms who have been invited to present at the space or via video conferencing. The space can become their home, either by plunking down a laptop as needed or by renting an office suite at the main hub or in one of the incubator like sites scattered across the area. These firms will benefit from the ancillary services (internet, web hosting, printing, and so forth) as well as cross cutting programming and discussions on business topics. Success Metric: Number of active emerging companies engaged; Jobs created; Capital accessed; Number of active members who use the space; Increase in C-Level talent Existing Industry Existing companies benefit in a variety of ways based upon their level of engagement. Again, the space is not designed for common purpose, but for companies to use this common space to find new solutions which help them achieve their individual purpose of increased profits. Whether it be a way to enhance their corporate culture for younger employees, identifying and understanding new tools to promote efficiency/message, or gaining exposure to new products and technologies coming out of the university, the inclusion into this network can be vital to continued relevance and prosperity. Existing companies can take part in industry specific cluster meetings and help promote local policy on business climate issues. Job specific topics can benefit HR staff, procurement, finance and others as timely issues and trainings are offered based on their suggestions and feedback. Success Metric: With this new level of innovation commercialization available in the area, ICAD Group would expect to assist with additional existing industry expansion projects per year of the campaign than would be possible without this network. Additionally this network would equate to improved VGRS scores on annual Synchronist surveys. Community Stakeholders (ICAD Group investors, students, UI) Community stakeholders will also find a benefit from this network based upon their interest and abilities to impart knowledge and services necessary to primary sector firms. Banks, for example, will be able to track the ideas of entrepreneurs as they move towards higher states of organization and be ready to provide financial tools once the emerging firm has documented sufficient market demand. As well, they can see which existing firms are making commitments to new ideas, R&D and might need an injection of capital to accomplish an expansion. The university has many programs and services to assist in the commercialization of technology coming out of academia as well as for students seeking to launch companies. ICAD Group envisions this space and networking augmenting these services as a bridge to the private sector; where capital and commerce can help vette ideas, offer mentorship and
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connections, thereby increasing the speed by which ideas can be brought to market while offering the experience to help avoid pitfalls along the way. For many of these emerging entrepreneurs the area does not exist beyond the campus. By having this new hub of activity, the people involved in these ventures can be integrated into the local business community, increasing their likelihood to grow here and contribute back to the environment and the university. Today’s student becomes tomorrow’s mentor. Similar linkages and benefits can be found for a host of investor groups. ICAD Group will need to be clear on the purpose of the network such that mission creep does not water down the need to focus programming and services to primary sector companies. While some topics and presentations might be of value to the local florist, they will not be served as a client. Success Metric: ICAD Group will use feedback surveys and two way communication to gauge the benefits of the space on its relevant investors who engage in the network. Success will be measured by continued support for the organization and increased pledge commitments in subsequent investment campaigns. ICAD Group In moving beyond traditional approaches to economic development to have a greater impact on our market/region, this space and networked system will aid ICAD Group in meeting its top-end goals. By physically placing ICAD Group staff in the center of this system, the organization and economic development program transitions from being viewed as a concept to one that is a tangible asset of our market. Additionally, this space allows ICAD Group to augment traditional investment based support with diversified revenue generation potential to create greater long-term financial stability for the organization. Potential Revenue Generation: This concept presents several new venues of revenue generation to compliment traditional campaign investment. 1) Hub memberships/utilization fees – Individuals and companies wishing to utilize this new space would become members at varying levels based upon the services they utilize. Use of conferences rooms, printers/copy machine, private offices, data storage, internet/phone/web conferencing, production studio and participation in learning events all have the potential to generate fee revenue. 2) Space management – ICAD Group could contract for the management of the incubator spaces throughout the area. Management responsibilities would include matching tenants to spaces, handling lease agreements in certain situations, moderating any incentives/rent subsidies and coordinating ancillary services to ensure harmony between tenants, building owners and cities. We realize there are significant issues to overcome to make this a reality, but it may be worth study. 3) Lease Income – As the primary tenant for this larger hub space, ICAD Group could generate revenue through the subleasing of office space as part of an incubator system and coworking. 4) New/Increased Investment Levels – The implementation of this system may in and of Page 8
itself draw the interest of investors who have not invested previously, or may entice existing investors to increase their investment level
Tomorrow’s Potential (three hypothetical scenarios continued): 1. Building on connections Ellen and Sarah first walked into this hub upon a referral from the John Pappajohn Entrepreneurial Center (JPEC). They were pleased to find a welcoming environment where they could meet with ICAD Group staff, a representative from the Entrepreneurial Development Center (EDC) and a local commercial banker who frequently spends time at the center to learn about emerging entrepreneurs and provide them advice on becoming bankable. After a casual discussion, the two entrepreneurs were invited to use the space to work for the remainder of the morning as a luncheon presentation was being made later by an angel investment firm from Chicago. Subsequent visits from the two new members introduced them to a graphic designer, an accountant, and a retired CFO who each offered advice, ideas on linkages and other contacts they should make. Before long the two realized they needed a space of their own. They worked with ICAD Group staff to identify a small second floor office space in Coralville that was part of the incubator network. Here they enjoyed the cost savings of having a partially subsidized rent and staying cash positive through shared internet, data, phone and printing plans at the incubator. Ellen and Sarah would continue to spend time at the hub and would utilize the conference rooms when they were entertaining potential clients or giving presentations to potential investors. 2. Enhancing serendipitous discovery John purchased memberships at the center for himself and his young staff member. The staff member began to spend several hours a day at the center working from his laptop. John found that, given a little more freedom from the company’s office, this individual was putting in more hours outside of the traditional 8-5 workday. Maybe more importantly, he was also interacting with other creatives and becoming involved in community activities through his expanding circle of colleagues. This employee would post topics and questions to the incubator’s message boards as a way for thinking through new ideas. John could use this tool to offer concepts, research articles and past experiences not only to his employee but the entire network. As well, since John was a member, he could log in at any time to see who was in the hub and encourage his employee to seek out certain contacts that could be helpful to his development and the company. Soon the new employee was fully engaged in his work; creating viral marketing web content from the center’s production studio and offering a host of other innovative ideas to John which could bolster the bottom line. 3. Managing memorable activity On their second visit to Iowa, the execs from ACME were brought in to the new ICAD Group Page 9
offices in the central hub. Buzzing with activity, they spent a few minutes reviewing a sales contract, which was emailed to them, from a bank of laptops before being treated to a multimedia presentation relevant to their work provided by the UI Center for Computer Aided Design (CCAD) in the center’s large conference room. Lunch was brought in and several ICAD Group board members joined them at the table to answer any questions they had on doing business in the community. ICAD Group staff provided a virtual tour of some available office space in the region and representatives from IDED and Kirkwood discussed the potential incentives and how the job training funds were administered. ICAD Group staff informed them of how the center could be used as a temporary location for ACME during their hiring phase and showed them how to link into the market to find the right talent for their expansion.
Conclusion Without deviating from its core functions, ICAD Group should move beyond traditional approaches to economic development and begin to drive the type of culture necessary to achieve innovation commercialization. By creating a space such as this and building the physical and virtual networks that will allow the sharing of "sticky" knowledge, the area can begin to develop clusters of technology which will lead to new capital investment and job creation. Further, it will aid in the recruitment of new firms eager to join the vibrancy of the region and can assist our existing companies in remaining relevant and prosperous. This collaborative spirit, put into practice, will become the brand identity which the authors of the cited paper find to be “crucially important in attracting globally mobile talent and earning reputation in new group economies" (p. 40). Or more aptly stated by Jacob Lerner, the Jacob H. Schiff Professor of Investment Banking at Harvard Business School states, “entrepreneurial activity does not exist in a vacuum: building an environment where new ventures can thrive is a critical first step.” With this concept proposal, ICAD Group is offering a means to taking that first step.
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