Maine Policy Review Winter/Spring 2014 by University of Maine

Winter/Spring 2014 Âˇ Vol. 23, No. 1 Âˇ $15

Maine Policy Review

Special Issue: Innovation

Margaret Chase Smith Policy Center

Maine Policy Review

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Volume 23, Number 1

MAINE POLICY REVIEW

PUBLISHERS MARGARET CHASE SMITH POLICY CENTER Linda Silka, Director

MARGARET CHASE SMITH FOUNDATION Charles Cragin, Chair

EDITORIAL STAFF EDITOR Ann Acheson Margaret Chase Smith Policy Center

MANAGING EDITOR Barbara Harrity Margaret Chase Smith Policy Center

PRODUCTION Beth Goodnight Goodnight Design

WEB SITE MAINTENANCE Catherine Dickerson Margaret Chase Smith Policy Center

DEVELOPMENT Eva McLaughlin Margaret Chase Smith Policy Center

COVER ILLUSTRATION Robert Shetterly

PRINTING Penmor Lithographics

Maine Policy Review (ISSN 1064-2587) publishes independent, peer-reviewed analyses of public policy issues relevant to Maine. The journal is published two times per year by the Margaret Chase Smith Policy Center at the University of Maine and the Margaret Chase Smith Foundation. The material published within does not necessarily reflect the views of the Margaret Chase Smith Policy Center or the Margaret Chase Smith Foundation. The majority of articles appearing in Maine Policy Review are written by Maine citizens, many of whom are readers of the journal. The journal encourages the submission of manuscripts concerning relevant public policy issues of the day or in response to articles already published in the journal. Prospective authors are urged to contact the journal at the address below for a copy of the guidelines for submission or see the journal’s Website, http://digitalcommons.library .umaine.edu/mpr/. For reprints of Maine Policy Review articles or for permission to quote and/or otherwise reproduce, please contact the journal at the address below. The editorial staff of Maine Policy Review welcome your views about issues presented in this journal. Please address your letter to the editor to:

Maine Policy Review

5784 York Complex, Bldg. #4 University of Maine Orono, ME 04469-5784

207-581-1567 • fax: 207-581-1266 http://mcspolicycenter.umaine.edu mpr@maine.edu

The University of Maine does not discriminate on the grounds of race, color, religion, sex, sexual orientation, including transgender status and gender expression, national origin, citizenship status, age, disability, genetic information or veteran’s status in employment, education, and all other programs and activities. The following person has been designated to handle inquires regarding nondiscrimination policies: Director, Office of Equal Opportunity, 101 North Stevens Hall, 207-581-1226.

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Thanks to… Major Sponsor

Margaret Chase Smith Foundation Donors

Linda Silka and Larry Smith

University of Maine Office of Innovation and Economic Development

Contributors

H. Allen and Sally Fernald John and Carol Gregory Merton G. Henry Roger Katz

William Knowles Samuel A. Ladd III and Nancy E. Ladd Peter Mills

Evan Richert Mark R. Shibles And anonymous Contributors

David Hart H. Paul McGuire Ethan Miller

Elizabeth Ward Saxl and Michael Saxl David Vail

Basil Wentworth And anonymous Friends

Friends

Volume Twenty-three of Maine Policy Review is funded, in part, by the supporters listed above. Tax-deductible contributions to the journal can be directed to the Margaret Chase Smith Policy Center at: 5784 York Complex, Bldg. 4, University of Maine, Orono, ME 04469-5784. Donations by credit card may be made through our secure website at digitalcommons.library.umaine.edu/mpr and clicking on “Donate.” Information regarding corporate, foundation or individual support is available by contacting the Margaret Chase Smith Policy Center.

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Volume 23, Number 1

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TABLE OF CONTENTS

FORUMS Maine’s Innovation Prospects: What the Research Can Tell Us Linda Silka gives an overview of lessons Maine can learn from the literature on innovation.

by Linda Silka . . . . . . . . . . . . . . . . . . . . . . . . . . .

Economic and Technological Innovation in Maine before the Twentieth Century: Complex, Uneven, but Pervasive and Important Howard Segal describes Maine’s long history of innovation.

by Howard P. Segal . . . . . . . . . . . . . . . . . . . . . . . .

An Emerging Model of Innovation for Maine Renee Kelly discusses Maine’s recent R&D strategies and suggests additional ones to make rural areas more successful in innovation.

by Renee Kell . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transforming Maine’s Economy: TO OUR READERS . . . . . . . . . . . . . . . . . 6 THE MARGARET CHASE SMITH ESSAY Natural Advantages Are Key to Achieving a Vibrant Innovation Ecosystem in Maine by David J. Kappos . . . . . . . . . . . . . . . . . .

Innovation and Entrepreneurship Policy Catherine Renault suggests how “enhancing the innovation ecosystem” can encourage innovation and entrepreneurship and thereby drive economic growth.

by Catherine Searle Renault . . . . . . . . . . . . . . . . . . .

R&D: Cornerstone of the Knowledge Economy

Evan Richert’s detailed analysis of Maine’s R&D expenditures suggests that further investment is needed if Maine is to come up to the national average and improve its per capita income.

by Evan Richert . . . . . . . . . . . . . . . . . . . . . . . . . .

4 MAINE POLICY REVIEW Winter/Spring 2014

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TABLE OF CONTENTS

Research, Innovation, and Commercialization at the University of Maine

Encouraging Innovation Thoughts from Ted Ames, Prize Winner

James S. (Jake) Ward presents the University of Maine’s accomplishments through its use of state R&D funds.

by James S. (Jake) Ward IV . . . . . . . . . . . . . . . . . . .

State Investment in University Research and Commercialization:

Do We Have the Workforce Skills for Maine’s Innovation Economy? 65

Interview with Doug Hall on the Role of Training in Innovation

Finding Untapped Opportunities in Forests by Linda Silka .

. . . . . . . . . . . . . . . . .

Farming’s Future Depends on Continued Innovation Farming is on the upswing in Maine, with many innovative practices and institutions as described here by John Piotti.

In this interview with Margo Lukens, Doug Hall gives his views on the importance of education in innovation, focusing on his trademarked program in Innovation Engineering.

by John Piotti . . . . . . . . . . . . . . . . . . . . . . . . . . .

Innovation Engineering

Improving Maine’s Culture of Innovation Jean Maginnis gives her thoughts on how Maine can foster a culture of creativity and innovation.

Student Perspective

by Jean Maginnis . . . . . . . . . . . . . . . . . . . . . . . . .

Brianna Hughes and Kathryn Smith reflect on their experiences as students in the University of Maine’s Innovation Engineering program.

by Brianna Hughes and Kathryn Smith . . . . . . . . . . . .

by Sheila Jans . . . . . . . . . . . . . . . . . . . . . . . . . . .

Linda Silka discusses opportunities for innovation in forests in Maine and elsewhere.

John Dorrer describes how a workforce with superior skills is important for economic growth and innovation.

by Margo Lukens . . . . . . . . . . . . . . . . . . . . . . . . .

Sheila Jans describes challenges and strategies for cultural development in rural areas such as Maine’s St. Johns Valley.

Kris Burton analyzes the challenges in measuring the return on investment in universities by state legislatures.

by John Dorrer . . . . . . . . . . . . . . . . . . . . . . . . . . .

by Linda Silka . . . . . . . . . . . . . . . . . . . . . . . . . . .

Building Prosperity in Rural Maine

What Is Measurable and What Is Meaningful? by Kris Burton . . . . . . . . . . . . . . . . . . . . . . . . . . .

In this discussion with Linda Silka, McArthur Fellow Ted Ames shares his thoughts on the impact of receiving this award and on creating innovation opportunities for future generations.

Commentary:

What Innovation Means to Me by Kerem Durdag . . . . . . . . . . . . . . . . . . . . . . . . .

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Volume 23, Number 1

MAINE POLICY REVIEW

LETTER FROM THE EDITOR

Dear Readers,

bit.” And what is ing is stronger than ha oth “N d, sai D. A. ry al issue of Maine Ovid in the first centu the subject of this speci is ich wh n, tio va no In e introductory the opposite of habit? ue, as expressed in th iss is th of st ru th ll era hlight the many Policy Review. The ov David Kappos, is to hig by d ore th au say Es d potential. Guest Margaret Chase Smith innovation policies an its en gth en str to d ise assembled a group ways that Maine is po es S. (Jake) Ward have Jam d an , lly Ke e ne s on innovation. editors Linda Silka, Re and varied perspective of s ect asp nt ere diff of authors who present ted with invenon should not be equa ati ov inn re, he es icl thinking or the art o involve new ways of As you will learn from als can n tio va no In . a single person new thing cessarily the result of tion, the creation of a ne t no is n tio va no In ething. ints out in her new ways of doing som ent, as Linda Silka po om m a” rek “eu a of e. Innovation r own, or e innovation literatur th working on his or he m fro ed rn lea be to aine’s long e lessons l shares examples of M overview article on th ga Se ard ow H e. ain new in M is also not something . on ati ov ch history of inn state and private resear ould be supported by sh d an es can icl ” art tem in sys re he The “innovation eco ty research, described g and through universi din Catherine S. d fun t an , en m ert ch lop Ri ve de an and is Burton, Ev Kr , ard W ) ke (Ja S. innovation, economic by Renee Kelly, James close linkages between e th t ou int po o als s Renault. These author r capita income. development, and pe d workforce, a trained and educate e uir req t en m lop ve mic de Lukens, stresses Innovation and econo interview with Margo his in , all H ug Do r. plified by his n Dorre discussed here by Joh ovative thinking, exem inn g tin or pp su d an g ulatin Smith reflect on education’s role in stim na Hughes and Katie ian Br s nt de Stu . ram prog In Linda Silka’s Innovation Engineering University of Maine. e th at es nc rie pe ex eering es his thoughts their Innovation Engin t Ted Ames, Ames giv en ipi rec ” nt gra ius en rthur “g the prestigious discussion with McA e impact of receiving th s sse cu dis d an , on educati on the importance of . ard ests McArthur aw es to encourage it: for innovation and process of s e’s ple ain am M ex d ibe an scr Jans); Shorter articles de development (Sheila e (John Piotti); rural ur ult y presents what ric tar ag en ); m ka m Sil co a ’s (Lind rem Durdag Ke . is) inn ag M an (Je culture of innovation him. innovation means to thoughtto be informative and ue iss is th in es icl art d the ovince of We hope you will fin ation is not just the pr ov inn at th see ll wi u pe yo ld be incorporated provoking. We also ho tors, but can and shou en inv d an es, ess sin ks, bu universities, think tan licymakers. and supported by po es liv y da ery into our ev

6 MAINE POLICY REVIEW Winter/Spring 2014

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Best,

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î&#x20AC;

My Creed . . .

is that public service must be more than doing a job efficiently and honestly. It must be a complete dedication to the people and to the nation with full recognition that every human being is entitled to courtesy and consideration, that constructive criticism is not only to be expected but sought, that smears are not only to be expected but fought, that honor is to be earned but not bought.

Margaret Chase Smith

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Volume 23, Number 1

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THE MARGARET CHASE SMITH ESSAY

The Margaret Chase Smith Essay

Natural Advantages Are Key to Achieving a Vibrant Innovation Ecosystem in Maine by David J. Kappos

aine is perhaps the most singular state in our union—occupying the far northern corner of the country, bordering as many foreign countries as united states, larger than all other New England states combined but very sparsely populated, enjoying natural advantages including stunning beauty and plentiful resources. I grew up in California, having an impression of Maine as an exotic destination with beautiful harbors, stunning coastline, and scenic lighthouses. Said differently, in my mind, as in the minds of many millions of Americans and perhaps billions of people around the world, Maine has a positive, if misunderstood, brand. A brand that transcends natural beauty, to include work ethic and understated style. And a brand that includes innovation. In the decade plus that I have had a home in Maine and spent substantial time in the state, I have come to understand a simple truth: in many respects, Maine punches far above its weight. This essay will not attempt to explore all of the ways in which Maine excels, rather it will focus on recounting Maine’s unique stake in our nation’s innovation economy, observing the natural innovation advantages Maine enjoys and considering what it will take to turn those advantages into marketplace outcomes that suit Maine’s culture and style. A BRIEF HISTORY OF BORN INNOVATORS

aine is no stranger to innovation. It was John Ruggles—a Skowheganand Thomaston-area lawyer, Supreme

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Judicial Court justice, and senator—who framed the bill that fundamentally restructured the U.S. patent system and the U.S. Patent Office in 1836. It is no wonder that the people of Maine have a rich history of inventive problem solving. Maine’s unforgiving environment and geographically dispersed population combined to make innovation not a luxury but a necessity. Indeed it was necessity—the mother of invention—that produced the Maine inventor and statesman remembered as the “father of the U.S. Patent Office.” The first patent issued under the 1836 regime (U.S. Patent No. 1) on an improved locomotive steam-engine designed to combat “the evil effects of frost, ice, snows, and mud” and traverse the “obstacles met within ascending inclined planes” was granted to none other than Ruggles himself. The Yankee work ethic with which Mainers have customarily met their rugged surroundings has been passed down from generation to generation, producing a tradition of inventiveness born of demanding labor and harsh climate. The patent office contains ample evidence of enterprising interactions between Maine’s people and its environment. Silas Taber, a Houlton blacksmith, set out at the dawn of the twentieth century to solve a problem presented by the topography of Aroostook County: a low platform for wagons was ideal for loading potatoes but large wheels were necessary to traverse the uneven terrain. In 1903, Taber was granted U.S. Patent No. 719531 for his drop-axle wagon, which solved the problem and became a popular item on New England farms for

as long as horse-drawn wagons remained in use. Chester Greenwood, the son of a Farmington bridge builder, was still a teenager when, in 1877, he was granted U.S. Patent No. 188292 for his “improvement in ear-mufflers.” By 1936, the year prior to his death, Greenwood’s Farmington-based company was producing and shipping 400,000 earmuffs annually. Maine’s work ethic extended indoors within its mills as the Industrial Revolution took hold. And so too did Maine innovation. Proving that invention was not just a man’s prerogative, two of the most prolific Maine-born inventors at the turn of the twentieth century were women. Margaret Knight (of York) and Helen Augusta Blanchard (of Portland) combined to obtain at least 50 patents that fueled advances in the textile, paper, and other manufacturing industries. From the fields to the mills, the men and women of Maine met their challenges with a remarkable penchant for invention. MAINE’S NATURAL ADVANTAGES TODAY

find myself regularly impressed by modern expressions of Maine’s unique innovative spirit, which I encounter as I spend time in the state. Not long ago I met a Mainer who created a new portable power generator for use in remote areas. This remarkable invention uses a power generation/storage unit connected by a flexible shaft to a propeller. The entire device is placed in a stream and can generate electricity in water of just a

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THE MARGARET CHASE SMITH ESSAY

few inches depth. This is invention in its purest form—encountering a problem firsthand and working out a solution, largely through trial and error. We imagine such feats of engineering innovation as the exclusive province of full-time scientists with Ivy League Ph.D.s, working in highly controlled research facilities. While institutional research plays a significant role in innovation, there is simply no substitute for native understanding—understanding that comes from doing. It is abundantly clear from my travels that Maine is a “doer” state. And Maine does innovation. The people of Maine have the inherent qualities necessary to thrive as innovators. The state can and must embrace its predisposition toward innovation—but on its own terms. Maine’s future as a player in the twenty-first century innovation landscape relies on leveraging its natural strengths. Ironically, the elements that discouraged heavy settlement centuries ago are responsible for Maine’s attractiveness today; the remarkably unspoiled country Maine has to offer makes it a place where people of all stripes want to be. The people Maine attracts and retains represent the state’s greatest natural resource in fostering innovation. Among those who choose to spend significant time in Maine are large numbers of industry leaders who have built successful careers in Maine or elsewhere and are drawn to the state for its idyllic surroundings. These are senior people in their fields (some still active in the work force and others in active retirement) with rich and varied business experience—people from whom much can be learned. People who have been there and done that, and have the gray hair to show for it. In my former role in the federal government as undersecretary of commerce and director of the U.S. Patent and Trademark Office, I had the opportunity to speak with innovators the world over.

Both globally and in America in particular, the innovative spirit is alive and well. But the single greatest challenge facing innovators isn’t generating great ideas; it’s turning those great ideas into successful marketplace outcomes. And the number-one reason great ideas fail to reach the marketplace is not a lack of drive to move them forward or a lack of capital; it is, in fact, a lack of access to mentorship. Time and time again, in every corner of the world, I found a near vacuum of senior stewards available to guide the next generation of smart, energetic innovators with tomorrow’s big ideas. The result: frustration and failure, as inventors unguided repeat the mistakes of the past, groping in the dark, expending energy and talent in wasted effort. Reenter the state of Maine and connect the dots. Maine enjoys an abundance of just the missing ingredient most other communities lack: potential mentors. Its special attractiveness to successful industry leaders is simply the key ingredient to a thriving innovation ecosystem. To these leaders, Maine is more than Vacationland—it is an environment where leisure and peace of mind can be complemented by opportunities to serve as mentors for future innovators. When connected to the next generation of talent, this reservoir of experience unleashes our one inexhaustible resource— innovation—at a level of efficiency few other communities can match. For Maine’s innovation scene, in other words, gray is a good look! Beyond its attractiveness to those of us from away, Maine has a lasting appeal to its native-born residents. Importantly, it is an affordable and beautiful place to raise a family and build a business. Invaluable to Maine’s ability to thrive as a center for innovation is that people who know Maine want to be here and want to stay here. So long as jobs are available in the state, why would a Mainer want to go anywhere else? The key to building

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innovation infrastructure is thus to provide a steady stream of jobs in the innovation sector by honing those industries for which Maine is ideally suited. THINKING OUTSIDE THE BOX —AND OUTSIDE THE STATES— WITH AN EYE TOWARD BIG DATA

s was true for Maine innovation in centuries past, the state’s distinctive natural environment will likely shape Maine’s innovation future. Its circumstances are unique—trying to duplicate in Maine the successful patterns of innovation in other states or regions would be misguided. In identifying a more fitting model, Maine would be wise to think Nordic. The Nordic countries, with their densely forested terrain, ready access to renewable resources, predominantly rural populations, rich maritime culture, and cold climate punctuated by pleasant summers, in many ways have more in common with Maine than even the state’s New England neighbors. Northern European countries (specifically Sweden, Finland, and Norway) have successfully leveraged their geographically distinctive features to become serious players in the rapidly ascending data server industry. The explosion of goods and services marketed over the Internet and vast increases in bandwidth available over the Internet have led to increased demand for the storage, analysis, and movement of data. So-called server farms are increasingly used to fulfill the everincreasing needs of big data. The enhanced capabilities of server farms, however, are accompanied by major cooling costs. Server farms use tremendous amounts of power and generate concomitant heat— anathema to computers, which are particularly vulnerable to overheating. Thus the growth of server farms is slowed by the high cost of cooling. Maine’s proximity to the Arctic Circle makes it a viable North American

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surrogate for the role the Nordic countries play in Europe. Its cold climate makes Maine an excellent sanctuary for computer servers. Furthermore, as was true during the Industrial Revolution, Maine’s proximity to the ocean adds value in this new wave of digital industrialization, especially through Maine’s leadership in renewable wind technology. Add to these strengths the security benefit offered by low population density—with its related low levels of anonymity—and Maine is a natural candidate for hosting North American server farms. Maine has already demonstrated its commitment to building data transfer infrastructure with the completion of its 1,100-mile Three Ring Binder fiber optic network. I applaud Maine’s forwardthinking leaders for investing in this project to position the state as a player in the data revolution. Policymakers must build upon the state’s success in this area and explore ways to create incentives for web service providers to make Maine not just one, but the server farm provider of choice for U.S. web traffic. Looking to the Nordic countries is by no means an invention to Mainers—the state has been doing this for ages. Let’s run that play again, informing Maine’s leadership toward leveraging the state’s natural advantages to achieve sustained success in innovation.

manufacturing facilities. And while in its infancy, additive manufacturing (also known as 3D printing) promises even greater opportunity for highly adaptive manufacturing in the future. Democracy in manufacturing is a boon to a state that already counts among its assets a population of doers, scenery that acts as a magnet to mentors, and proximity to renewable energy resources. The world, in my estimation, has caught up to Maine’s advantages. Continued promulgation of fabrication labs is crucial to Maine’s ascent in innovation. The University of Maine has wisely made bold investments in such facilities. In addition to large-scale projects that promote industry partnerships, Maine would benefit from an increased number of smaller-scale “maker spaces”— shop floors equipped with the tools needed for Maine’s innovators to test their inventions. Localizing access to manufacturing will allow Maine’s natural-born doers to build prototypes and turn their ideas into marketplace outcomes. Increased maker space represents a key addition to Maine’s innovation regimen, necessary to enable the relatively undersized state (population-wise) to punch well above its weight. For those who long ago wrote off Maine as a hub for manufacturing, I say, “Not so fast!”

DEMOCRATIZING YANKEE INNOVATION

CONCLUSION

aine’s potential to develop a worldclass innovation environment has never been greater than it is today. Advanced manufacturing technologies are having a profound equalizing effect on the process of turning ideas into products. Maine’s relative lack of access to largescale manufacturing—a longstanding impediment to innovation success—is offset by the advent of micro-manufacturing. A pronounced decrease in tooling costs greatly reduces the necessity of major 10

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of the hottest sectors in the world today: big data. Maine has much to celebrate in its history of innovation and—more importantly—much to look forward to, provided it plays thoughtfully the high hand it has been dealt. Personally, I am excited to be a small part (from my own Otis Point perch) of the flourishing innovation I am confident lies just over Maine’s remarkable horizon. -

David Kappos is a partner at Cravath, Swaine & Moore LLP in New York. He served as under secretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office from 2009 to 2013. He is widely recognized as one of the world’s foremost leaders in the field of intellectual property.

aine is well positioned to play a significant role in American innovation in the twenty-first century. Its historical “disadvantages” inspired inventiveness and instilled in the Maine character a work ethic that will be crucial to its future role as an innovator state. Critically, those former disadvantages are sources of distinct competitive advantage today. Maine’s pristine beauty provides leverage to attract mentors aplenty that are in such short supply elsewhere, and its cold climate can be leveraged to attract one View current & previous issues of MPR at: digitalcommons.library.umaine.edu/mpr/

MAINE’S INNOVATION PROSPECTS

Maine’s Innovation Prospects: What the Research Can Tell Us by Linda Silka The literature on innovation suggests Maine faces a number of challenges. In this overview article, Linda Silka discusses the literature, noting how recent findings about boundary spanning point to the importance of both individual skills and group collaboration in innovation. Silka highlights the implications for policies to jumpstart innovation and suggests the importance of looking to history, looking across topics, looking across disciplines, looking to other states, and looking to other countries to avoid becoming too short-sighted and parochial in approaches.

nnovation can be surprisingly simple yet exceedingly complex. At its essence, it involves finding ways to see the familiar with fresh eyes. Consider something as seemingly straightforward as the signs we see everywhere marking parking spaces reserved for the disabled. The symbol has remained unchanged since 1968 (Figure 1a). Yet, the artists involved in the Accessible Icon Project (ref http://www.accessibleicon.org) saw what was invisible to so many others. The old image was not solely informational: it conveyed messages on societal attitudes about disability. According to an article in the Boston Globe (December 14, 2013), the artist felt the old symbol was “stiff, robotic, with the chair functioning as a part of, not a tool for, the human.” The artists began to re-envision the wheelchair icon and all that it communicates. Their innovation was to propose a new icon (Figure 1b). The new image is described with words such as active, abled, and engaged. In the process of creating a new symbol, the artists have spawned an international grass-roots movement about the way society portrays and views disability. All this was the result of someone recognizing a problem that others failed to see. Innovation starts with envisioning the familiar—a resistant problem, an unfilled need, an unmet opportunity—in new ways. Innovation often involves arriving at solutions that seem self-evident once the reframing has taken place. As in the case of the parking sign, what was needed was to recognize that something was not working and then to invent new solutions. How can Maine promote such processes of innovation?

As we see in the many articles in this issue of Maine Policy Review, Maine has begun turning its attention to innovation and to the question of how to create policies that stimulate innovation. Policymakers have begun to envision new strategies to enhance innovation and to implement policies, such as the Maine Economic Improvement Fund (MEIF). Additionally, new innovation hubs have developed in the state, for example, the Maine Center for Creativity in Portland and the Foster Innovation Center at the University of Maine. There have been substantial results for these kinds of efforts. Research is leading to innovations in energy, infrastructure innovation, agriculture, and aquaculture. Figure 1: Accessible Icon—Traditional vs New

(a)

(b)

(a) The traditional icon used to mark parking spaces reserved for people with disabilities. (b) The icon as revised by the Accessible Icon Project.

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Volume 23, Number 1

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MAINE’S INNOVATION PROSPECTS

In today’s economy, innovation is widely recognized as fueling job growth and a more robust economic future. Indeed, because of the rapid rate of change, it is no longer possible to just keep doing the same thing: In this quickly changing economy, doing the same often means falling behind. Innovation is no long optional; it is mandatory. In this essay, I begin with the challenges Maine faces as a rural state and consider what the literature on innovation suggests about why urban areas are more creative. I dissect this urban advantage and suggest that much of it points to the centrality of boundary spanning. I then look more closely at assumptions about how to increase innovation: Should the focus be on finding creative people or the creation of contexts that stimulate innovations? And I then analyze the underlying policy issues and recommend ways to use the literature to develop strategies for enhancing Maine’s future in innovation.

Despite what has been shown about rural states being places of limited creativity, Maine actually has a long history of innovation.

MAINE’S INNOVATION DISADVANTAGES

tudies on innovation increasingly indicate that rural states such as Maine are at a disadvantage when it comes to innovation. Much of the evidence shows urban areas to be the hotbeds of innovation. Maine is also disadvantaged because it is an old state, with the highest median age in the country, and the literature on innovation indicates that creativity is not often associated with advanced age. Innovation is a younger person’s sport. A further disadvantage is the nature of the jobs that drive Maine’s economy: many are in traditional sectors (forestry, fisheries, and farming) that are not considered innovative industries. Rather, these industries often value tradition. A key challenge, then, is to find strategies that will increase the number of

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jobs in these traditional industries, which face national and international trends that make it difficult to survive simply by being excellent at the practices that were applauded in the past. The overarching question is, What the best way for Maine to surmount these challenges? How do we reinvent what we have so that Maine is not left behind? How can we keep traditions alive while at the same time changing them? Despite what has been shown about rural states being places of limited creativity, Maine actually has a long history of innovation. (See Segal, this issue.) At one time Maine was known for its innovations around our natural resources including forests, fisheries, and even resources we no longer recognize as economic assets such as ice. Consider ice harvesting: Until after the Civil War, ice was largely a luxury item, used for cooling drinks. But when Americans added more dairy and fresh produce to their diets, ice-boxes became a standard feature in the middle-class home, and markets for ice expanded rapidly. Maine moved to the forefront of the burgeoning ice industry. At its heyday (1870–1890), around 25,000 men converged on the Kennebec ice fields each winter to cut and store ice. Maine’s deep lakes, broad rivers, and cold winters produced a pure, crystal-blue product that set the standard for quality, and the proximity of these ice fields to the sea lanes kept shipping costs low. During these decades Maine’s ice returned a wealth greater than that of California’s annual gold production.1

Zillman, Walta, and Del Guavo Castiella (2009) point out that innovations in energy have long been drivers of Maine’s economy, and Maine continues to lead in value-added energy innovation. The same can be said about innovations in areas such as pulp and paper and fisheries. Knowledge of Maine’s history is an intriguing starting point for envisioning innovation potential. Ted Ames and faculty at Bowdoin (Lichter and Ames 2012) have pioneered ways of harnessing Maine’s history to reframe the challenges facing marine fisheries and freshwater lakes. They have unearthed stories that capture historical problem solving and highlight past innovation strategies undertaken by Maine’s people. McCoy et al. (2011) recently completed research on views of wind power in Maine that also evokes the nature of Maine’s innovation history. As a part of a large-scale survey to assess Mainers’ views on wind power, these

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researchers embedded a framing experiment within the statewide survey. For some participants, wind power was framed as new, whereas for others this innovation was framed as being part of a Maine tradition of problem solving. People who had reference to that history were not only more positive toward wind power, but were also more likely to regard an innovation of this sort as an opportunity to continue Maine’s tradition of finding creative solutions. Paradoxically, ensuring that innovation is seen as a part of tradition— as not new—may be a way to stimulate new innovations and reduce resistance to them. Familiarity with tradition—such as having deep knowledge of a field—has been shown to be of great importance to innovation. The literature points to the need for familiarity with traditions, but also to the importance of being able to envision those traditions in new ways. People need to draw on history but also reinvent it. Consider Maine’s history with tidal power as an example. In the 1930s, a tidal power project was tried in the Bay of Fundy, where some of the world’s most robust tidal energy resources can be found. The attempt failed. Recently, new attempts at tidal power generation in the area have been developed with an awareness of what went wrong in the past, but also with a re-envisioning of new opportunities using advanced technology.

which a problem resistant to solution is presented online and people are given an opportunity to come up with a creative solution. Contrary to what might be expected, successful contributors frequently are not those in the discipline from which the problems come; they are more often from a related discipline: When the business scholars Karim Lakhani and Lars Bo Jeppesen studied Innocentive, an online clearinghouse for unanswered questions in science and other fields, they discovered that the people most likely to solve the most complex problems weren’t professionals in the discipline in question. In fact, being an expert in an area distinct from the field of the challenge was a statistically significant predictor of success. The secret ingredient was what Lakhani calls “interdisciplinary expertise”—the ability to draw connections between one subject and another (Thompson 2014: 26).

The creative answers to the questions posed on Innocentive’s website came from professionals at an optimal distance from the challenge. As Alph Bingham, Innocentive’s founder, notes, “You have to be close enough to comprehend the technical aspects, but not so close that you are biased by the way those immersed in the problem tend to think” (Thompson 2014: 26). THE SOURCE OF URBAN SUCCESS AT INNOVATION

THE FAMILIARITY PARADOX

s states seek to enhance their innovation potential, researchers who study innovation are uncovering intriguing puzzles about familiarity: for innovation it seems to be necessary and it seems to be an impediment. Throughout this essay I will consider this puzzle and its implication for crafting policies. On the one hand, innovators appear to need extensive familiarity with a topic. Gladwell (2008) reports that what distinguishes those who succeed in an area is their depth of experience in the area and not necessarily some inherent creativity. Gladwell also argues that what is important is having on the order of 10,000 hours of time on task. These hours of experience, rather than some natural talent, accounts substantially for differences in success. Yet, paradoxically, more experience has also been found to stymie innovation. As Thompson (2014: 24) notes: “When you become infinitely educated in a category, you’re your own worst enemy.” Evidence from a variety of studies confirms this. For example, recent studies of the generation of solutions have examined cases in

he evidence suggests another theme that is important for innovation: collaboration between people, businesses, or institutions with different assets. If Maine is to succeed at increasing innovation, we need to understand the ways in which innovation is increasingly linked to connectedness and collaboration. Urban areas are especially well endowed with connectedness (Glaeser 2011). What, then, is it about urban areas that make them hotbeds for innovation and what does this mean for rural areas? One of the characteristics that advantage urban areas in the realm of innovation is the diverse populations living close to each other, which enables people to encounter others engaged with the same problems but coming at them from different perspectives. Cities bring opportunities for wealth and for the creative inspiration that can result only from face-toface contact with others. In fact, the crush of people living in close quarters fosters the kind of collaborative creativity that has produced some of humanity’s best

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ideas, including the industrial revolution and the digital age. In the years ahead such collaborations can be expected to help solve the world’s most pressing problems—poverty, energy shortages, climate change (Glaeser 2014: 102).

Glaeser (2014: 102) also hypothesizes about the characteristics of urban areas that make them hotbeds for innovation. Why do cities bring out the best in us? Technology lets us hold virtual meetings, and the Internet keeps us in touch 24/7, but neither can be a substitute for the social cues—such as a facial expression signaling comprehension or confusion—shared when people meet in an office, bar or gym. Cities deliver the random exchanges of insight that generate new ideas for solving the intransigent problems….Young workers....succeed by picking up unexpected bits of knowledge from the successes and failures of those around them. By supercharging the flow of ideas, cities foster economic prosperity, innovation, better health—and even new ways to govern ourselves.

Bettencourt and West (2014: 106–107) point to other features of cities that may be important. Cities concentrate, accelerate, and diversify social and economic activity. The numbers show that urban dwellers produce more inventions and create more opportunities for economic growth….What we can say with certainty… is that increased population promotes more intense and frequent social interactions, occurrences that correlate with higher rates of productivity and innovation.

Urban areas bring people together in ways that foster innovation. So, an important question for a rural state such as Maine is, How to create opportunities to encounter the other? Such encounters happen almost spontaneously in urban settings, but are there some natural advantages that rural states have that have yet to be understood in terms of their value for bringing about collaborations with people from different perspectives? CREATIVE USE OF MAINE’S ASSET OF BOUNDARY SPANNING

erhaps rural states have the key ingredients for innovation, but they have not been adequately exploited. One of the advantages of rural states with small populations is that the groups tend to be manageable in

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size. Could this be a natural advantage that could be developed and serve as the foundation for innovation? Several examples illustrate this possibility. A recent endeavor by Maine’s Elmina B. Sewall Foundation hints at the possibilities of building collaborations. Leaders of the Sewall Foundation noted an emerging challenge: Across the state a similar scenario was playing out in which Maine’s land trusts and their adjacent communities were not working together nor were they learning from each other. Indeed, there was a basic tension related to class and opportunity. Land trusts were sometimes seen as removing land from the tax records and as being places that did not welcome the activities (such as snowmobiling) that people living in nearby communities had previously engaged in. The Sewall Foundation brought together leaders of land trusts with leaders of nearby communities for a day-long retreat in a face-to-face setting that enabled the two groups to consider their common ground and identify what they could do together. This kind of innovation-spawning event could not easily happen in urban areas where the numbers are too large. In Maine, however, once someone makes it happen, groups can sit down together and develop innovative ideas that would be unlikely to emerge from either the land trusts or the communities alone. One of the featured Maine speakers at the Sewall Foundation’s retreat was Amber Lambke, who used her own experiences to showcase how to bring separate ideas together to create productive innovations. Developer of the Somerset Grist Mill, Lambke had noted that many old abandoned mills were going unused. She also saw that nearby land was not being productively used because of a lack of a market for the crops. She recognized that jobs could be created if a way could be found to use both the abandoned mills and the underused land. This led to the creation of a state-of-the-art, awardwinning grist mill. The Somerset Grist Mill is not the only example of innovative reuse of Maine resources. Others have seen this as a way to encourage Maine’s young people to stay or young people from elsewhere to come to Maine and make it their home (McCarthy 2013). Bjarki Gunnarson and Josh Saltmarsh have taken over a languishing mill in central Maine and reinvented it as the Wood Idea and the Wood Mill of Maine to produce high-end lumber products for markets throughout New England. These young entrepreneurs chose Maine because these opportunities did not exist elsewhere.

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Boundary spanning is the term now used describe this bringing together of different groups and sectors. According to the rapidly expanding literature on the subject (Easley and Kleinberg 2010; Fox and Cooper 2013; Lee, Horth, and Ernst 2012; Marrone 2010), boundary spanning is enhanced by those who cross different situations and roles. In a state with a population small enough so people can know of each other’s efforts, individuals who cross boundaries have ready access to, and can interact with, individuals and groups across different sectors. They readily serve to stimulate innovation by bringing together different people with different ideas. These kinds of boundary crossings are commonplace in the rural state of Maine. Recently a very different convening occurred to investigate ways to reduce intergenerational poverty. People in different sectors—education, faith, social services, philanthropic—in Maine had recognized the need for innovative solutions to the persistent problem of intergenerational poverty. Old solutions had reached dead ends, so people came together for a discussion of what needed to be done. Drawing on the literature, they began conversations about how to address intergenerational poverty and developed innovative plans for addressing intergenerational poverty in Maine. Bringing disparate ideas together is an important component of boundary spanning, and it is flourishing in Maine. Putting citizen and science together is an example of this innovative approach, and Maine leads in the development of citizen-science initiatives. Abe Miller-Rushing of Acadia National Park’s Schoodic Education and Research Center (SERC) is a national leader in citizen science. The citizen-science movement is built around linking two problems that have formerly been treated as being unrelated: (1) there are too few scientists to collect all the data needed to test hypotheses; (2) laypeople are suspicious of scientific findings generated through traditional, opaque research processes. Leaders in the field of citizen science saw a way to perhaps solve both the problem of too few scientists and skepticism about science, by employing the boundaryspanning theme of science democratization and involving citizens in collecting scientific data. Maine’s SERC Institute is a leader in this area. These examples of emergent boundary spanning beg the question: Must we just wait for boundary-spanning projects to develop on their own, or are there ways to encourage this behavior? Maine’s Sustainability Solutions Initiative (SSI) is an example of intentional action to

systematically build interconnections into a research program that involves more than 100 faculty from throughout Maine in an attempt to address Maine’s sustainability challenges. The central focus of SSI is bringing together diverse academic disciplines to allow their differing expertise to be integrated in order to solve long-standing problems (Silka et al. 2012).

Bringing disparate ideas together is an important component of boundary spanning, and it is flourishing in Maine.

WHAT IS NEEDED TO ENHANCE INNOVATION

he literature on boundary spanning allows us to recast the findings from urban innovation studies to point to Maine’s untapped assets. Boundary spanning calls attention to both individual skills and group functioning, suggesting the need to bring groups into stimulating, productive contact and to enlist individuals with particular boundary-transcending skills. But which should receive the greater emphasis—the individual or the group? Within the literature there are two divergent views of how to best increase innovation: one emerging from cognitive psychology and one from corporate studies of innovation. They represent two competing assumptions: one that sees innovation as tied to improving how individuals think and one that sees innovation as a consequence of improving how groups work. Examining this distinction more closely will be an important step in selecting strategies to improve Maine’s innovation prospects. Within the cognitive psychology literature, Hofstadter and Sander (2013) make a strong case that innovation is associated with the ways individuals think. Nobel Prize–winner Daniel Kahneman, in his awardwinning book Thinking Fast and Slow (2011), argues that we need to recognize the central importance of analogical and metaphorical thinking. This type of thinking helps bring disparate possibilities together in inventive new ways. Consider how this idea is encapsulated in the familiar metaphor of the light bulb:

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For more than a century Americans have regarded the creation of the incandescent light as the greatest act of invention in the nation’s history, and the light bulb has even become our symbol of a great idea. We associate the bulb with a “eureka” moment, the modern version of an ancient metaphor linking light with insight (Freeberg 2014: 2–3).

Strategies for encouraging creativity emphasized by psychologists implicitly tap into analogy, metaphor, and history and raise questions about how to make this kind of thinking more widespread. In contrast, students of corporate innovation focus on the kinds of collaboration that are the basis for innovation. They often critique the idea of innovation coming from an individual genius: Many of us think of invention as something that springs from an individual mind. It’s a romantic view, but it bears little relation to the creative process behind the technologies that are shaping our world. That process is increasingly collaborative—not so much a single light bulb going off in someone’s head as many light bulbs in a social network of diverse minds (DiChristina 2013: 57).

…policy recommendations [for stimulating innovation] continue to bounce between efforts aimed at persons and efforts focused on groups and situations. The corporate literature identifies the importance of conditions that enable collaboration and the growing connectedness of work. Fagerberg (2003) notes that every new innovation, rather than coming from a single individual, consists of a new combination of existing ideas, capabilities skills, and resources. Others studying corporate innovation note that “popular folklore notwithstanding, the innovation journey is a collective achievement that requires key roles from numerous entrepreneurs” (Van de Ven et al. 1999: 149). And many other researchers point to the particular ways in which groups function. Groups need to have absorptive capacity (Cohen and Levinthal 1990), that is, groups 16

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must be able to take in new ideas and be open to different and competing ideas (Van de Ven et al. 1999). In other words, collaboration is crucial. In short, two thoughtful bodies of research take us in different directions with regard to how to increase innovation. One emphasizes individual skills while the other emphasizes the need to analyze situations that enhance collaboration. How then can this information be used to inform the development of policies that increase innovation and create a more robust economy? POLICY MAKING TO STIMULATE INNOVATION

he policy options for stimulating innovation will depend on our assumptions about innovation’s scarcity. Is innovation scarce because individuals with the potential to innovate are rare? Or is innovation rare because of the scarcity of the conditions needed to bring out innovation? In other words, should policy efforts be directed at individuals or at creating the right situations to produce greater innovation? Not surprisingly, policy recommendations continue to bounce between efforts aimed at persons and efforts focused on groups and situations. I will briefly summarize the complications to be considered before we start creating such policies. Since the issues are more complex than can be fully analyzed in this short essay, I recommend Brzustowski’s (2012) book Why We Need More Innovation in Canada and What We Must Do to Get It.

Focusing on Individuals When innovation is considered to be a consequence of individuals’ attributes, attention turns toward identifying people who are naturally creative. Although creativity has often been treated as something inborn within the individual, a growing body of literature suggests that the key characteristics associated with innovation are varied. Winner (1996) and Drake and Winner (2012) studied children with a creative edge. The researchers describe the children as distinctive in having “a rage to master” and that it is this mastery impulse that is centrally important to their success. Others have hypothesized that cognitive disinhibition rather than creative thinking may be the major contributor to creativity. Carson, Peterson, and Higgins (2003) hypothesize that genetic variation make some people’s brains more open and responsive to ideas or feelings that may be blocked by most people’s mental filters. Still others point to having a diversity of interests as

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important, with creative individuals exhibiting “unusually wide interests and hobbies, often contributing to more than one domain of expertise” (Simonton 2014: 23). Simonton, author of dozens of books and hundreds of articles on creativity, has summarized much of the literature by arguing that “practice, training and exposure to unfamiliar ideas and experiences play essential roles in shaping creativity” (2008: 30). Before we can develop policies to encourage innovation, we need a deeper understanding of which are the most important individual attributes. We need to consider whether creativity is inborn or can be learned. Should policies focus on how to detect the resource or on how to create the resource? In all of this, we are cautioned by Burkus (2014) to avoid the Lone Creator Myth. Burkus notes that such a myth directs us toward the magic bullet of creative individuals who can be the source of the next invention. We can exhaust limited resources searching for these individuals rather than enhancing features of situations that would promote everyone’s capacity to innovate. If we see innovation as something that does not only reside in the rare creative individual, then we turn focus our attention on of the kinds of contexts that make a difference. Focusing on Situations and Conditions The term combinatorial innovation is used in the literature to describe the conditions that make some companies creative and others not. Innovations typically come from the right combination of existing ideas. Brynjolfsson and McAfee (2014) in The Second Machine Age describe conditions for combinatorial innovation as a new approach to group problem solving. “What science and engineering companies need, therefore, are smarter ways to collect and grade all these potential ideas combinations” (Thompson 2014: 24). Important resources are appearing that propose blueprints for policies that would create the right conditions for innovation-strengthening collaboration. One such resource is Brzustowski’s book on the need for more Canadian innovation (Brzustowski 2012). Out of the book’s discussion emerge 10 principles for an innovation policy along with a framework for innovation and four models for industrial innovation. In similar ways, leaders in Maine have begun to write about innovation potential in Maine’s traditional industries and ways to bring people together to enhance innovation potential (see, Stone, Benjamin, and Leahy 2011a; 2011b).

The Challenges of Bringing the Two Together

A few policy analysts have begun the difficult task of integrating the two perspectives of creative individuals and collaborative environments. Amabile’s (1996) book Creativity in Context is an instructive resource, as is Wagner’s (2012) Creating Innovators: The Making of Young People Who Will Change the World. The books differ in the degree of emphasis on person vs situation, but each is an in-depth look at the two factors that are key to enhancing innovation. They lead us through various ideas on how to combine person and situation to create innovation. As Maine develops policies to enhance innovation, it will be important to learn from new efforts and experiments—and remain aware of possible ambiguities in their impact and suitability. New strategies are being tried and new conclusions are being reached. To make progress in formulating policy, we need to scrutinize these efforts while recognizing that key factors may be outside of the frame of reference. Can Competition and Prizes Encourage Innovation?

We should not leave the topic of innovation without considering one of the most common policy strategies for increasing innovation, the use of prizes and competitions. According to the article by Thompson (2014: 27): In the past decade, the federal government has embraced ideas generated by open prize-based challenges to block illegal robocalls, improve local air-pollution measurements, adapt public-transport systems to self-driving buses, map the universe’s dark matter, design a better astronaut glove, mop up oil spills, and design more-fuel-efficient cars. Kalil thinks the government has barely tapped the potential of challenges. “Prizes,” he said, “are great public policy,” with several benefits. They increase both the number and diversity of potential solutions, fostering the sort of combinatorial innovation that can produce radically new ideas. And they’re cost-effective, since they reward only the winning solutions.

Such an approach seems to have many elements to recommend it: it can be cost-effective because many potential innovators can be tapped essentially for free as only the prize winner is paid, and low-cost competitions are made feasible because of the availability of the Internet and information technology. As it turns out,

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however, the use of competitions is more complex than it might seem: Designing a good challenge is not as simple as posting a question and waiting for a response. There are three key elements: asking the right question, offering the right prize, and having the right team of experts evaluate the proposed solutions. Vague questions are ignored, good questions go unanswered without sufficient rewards, and if you don’t have proper oversight to evaluate the answers, crowd-sourcing is just one big, useless guessing game (Thompson 2014: 26–27).

Policy Making and the Innovation Life Cycle

Important as it is to develop innovation-stimulating policies, it can be hard in the short run to know if these policies have succeeded. In the case of innovations in technology, for example, a misleading impression may result if one uses just a snippet of time to decide whether new policies have produced lasting innovation. In his Mastering the Dynamics of Innovation (1994), Utterback turns to the topic introduced earlier in this essay—the history of ice harvesting— to illustrate the misleading impressions that can result if the full life cycle of a technology is not taken into account. He notes that at one point natural ice harvesting held a commanding lead over other technologies, but it was eventually made obsolete by other icemaking technologies. Without taking into account the full life cycle, which frequently includes the emergence of competing technologies, one would have been tempted to see traditional ice harvesting as doing well and getting even better: Here we investigate the case of the American iceharvesting industry and its subsequent decline in the face of machine-made ice. Far from being an arcane historical curiosity, this case provides a look at a familiar process technology over its full life cycle. This long-term perspective helps us to see how a competing technology emerged....We also observe here how one generation of technology applied to a commonplace requirement (cooling) gave way to others. Thus refrigeration using harvested ice was rendered obsolete by machine-made ice—an innovation based on a radically different technology—which in turn was superseded by electromechanical refrigeration (Utterback 1994: 147). The performance superiority of the established technology may prevail for quite some time, as was the case

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for harvested ice relative to machine-made ice in most locations for the last quarter of the nineteenth century, but if the new technology has real merit, it typically enters a period of rapid improvement—just as the established technology enters a stage of slow innovative improvements. Eventually, the newcomer improves its performance characteristics to the point where they match those of the established technology and rockets past it (Utterback 1994: 159).

Careful attention to recurrent patterns made evident in life-cycle analyses—particularly ones that look at many different innovations through many eras—will be important in the design of innovation-promoting policies. To avoid drawing misleading conclusions about policies based on brief glimpses at single points in the cycle, it is important to examine the full life cycle both when framing policies and when evaluating their success. The ultimate danger is that states will use the complexity of the data to avoid creating policies because of the difficulties of determining what should be done. Attending to life-cycle analyses provides a better solution by showing how to embed policies in evaluations that take the complexity into account. Policy Levers Finally, sometimes the most important policy levers remain outside of our range of attention: for example, patent laws. As David Kappos (this issue) notes in his introductory essay, patent laws that protect intellectual property are an often-unheralded impetus for America’s leadership in innovation. Companies know they can accrue enormous upfront costs for the research and development necessary for innovations and the payoff will not be seen until well into the future. Because of patent laws, companies need not fear that their development costs will simply enable some other company to benefit from the innovations. The importance of patent laws and related policies becomes evident when there are gaps in what intellectual property laws cover. Recent discussions of whether states such as Maine should use tax credits to promote new energy technologies for the development of offshore wind power, for example, raise these issues. By doing so, will Maine underwrite the development costs only to have future jobs move to other states once the technical innovations are devised? Can Maine design policies that keep this from happening but that do not serve as barriers to innovators coming to Maine in the first place?

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CONCLUSION AND FINAL RECOMMENDATIONS

his essay began with the simple story of the redesign of the accessibility icon, an example that illustrates that there are many targets for innovation. Sometimes it is something as simple as an icon. Other times the target is complex, such as revolutionizing the way we produce and use energy in our homes, workplaces, and automobiles. Whether the target is simple or complex, however, the processes of innovation often run counter to our assumptions that it is the result of individual inventors creating something from scratch on their own. We are surrounded by images and sayings that reinforce popular folklore about innovation. Calls for innovation charm us with familiar images such as a Eureka light bulb above a person’s head. As we work to strengthen Maine’s innovation capacity, we must not be seduced by these familiar images. The complex story of the invention of the light bulb is a useful reminder of innovation’s intricacies. The light bulb was not the result of a single brilliant inventor, Thomas Edison, working alone; rather it was the culmination of contributions from many contributors over time that made the invention of the incandescent bulb possible (Freeberg 2014). Other familiar sayings may further obscure the many types of innovation that are needed. We are constantly told “we need to create a better widget” or “we need to create a better mousetrap.” The phrases cast innovation as being largely about creating the next better tool or object. Yet, the need for innovation extends well beyond creating things. Increasingly, we need to use innovation to solve social problems, create new processes, and address logistical challenges. Many emerging needs will focus on changing processes such as energy distribution networks. Policies to strengthen innovation capacity will need to be aware of the rich variety of innovation needs in Maine. As we tackle the problem of enhancing Maine’s future, we will need to learn from the ever-growing literature on the subject of innovation. But here is the final challenge: There are now thousands of articles and books on innovation, and it is nearly impossible to absorb even what is available at this moment. Trying to discern what the literature recommends for best practices is a daunting task, made even more daunting the contradictions that pervade the literature. In light of the sheer size and complexity of literature, I offer five brief

recommendations for how to organize the literature to guide Maine’s future policy development. 1. Look to the history. To avoid getting caught up in the innovation fad of the moment, look to what has been written about past innovation successes and failures. By looking at full cycles of innovation and development, there is a greater possibility of discerning patterns of interest. This longer time perspective can be an antidote to the rushed conclusions arrived at from high visibility contemporary innovations. 2. Look across topics. Innovation recommendations are held hostage by their particular topic (for example, energy, poverty), often resulting in a narrowing of focus. Considering alternatives from entirely different topics can open up possibilities. 3. Look across disciplines. Individual disciplines get caught up in particular approaches to problems. By considering how different disciplines have addressed the same problem, we can begin to see new alternatives and new opportunities.

…the processes of innovation often run counter to our assumptions that it is the result of individual inventors creating something from scratch on their own. 4. Look to other states. A range of ideas for promoting innovation can be gained by looking across the practices in other states (those that are similar to Maine, as well as those that are different). The policy contexts are different, but some of the ideas hold promise for Maine. 5. Look to other countries. Policy discussions in other countries provide a different view of the issues and opportunities for promoting innovation. Attention to these discussions can provide guidance beyond the rhetoric and framing in the United States.

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To a large degree, these recommendations encourage boundary spanning and analogical thinking and thus mirror the policy advice articulated earlier. As we move forward, it will be important to find ways to expose ourselves to many different models of what might be possible and draw on them to promote innovation. ENDNOTES 1. Judd, Richard. 2014. “Ice: A Maine Commodity.” Maine History Online. Maine Historical Society. Accessed March 31. http://www.mainememory.net /sitebuilder/site/773/page/1182/display. REFERENCES Amabile, Teresa M. 1996. Creativity in Context: Update to the Social Psychology of Creativity. Westview, Boulder, CO. Bettencourt, Luis M.A., and Geoffrey B. West. 2014. “Bigger Cities Do More with Less.” Scientific American Mind 23(1): 106–108. Burkus, David. 2014. The Myths of Creativity. Jossey-Bass, San Francisco. Brynjolfsson, Erik, and Andrew McAfee. 2014. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. Norton, New York. Brzustowski, Tom. 2012. Why We Need More Innovation in Canada and What We Must Do to Get It. Invenire Books, Ottawa. Carson, Shelley H., Jordan B. Peterson, and Daniel M. Higgins. 2003. “Decreased Latent Inhibition Is Associated with Increased Creative Achievement in High-Functioning Individuals.” Journal of Personality and Social Psychology 85(3): 499–506. Cohen, Wesley M., and Daniel Leventhal. 1990. “Absorptive Capacity: A New Perspective on Learning and Innovation.” Administrative Science Quarterly 35:128–152. DiChristina, Mariette. 2013. “Crossroads of Invention.” Scientific American (October 13): 57. Drake, Jennifer E., and Ellen Winner. 2012. “Children Gifted in Drawing: The Incidence of Precocious Realism.” Gifted Education International 29(2): 125–129. Easley, David, and Jon Kleinberg. 2010. Networks, Crowds, and Markets: Reasoning about a Highly Connected World. Cambridge University Press, Cambridge.

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Fagerberg, Jan. 2003. “Innovation: A Guide to the Literature.” Paper presented at the Many Guises of Innovation: What We Have Learnt and Where We Are Heading Workshop, Ottawa, October 23–24. https:// smartech.gatech.edu/bitstream/handle/1853/43180 /JanFagerberg_1.pdf Fox, Janice L., and Cary Cooper, Cary, eds. 2013. BoundarySpanning in Organizations: Network, Influence, and Conflict. Taylor and Francis, Abingdon, UK. Freeberg, Ernest. 2014. The Age of Edison: Electric Light and the Invention of Modern America. Penguin Books, New York. Gladwell, Malcolm. 2008. Outliers: The Story of Success. New York: Little Brown. Glaeser, Edward. 2014. “Engines of Innovation.” Scientific American Mind 23(1): 102–105. Glaeser, Edward. 2011. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier. Penguin Press, New York. Hofstadter, Douglas, and Emmanual Sander. 2013. Surfaces and Essences: Analogy as the Fuel and Fire of Thinking. Basic Books, New York. Kahneman, Daniel. 2012. Thinking, Fast and Slow. Farrar, Straus, and Giroux, New York. Kappos, David. 2014. “Natural Advantages Are Key to Achieving a Vibrant Innovation Ecosystem in Maine.” Maine Policy Review 23(1): 8–10. Lee, Lance, David M. Horth, and Chris Ernst. 2012. Boundary Spanning in Action: Tactics for Transforming Today’s Borders into Tomorrow’s Frontiers. Center for Creative Leadership, Greensboro, NC. http://www.ccl.org /leadership/pdf/research/boundarySpanningAction.pdf Lichter, John, and Ted Ames. 2012. “Reaching into the Past for Future Resilience: Recovery Efforts in Maine Rivers and Coastal Waters.” Maine Policy Review 21(1): 96–102. McCarthy, James. 2013. “To the Rescue: A Group of Young Visionaries Joins a Veteran Developer to Save an Iconic Mill.” Mainebiz 19(24): 1, 20–23. McCoy, Shannon K., Brandon Cosley, Caroline Noblet, E.E. Newell, J. Wellman, and Mario Teisl. 2011. “Can the Status Quo Bias Be Used to Bolster Support for New Environmental Technology?” Joint Meeting of the International Association for Research in Economic Psychology and the Society for the Advancement of Behavioural Economics University of Exeter, Exeter UK. Marrone, Jennifer A. 2010. “Team Boundary Spanning: A Multilevel Review of Past Research and Proposals for the Future.” Journal of Management 26(4): 911–940.

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Segal, Howard. 2014. “Economic and Technological Innovation in Maine before the Twentieth Century: Complex, Uneven, but Pervasive and Important.” Maine Policy Review 23(1): 22–27 Silka, Linda, Bridie McGreavy, Brittany Cline, and Laura Lindenfeld, eds. 2012. Special Issue: Sustainability. Maine Policy Review 21(1). Simonton, Dean K. 2014. “The Science of Genius: Outstanding Creativity in All Domains May Stem from Shared Attributes and a Common Process of Discovery.” Scientific American 23(5): 21–27.

Linda Silka directs the Margaret Chase Smith Policy Center and is a professor in the University of Maine School of Economics. Her research focuses on building research partnerships among diverse researchers and stakeholder groups.

Simonton, Dean K. 2008. “Scientific Talent, Training, and Performance: Intellect, Personality, and Genetic Endowment.” Review of General Psychology 12(1): 28–46. Stone, Ian J., Jeffrey G. Benjamin, and Jessica E. Leahy. 2011a. “Applying Innovation Theory to Maine’s Logging Industry.” Journal of Forestry 61:462–469. Stone, Ian J., Jeffrey G. Benjamin, and Jessica E. Leahy. 2011b. “Innovation Impacts on Biomass Supply in Maine’s Logging Industry.” Forest Products Journal 61: 579–585. Thompson, Derek. 2014. “Finding the Next Edison.” The Atlantic (January/February): 24–26. Utterback, James M. 1994. Mastering the Dynamics of Innovation: How Companies Can Seize Opportunities in the Face of Technological Change. Harvard Business School Press, Boston. Van de Ven, Andrew, Douglas Polley, Raghu Garud, and Sankaran Venkataraman. 1999. The Innovation Journey. Oxford University Press, New York. Wagner, Tony. 2012. Creating Innovators: The Making of Young People Who Will Change the World. Scribner, New York. Winner, Ellen. 1996. Gifted Children: Myths and Realities. Basic Books, New York. Zillman, Donald, Mary E. Walta, and Inigo Del Guavo Castiella. 2009. “More than Tilting at Windmills.” Washburn Law Journal 49(1): 1–68.

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Economic and Technological Innovation in Maine before the Twentieth Century: Complex, Uneven, but Pervasive and Important by Howard P. Segal Howard Segal describes Maine’s long history of innovation, which began long before it became a state in 1820. Over the nineteenth and early twentieth centuries, woolen mills, shoe factories, paper mills, hydroelectric power and utilities, and other components of America’s industrial and commercial revolutions became key parts of most Mainers’ daily lives. Segal argues that the blue signs one passes on entering Maine—Maine: The Way Life Should Be—conceal much of Maine’s actual past and present, especially its rich and complex history of innovation.

n 1995 the Maine Humanities Council produced a 30-minute video entitled “Modern Times in Maine and America, 1890–1930.” The council is Maine’s affiliate of the National Endowment for the Humanities (NEH), and the video was made in conjunction with NEH directives for its state affiliates. Despite its brevity, the video illuminates remarkably well the many ways in which Maine was at once like and unlike the rest of America in these four decades. The topics covered include woolen mills, shoe factories, paper mills, hydroelectric power and utilities, potato farming and the decline of agriculture, fisheries, trains and trolleys, automobiles, urban problems, political and social reforms, the Ku Klux Klan, World War I, and American expansionism. The story of how Maine evolved in this period is told through narration, period music, still photographs, and rare moving images—and, most interestingly, the memories of three elderly Mainers plus the comments of University of Maine history professor Richard Judd. The video begins with a discussion of the State of Maine building at the 1893 Chicago World’s Fair (celebrating Christopher Columbus’s alleged discovery in 1493 of America) and concludes with a list of inventions and social, cultural, and economic developments that came about during these 40 years. Having used the video for countless classes at the University of Maine over the years, I remain quite impressed by the comments of historian Judd about the image of Maine promoted by the

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tourist industry: that Maine’s population and geography consisted overwhelmingly of fishermen and hunters, of small farms and coastal villages, and of rural landscapes and seascapes. Even after the availability of automobiles allowed tourists to see more of Maine than they could by train, those romanticized images were kept alive. Indeed, contemporary tourist promotions are not dissimilar from them. The blue signs upon entering Maine from New Hampshire, New Brunswick, and Quebec—Maine: The Way Life Should Be—play a role in this contemporary promotion of an arguably more satisfying quality of life and of a slower pace of life than would be found in, say, more urbanized and more industrialized New England states like Massachusetts and Rhode Island. For whatever reasons, the slogan was dropped by Maine Tourism within a few years of its development in the mid-1980s, but by then it had become ingrained in the consciousness of many Mainers and non-Mainers alike (Townsend 2010). If, to be sure, the placement of those border-crossing signs never explicitly connected that phrase with the rural and barely technological images illuminated in the “Modern Times in Maine and America” video, the subtext was still a throwback to those romanticized pre–Industrial Revolution depictions. Moreover, the placement of those signs next to modern highways did not really constitute a contradiction, for twentieth century cars, trucks, campers, and buses passing by them were supposedly bringing tourists (back) to the good old days.

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In his first year as governor, Paul LePage added the Visitors use several ramps to get from one display to slogan Open for Business beneath each of those highway another. Home is represented by spinning yarn in an border signs. The additions generated controversy about 1820 kitchen and by sewing clothes in an 1880 parlor the governor’s motives, but largely missing from the (all dates are circa). Shop is represented by an 1815 gun rhetorical battles was the deeper meaning of these addishop, an 1820 furniture shop, an 1850 shoe shop, an tions: a belated acknowledgment that Maine was and, in 1870 blacksmith (small machine) shop, and a 1900 effect, had long been a far more urban and technologifishing rod shop. Mill is represented by an 1830 wool cally up-to-date state than one might guess from that fulling and finishing mill and an 1890 cupola furnace 1995 video and from the original signs and the merchanfrom a stove foundry. Finally, factory is represented by dise repeating Maine: The Way Life Should Be. carding and spinning wool in parts of 1850 and 1890 For an appreciation of Maine’s actual history of factories, respectively. industrial innovation, there is probably no better starting Bridging shop, mill, and factory is an 1850 waterpoint than the permanent exhibit at the Maine State powered woodworking operation that rises through all Museum in Augusta entitled Made in Maine. This three levels of the exhibit. Using water released from a exhibit opened in 1985 after two years of design and turbine placed well below the lowest floor level (with the construction. The museum itself had opened in 1971 aid of hidden electric motors and pumps), it manufacand remains New England’s only public state museum. tures barrel staves, shingles, and wheelbarrows. It is an Under the direction of historian Paul Rivard from 1977 impressive machine that illuminates innovation in until 1991, the museum created Made in Maine to Maine for all visitors. As Rivard put it in the visitor’s educate the public about Maine’s nineteenth-century guide, the Made in Maine exhibit treats “the history of manufacturing developments. Many Maine schoolchilthe vast majority of Mainers who were not lumberjacks, dren visit the Maine State Museum, and Made in not lighthouse keepers, not the captains of tall ships.” Maine is oriented as much toward youth as toward older visitors. Not only does the exhibit explode those romantic and simplistic stereotypes of the good old days, but, more deeply, it also constitutes a superb case study of the so-called Invention of Tradition, as illuminated by the book of that title coedited by historians Eric Hobsbawm and Terence Ranger (1983).1 Made in Maine consists of displays illuminating four work environments: home, shop, mill and furnace, and factory. These vague, if not outdated, categories derive from Victor Clark’s classic History of Manufactures in the United States (1929). As Rivard put it in a modest but useful visitor’s guide, the exhibit was designed to illustrate “social integration in a complex nineteenth-century story about technology, work, and urban life”(Segal 1994). And complexity is the de facto theme of both the exhibit and Rivard’s 2007 book Made in Maine: From Home and Workshop to Mill and Factory, which grew out of the exhibit. In addition to an introductory display of artifacts and historical images reflecting manufacturing in Maine, there are reconstructions of The Blacksmith Shop, Made in Maine Exhibit. a dozen period-room work environments plus Courtesy of the Maine State Museum. several cases filled with Maine-made goods. View current & previous issues of MPR at: digitalcommons.library.umaine.edu/mpr/

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Like the exhibit, the book adopts the four basic categories. Rivard concedes that the four oversimplify the huge number of examples he studied in preparation for both the exhibit and the book. Yet he contends that, to educate visitors and readers alike, the categories remain the most practical way of organizing the many examples. Still, this approach hardly means a lack of appreciation for Maine’s hugely diverse economy from at least 1820, when it split off from Massachusetts to become a separate state. For all levels of manufacturing, large and small, coexisted in Maine. Nevertheless, “regardless of how they might have started out, most manufactures ended up as factories” of some kind (Rivard 2007: 9). This was despite the fact that, as with shoemakers, many employees had already worked at home or had done custom jobs on an irregular basis. A major point in Rivard’s book is that sailing, shipbuilding, and related activities did create thousands of jobs for decades. So what of the alleged falsity of that stereotype of most male Mainers as seafarers and lobstermen (as well as farmers)? It has a core of truth, but as Maine became more urbanized and more industrialized in the nineteenth century and into the twentieth, seafarers and lobstermen were eventually

Loom, Knox Mill, Camden, Maine, Made in Maine Exhibit. Courtesy of the Maine State Museum. 24

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outnumbered by workers in homes, shops, mills, furnaces, and factories. Moreover, contrary to those stereotypes, sailors and shipbuilders commonly led very hard lives. As Rivard puts it, they “probably shared baked beans more often than lobster bisque” (2007: 13). Thanks to Maine’s abundant waterpower, mills in the nineteenth century became the state’s leading industrial concern (Rivard 2007). The growing number and size of mills changed Mainers’ own sense of a changing landscape and a changing economy. One didn’t have to work in a mill to take notice. Another example of the complexity of innovation in Maine brought to light by Rivard’s book is the branding of products, which gradually became a critical marketing tool—but only when there were enough different manufacturers to matter, when tools and machines were powerful and efficient enough to produce goods that ordinary consumers could afford to buy. The most successful brands in the mid-nineteenth century at the national level were Isaac Singer’s sewing machines and Cyrus McCormick’s harvesters and other agricultural machines. In their respective marketing campaigns against their rivals, Singer and McCormick and their salesmen boldly claimed that their products were superior in quality and in durability—if not outright cheaper—than their competitors’ products. Both men likewise (and falsely) claimed to have pioneered interchangeable parts in their respective industries. If, on the one hand, branding in Maine was initially infrequent because most Maine manufacturers were not “bold enough to be individualistic,” on the other hand, a few others exploited “prominent names or countries of origin” (Rivard 2007: 15). They put on tags that falsely claimed that their goods were from England or France or elsewhere in Europe—thereby charging more than for acknowledged home-made products. Still, legitimate branding in Maine was increasingly common in the nineteenth century, including carding and sewing machines, spinning wheels, looms, plows, and sleighs. A further example of the complexity of innovation is the role of work sites inside homes and factories. Rivard reminds us that through the late nineteenth century, the home was as frequently the focus of work as an escape from it. The image of the home in more urbanized areas as a literal sanctuary from the

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INNOVATION IN MAINE BEFORE THE TWENTIETH CENTURY

competitive, crowded, crime-ridden outside world— Going further, Rivard qualifies the common the very world that rising industrialists and financiers assumption that sewing machines in particular transwere creating—did not take root as much in less formed the operation of physically decentralized “local urbanized Maine. Some family members worked at workshops into centralized factories” and “artisans into home, but others worked outside of it. Often extended machine operatives.” When Mainers made bonnets, hats, families worked at the home of someone else in the clothes, and shoes, their workshops nevertheless retained family, while unrelated hired hands did so at either the the look and feel of traditional work sites (Rivard 2007: same or another home. 77, 79). Textile production was the principal work in the Mills and furnaces played a limited role in the home and was frequently called domestic manufacture. production of consumer goods. Again, Rivard rejects the Moreover, homemade products did not quickly disapconventional wisdom. Mills and furnaces did not interpear when factories opened. Home-based labor-intenfere with artisan trades or compete with domestic goods. sive piecework continued despite the common absence Gristmills, for example, made cornmeal, not bread, and of specialized talents and tools. True, what tools there sawmills never competed with cabinetmakers, despite were in the home were usually, as Rivard puts it, “tolertransforming the work of hand sawyers. The mill and ated intrusions,” but the transition from home-made to the furnace “assist[ed] but did not ‘supplant’ consumer factory-made textiles was slow and, once again, complex. goods manufacturers” (Rivard 2007: 83). Inside the home “the world of machinery was redefined Innovation also contributed to the persistence of continuously to form an ever-changing jigsaw of domestic textile production. Rivard found a Westbrook supporting parts”(Rivard 2007: 16–27). Rivard notes that home-based spinning and weaving may have survived for so long because they were designated as women’s work, and these women generally stayed home to attend to their numerous other domestic chores. The sewing machine was by far the most significant home machine. By 1860, nine years after Singer had patented the first practical one, home-based sewing machines were being manufactured in such large numbers in Maine that they nearly equaled all textile machines being produced in and for factories (Rivard 2007: 49). Although the sewing machine certainly increased productivity, it did not lessen the labor required. Moreover, Rivard rightly distinguishes between the often boring drudgery done in poorer families with the creative work enjoyed by more affluent women—and often wrongly confused with commercial sewing: needlework, quilting, and rug hooking. Ironically, “no sooner had spinning and weaving ceased to be common needs of communities” than the work itself “became a romantic memory of simpler Factory in Jonesport, Maine, where sardines, clams, lobsters, and other times” (Rivard 2007: 38, 50). The drudgery fishery products were canned. Maine was a pioneer in the commercial was forgotten, papered over by false nostalgia canning industry, particularly seafood, blueberries, and corn. In the 1850s, for a romanticized past that never existed. Once Portland natives Isaac and Nathan Winslow patented a canning process again, Rivard corrects an historical misinterprefor corn and for a time Maine was one of the country’s leading producers tation that has been passed on to students and of canned corn. MS 1134, William Underwood Photographs of Cannery, the general public. 1890s to 1922; University of Maine Special Collections. View current & previous issues of MPR at: digitalcommons.library.umaine.edu/mpr/

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shopkeeper, for instance, who “cut paper patterns and sent them out to be pasted into bags in households”(Rivard 2007: 17). Once again, the process was uneven and is not reducible to easy generalizations. Yet another example of this complexity is the case of farmers, increasingly few of whom could maintain selfsufficiency without working in shops, mills, and, yes, factories. So much for the romanticized full-time farmer. Lest one fall into the trap of picturing these farmerartisans as enjoying the best of both worlds—as happy practitioners of Yankee ingenuity—Rivard notes that most of them helped to produce distinctly unromantic “shingles, clapboards, and barrel staves” (2007: 20). Moreover, rural though they may have been, even during the eighteenth and nineteenth centuries they were quite informed about the outside world. After all of these deviations along the path from home, workshop, and mill, we finally come to the factory. Here, too, however, matters are never “perfectly clear,” as President Richard Nixon loved to say about

unrelated political matters. The very definition of factory changed. In the eighteenth and early nineteenth centuries, manufactory was the term used to categorize “an enterprise making goods by hand.” By the midnineteenth century, by contrast, factory was increasingly used instead and now meant the opposite: an enterprise in which machinery prevailed (Rivard 2007: 115). Analogously, the original computers were men and women who used blueprints, slide rules, and, sometimes, early calculators. Only in World War II, with the development of non-human computers, did the definition change (Grier 2005). Many manufactories retained the original names of mills and shops assigned them before they grew into the large-scale, centralized, and specialized enterprises that we associate with genuine factories. But where textile factories depended upon abundant waterpower, shoe manufacturing depended more on inexpensive labor. And although both linen and wool preceded cotton manufacture in Maine, only the last gave rise to factory production. Here Saco/ Biddeford took the lead. Originally a town of fishermen and lumbermen, in the 1820s and 1830s it became Maine’s first manufacturing city. Brick factories, offices, and boardinghouses transformed the landscape. Yet cotton production was “regimented, standardized, and mechanical before it was actually mechanized” (Rivard 2007: 116)—still another instance of complex developments in the story of innovation in Maine. Rural Lewiston eventually superseded Saco/ Biddeford, with cotton factories that ranked among New England’s Moving logs with steam powered vehicles over snow covered, frozen ground in Lincoln, Maine. biggest and most modern. The Lombard steam hauler, patented in 1901, was invented by Waterville, Maine, blacksmith By contrast, Maine’s and logging-equipment builder Alvin Orlando Lombard. It was the first successful commercial woolen mills remained application of a continuous track for vehicle propulsion, a concept later used for military tanks, small and home-based. agricultural tractors, and construction equipment. MS 1732, Dwight B. Demeritt collection; Modest-sized Dexter and University of Maine Special Collections. 26

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INNOVATION IN MAINE BEFORE THE TWENTIETH CENTURY

Sanford were the state’s sole woolen cities—contrary to the general pattern elsewhere in America of ever larger and more centralized growth. Still, Maine’s woolen industry was not inconsequential in terms of both quantity and quality (Rivard 2007). It is evident that, on the one hand, Maine—long before it became a state in 1820—was innovating economically and technologically in various ways and, on the other hand, was innovating in complex ways that are not reducible to the conventional historical wisdom. As noted at the outset, from at least the late eighteenth century on, Maine was not simply an oasis of farms and villages populated overwhelmingly by farmers, lumberjacks, and lobstermen. This example of the invention of tradition was promoted to tourists for decades after the Civil War, when passenger railroads had been operating in parts of Maine for a quarter century, and beginning in the early twentieth century when automobiles first came to the state, and it is promoted even today. Early in his book Rivard provides a particularly telling example of the persistent and widespread ignorance about the way life really was for most Mainers before the twentieth century. Few contemporary visitors to lovely mid-coast Camden—with its beautiful harbor, picturesque boats, appealing restaurants and gift shops, and renovated white clapboard homes—notice, much less inquire about, the nearby Knox Woolen Mills, the last of which closed in 1988. True, Camden was a shipbuilding town before it became a textile town, but the mills—for decades the town’s largest employer—were heavily responsible for Camden’s growth. If, as Rivard laments, “analysis of Maine’s nineteenth-century industrial manufactures can be hopelessly complicated,”(2007: 139) Made in Maine, like the Maine State Museum exhibit that generated it, goes a long way toward addressing that lamentation. Dear lawmakers, policy analysts, academics, business persons, and tourists today: please don’t ignore Maine’s rich economic and technological past as you try to chart its future. -

REFERENCES Clark, Victor. 1929. History of Manufactures in the United States…:1607–1860. Carnegie Institution, Washington, DC. Grier, David Alan. 2005. When Computers Were Human. Princeton University Press, Princeton, NJ. Hobsbawm, Eric, and Terence O. Ranger. 1983. The Invention of Tradition. Cambridge University Press. Rivard, Paul. 2008. Made in Maine: From Home and Workshop to Mill and Factory. This History Press, Charleston, SC. Townsend, Michael. 2010. “The Way Life should Be, Part One: The Origin.” Maine 4:112.

Howard P. Segal is Adelaide and Alan Bird Professor of History at the University of Maine, where he has taught since 1986. His books include Technological Utopianism in American Culture, Future Imperfect: The Mixed Blessings of Technology in America, Technology and Utopia, Recasting the Machine Age: Henry Ford’s Village Industries, Utopias: A Brief History from Ancient Writings to Virtual Communities, and with Alan Marcus, Technology in America: A Brief History.

ENDNOTES 1. The following paragraphs about “Made in Maine” derive from Howard P. Segal. 1994. “On Technological Museums: A Professor’s Perspective.” Future Imperfect: The Mixed Blessings of Technology in America, ed. Howard P. Segal. University of Massachusetts Press, Amherst. The visitor’s guide is long out of print.

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EMERGING MODEL OF INNOVATION FOR MAINE

An Emerging Model of Innovation for Maine by Renee Kelly Maine began making significant investments in research and development in the late 1990s, aligning those investments with industry sectors that draw upon the state’s traditional strengths as well as emerging industries such as biotechnology. Renee Kelly notes that this strategy, largely built on the cluster theory of economic development, can be challenging to implement in rural areas, in part because of their less dense social networks. She suggests that developing more efficient social networks will build stronger clusters and make rural areas more successful in innovation.

he importance of innovation to economic growth is well documented. Economists Joseph Schumpeter and Robert Solow demonstrated how creative destruction and the introduction of new products and processes account for most economic gains. On a micro level, individual companies must innovate and provide unique offerings that meet customers’ needs or face competition from lower-priced rivals. This reality is even more pronounced in a global economy where competitors for many products and services can be located anywhere in the world. Seeing the prosperity achieved through innovation in areas such as Route 128 around Boston and Research Triangle in North Carolina, the state of Maine in the late 1990s began to support innovation and research and development (R&D) investments as an important aspect of its economic development strategy. There have been several notable successes. CashStar, which employs approximately 85 people and provides digital gift card solutions to companies such as Starbucks and The Gap, has received funding from the Maine Technology Institute to develop its products. In 2013, Cianbro was awarded a $100 million contract to fabricate platforms for the Cape Wind offshore wind project in Massachusetts based, in part, on the expertise the company has developed through its partnership with the University of Maine on offshore wind R&D. However, the benefits of Maine’s investments have taken time to develop. Furthermore, support for innovation at the state level has been inconsistent as lawmakers have been challenged by budget shortfalls and concerns about the level of state borrowing, and as priorities have

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shifted in the implementation of innovation efforts in economic development strategy. In addition, there is concern that the benefits of innovation should touch all parts of the state, particularly the most rural parts that have faced the highest unemployment rates and a steady loss of population. MAINE’S INNOVATION MODEL TO DATE

ost of Maine’s innovation programs have been organized around seven technology sectors established by the state legislature. These sectors are biotechnology, composites and advanced materials, environmental technologies, forest products and agriculture, information technology, marine technology and aquaculture, and precision manufacturing. Research and development bond funding through the Maine Technology Asset Fund investments to build innovation capacity in the state must fit into one of these sectors. The Maine Technology Institute also provides grants, loans, and equity investments to companies in these sectors to encourage commercialization activities and boost private-sector investment in R&D. The alignment of innovation programs with these sectors is based on the cluster theory of economic growth developed by Harvard business professor Michael Porter. This theory suggests that a geographic concentration of interconnected companies in related industries leads to innovation and economic growth through both competition and collaboration among the members of the cluster. Cluster members also include university R&D centers, education programs and trade

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EMERGING MODEL OF INNOVATION FOR MAINE

associations that support innovation, workforce development, export development and industry partnerships (Porter 2000). The Maine Technology Institute also funds initiatives within the seven sectors to strengthen clusters. These efforts often include activities such as workforce training, market research to identify new business opportunities, promotion of the cluster outside the state to increase exports, and technology development that will benefit companies throughout the cluster. Maine Economic Improvement Fund investments in the University of Maine System’s R&D capacity are also intended to strengthen the research and commercialization infrastructure for the seven sectors. These sectors were chosen for their potential to build on Maine’s existing strengths and emerging opportunities. For instance, the composites and advanced materials sector was selected because of the state’s historic strengths in textiles and boatbuilding as well as the then-developing world-class composites center at the University of Maine. These selections also had the promise of reaching all parts of the state. The forest products and agriculture sector is largely based in the most rural parts of the state. The marine technology and aquaculture industry is dispersed along the state’s long coastline from York to Washington counties. However, there are challenges to using cluster development as a model for growth in a rural state like Maine. Barkley and Henry (1997) identified several barriers to developing clusters in rural areas. Inevitably, the selection of clusters to support is, to some extent, an exercise in picking winners and losers. They note that the competitive advantages of a region change over time, and thus it is difficult to project the growth of specific industries. Clusters also take time to develop, and market forces may completely change the opportunity for which a cluster was originally envisioned. An example of this phenomenon is in the composites and advanced materials sector. Many of the early initiatives in this cluster focused on expanding boatbuilding as well as defense and homeland security technologies. However, as the recession affected spending on luxury items such as boats and as a drawdown of forces in the Middle East began, these opportunities have diminished. Many players in this sector are now focused on renewable energy opportunities, particularly in wind energy. Another challenge cited by Barkley and Henry is that new clusters may not be competitive in comparison to well-established clusters (1997). New clusters will not

have the same level of infrastructure, the depth of workforce, or the embedded networks that exist in established clusters in other regions. This issue suggests that new clusters need to build upon specializations and unique local resources. Maine’s emerging biotechnology sector, for instance, likely will not ever compete with clusters in the Boston, San Francisco, and San Diego regions, but may be able to build upon niches such as veterinary health.

An enhanced model for innovation in Maine could use a more networked approach that expands beyond the notion of sectors.

ENHANCING THE MODEL: BUILDING ON SOCIAL NETWORKS

n enhanced model for innovation in Maine could use a more networked approach that expands beyond the notion of sectors. Social networks in this model are not the online platforms such as Facebook and LinkedIn. Rather, they are a system of personal and professional connections among individuals. Information and resources are shared through these connections, and groups and alliances are formed with these contacts. Sometimes these alliances are formal such as in the case of trade associations or business partnerships, and other times they are informal groups with common interests. A key feature of successful clusters is the embedded networks among multiple firms from related industries, along with supporting players such as financial institutions, law firms, and marketing companies, and educational and research institutions. These relationships are what create the knowledge sharing that leads to productivity gains and the development of new products and services. However, in rural areas, these types of networks can be “thin.” In the social networks that comprise personal and business relationships, thin networks are less dense, meaning they have fewer connections. Applied to

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business clusters, thin networks in rural areas simply mean that they have fewer companies and supporting resource providers to participate in knowledge sharing. While the connections among a smaller number of companies may be quite strong, fewer companies means fewer connections, which leads to fewer opportunities for collaboration and knowledge exchange. This social network model recognizes that a great deal of innovation happens at the intersections of disciplines and sectors. In fact, innovation is, to a large extent, a process of combining existing seemingly unrelated concepts in new ways to create better solutions. A classic example of this result is the creation Velcro. A Swiss engineer taking his dog for a walk noticed how well burdock burrs stuck to his clothing. He took one off at home and examined it to discover its barbed hook structure that grasped the tiny thread loops in fabric. He then worked with a weaver to invent the hook and loop tape used for fastening clothing. The combination of engineering, the biology of seed transport, and textile weaving came together in an innovation that is now used around the world. The National Science Foundation has recognized that interdisciplinary research will be required to solve many of the world’s largest problems. In fact, many of its funding programs require proposals that include researchers from multiple disciplines. The Forest Bioproducts Research Institute at the University of Maine, which received a significant portion of its startup funding from the National Science Foundation, brings together chemical engineers, wood scientists, foresters, economists, and microbiologists, just to name a few, to understand the potential for making chemicals, fuels and plastics from wood. Indeed, many applicants to the Maine Technology Institute’s funding programs for companies have a difficult time selecting in which sector to submit their proposal. Their technology innovations cut across sectors. Is a software program that helps track brain activity in the information technology sector or the biotechnology sector? Is a structural panel made out of wood and reinforced with fiberglass a technology in the composites sector or the forest products sector? Porter (2000) noted that strong clusters span multiple industrial sectors. In the case of the development of wind energy technology in Maine, participating companies and researchers are crossing sector lines to form a new cluster that spans advanced materials, construction, environmental technology, 30

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geographic information systems, wildlife biology, and marine technology. These intersections demonstrate how social networks can be expanded to help alleviate the thin network problem. Andrew Hargadon, an expert in entrepreneurship and technology management, argues that breakthrough innovations happen when networks are created, shifted and reorganized to use established knowledge to create new ideas (2003). Small communities rarely develop recombinant innovations because they do not interact outside of their networks as often as they should and therefore do not make useful connections. Closed networks can stagnate and even develop a form of groupthink without injections of new ideas. Economic sociologist Mark Granovetter (1973) was among the first to show the value of making connections among different communities. The strength of bonds among the participants is an important factor in the innovation process. When individuals have strong ties, such as with coworkers and family, they share a great deal of common knowledge. Individuals have weak ties with people to whom they are associated but are not closely related and share different communities, knowledge and experience. Granovetter demonstrated that weak ties are actually the most fruitful for finding useful and unique information because the information comes from outside one’s existing shared knowledge base. Brokers, people who span and connect networks, play an important role in this process. They see opportunities to connect members of the different networks to build innovations, form partnerships, strengthen ties, and add value to the overall network (Hargadon 2003). Sometimes this process also leads to the formation of a new, more interconnected network, and ultimately might spur the development of a new cluster. People within companies, university researchers, service providers, or economic development professionals can all serve this important brokering role. As a rural state, one of Maine’s biggest challenges is the size and density of its networks. The state simply does not have as many people as urban areas to easily make connections and share knowledge that will lead to innovations. In fact, Maine’s entire population is only approximately one-quarter of that of the Boston metropolitan area. Furthermore, this smaller population is spread over a larger geographic area. Maine also has fewer corporate and public R&D centers with people particularly interested in generating new innovations.

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Entrepreneurs in Maine frequently cite the need for more connections to capital and mentors as one of their biggest challenges to growth. While these connections are important to an entrepreneur’s success, the density problem extends far beyond money and advisors. In fact, many entrepreneurs with good ideas can find significant financial resources through the Maine Technology Institute and other private and public sources. Most of these companies also need connections to strategic partners, manufacturers, suppliers and distributors in order to commercialize and scale operations. To overcome the density problem of Maine’s networks, its networks need to be more productive and efficient. Efficiency in rural networks could primarily be achieved through two methods: (1) more deliberate brokering and network development could increase the number and quality of connections among existing entrepreneurs and innovators in companies and R&D centers; and (2) creating a higher concentration of people specifically interested in innovation than is typically found in the general population by encouraging more people to pursue innovation and by providing them with the requisite skills to innovate. By increasing the number of innovators and encouraging more connections, the number of high-potential innovations will increase as knowledge sharing takes place and the number of innovative ideas increases. There are nascent efforts taking shape in the state that are using these strategies to build upon the power and opportunity of social networks to ignite innovation and strengthen clusters. These efforts are forming a new, emerging model of innovation in Maine. A FRAMEWORK FOR INNOVATIVE PERFORMANCE

renner and Broekel (2011), in an attempt to develop better methods for measuring the innovation performance of regions, emphasized the need to develop greater numbers of innovators. They note that innovations are not developed by regions or clusters, but instead by people within the region. They identify people who contribute directly to the development of innovations as innovation generators. Without any generators, a region would have no innovations. However, the number and productivity of innovation generators is influenced by other factors. Innovation facilitators are the conditions within a region that make innovation generators more productive. They identify

culture as an important facilitator. Features of a culture that facilitate innovation include openness to collaboration and attitudes that reward and support innovation and risk taking. Furthermore, public policy can facilitate innovation generation by supporting research in public universities and research institutes and by providing for a supportive tax, investment, and regulatory climate. In addition, the economic structure of the region and the presence of clusters and strong social networks that allow for collaboration increase the generation of innovations. Innovation attractors are the characteristics of a region that cause more or fewers innovators to locate in a region. Brenner and Broekel note that there are only two ways to increase the number innovation generators: attract more innovation generators to relocate to the region and create new innovation generators within the region. Thus, education plays an important role in developing new innovation generators with technical and innovation skills. The geographic location and economic activities within a region attract other innovators. For instance, a company might move its R&D staff to a region to locate near other like-minded firms. In general, a larger population attracts more innovators. Additionally, public research centers attract innovation talent both to work in the centers and to collaborate with experts in a technology.

…innovations are not developed by regions or clusters, but instead by people within the region. With this framework in mind, increasing the percentage of people who become innovation generators in Maine will have a direct impact on the innovation success of the state. Moreover, strengthening networks that cut across industry sectors will increase the productivity of the state’s innovation generators. That being said, the state’s existing policy efforts to support public R&D capacity and provide a nurturing economic environment for innovative companies and entrepreneurs will attract more innovators and enhance their productivity. It is worth noting, however, that other states and regions around the world are engaged in similar efforts to attract and facilitate innovation.

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Thus, there is significant value in stimulating a culture that creates more innovation generators from within. SPECIFIC STRATEGIES TO BUILD DENSER INNOVATION NETWORKS

o build the kind of culture that enhances innovation performance, rural states must go beyond policies and funding programs to address the underlying challenge that innovations are developed by people, and rural states have fewer people spread over a larger geography. Across the country and in Maine, some specific strategies are taking shape with the goal of increasing the innovation productivity and efficiency of its population.

Network Development Active networks are a key facilitator of innovation generators. While Maine has many robust industry associations that provide strong sector networks, for significant innovation to occur, there must also be strong networks that span sectors. Beyond identifying and generating innovations, social networks are also important for acquiring the resources needed to commercialize an innovation opportunity. These resources might include capital, but also could include strategic partners, mentors, advisors, and economic developers. These resources also likely span multiple sectors. Thus, there are important reasons to develop networks that are multi-dimensional, and there are clear benefits associated with building strong local networks. Good relationships stem from trust, and trust is more easily developed through regular face-to-face interactions. Research has shown that people are less willing to depend on others in collaborations when interactions are developed online or in video-based communication (Rockmann and Northcraft 2008), particularly in the early stages of a project (Wilson, Straus, and McEvily 2006). Described as the propinquity effect by social psychologists, frequent and regular face-to-face contact increases the likelihood of forming relationships, including business interactions. Sorenson and Stuart (2001) demonstrated this effect with venture capital investments. Venture capitalists are much more likely to invest in companies that are near them and only invest in more distant companies when they have a trusted associate located nearby. The propinquity effect suggests another important feature of dynamic social networks that facilitate 32

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innovation: since local networks can become insular, the brokers who connect people in different networks can play an important role in not only spanning disciplines, but also spanning geography. A venture capitalist’s trusted associate is a broker who allows the investor to connect to companies in a different geographic network. Maine can help overcome its density challenge by building local networks with strong ties for innovation and entrepreneurship and then connecting networks with deliberate brokering throughout the state, thereby expanding an individual business’ or entrepreneur’s network substantially through a trusted intermediary. An example of this kind of deliberate brokering is the Kansas Opportunity Innovation Network (KOIN). The initiative’s mission is to “increase the number of globally competitive innovative products and services produced in rural and/or distressed Kansas communities and regions” (NADO 2011: 3). KOIN is a partnership of Kansas State University, economic development districts in the state, and industry associations. KOIN has created asset maps that compile both company and organizational capabilities and needs along with workforce skills and technologies. When a company wants to pursue an innovation opportunity, KOIN identifies potential partners and collaborators and can connect someone in an isolated rural area with a wide network of potential partners. Connections are made through Kansas State University and local economic development organizations that act as trusted intermediaries. Second- and Third-Stage Companies Another way to increase the concentration of innovation generators is to encourage more existing companies to pursue growth through the development of new products and services. Maine is particularly successful in its rate of new business starts, ranking fourth in the country in the number of business starts per 100,000 people.1 However, Maine is challenged in growing these businesses into larger companies (Maine DECD 2012). Placing more emphasis on moving companies from being small employers to larger entities requires focusing on the specific growth needs of these companies, which are different from the economic development resources developed for startups. Second-stage companies are defined as having 10 to 99 employees. This stage represents a key stage in a company’s development as the

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company needs to develop more sophistication in its business operations as well as new product or service opportunities to continue to grow (U.S. SBA 2006). Third-stage companies with 100 to 499 employees tend to have more established business processes, but need injections of innovation to continue to grow. One reason to provide additional focus on secondand third-stage companies is that these businesses already have several advantages over startups for pursuing growth opportunities. They already have a management team and typically have significant capital resources such as buildings and equipment. Another reason Maine should engage existing companies is that there are second- and third-stage companies throughout the state that could grow with business assistance and innovation, while innovation-based startups tend to be concentrated in the more densely populated areas. Furthermore, priming existing companies to innovate creates opportunities for startups to be more successful through joint ventures and partnering. For instance, Advanced Infrastructure Technologies, a spin-off business from the University of Maine to commercialize what is known as the “bridge-in-a-backpack” technology, sells and designs new bridges. Rather than building its own manufacturing capacity in its early stages, Advanced Infrastructure Technologies has partnered with Kenway Corporation, a long-time leader in the composites industry, to make the bridge components. The economic development strategy of economic gardening, which focuses on growing existing companies, began in Littleton, Colorado, arising from the observation that there was a relationship between innovation and growth. By focusing on the specific needs of second-stage companies, rather than targeting specific sectors, the town realized a significant opportunity to grow the city’s employment base. Christian Gibbons, the leader of this initiative in Littleton, noted that businesses could be “frozen—a state in which nothing moves or adapts and no information is transferred; chaotic— where so much change occurs that the organization doesn’t have an identity; or stable—where identity is retained, but adaptation is possible…They adapted through experimentation and by learning from many small mistakes, which helped them avoid the big fatal ones” (US SBA 2006: 166). Economic gardening builds adaptive companies by developing the social networks that involve and support companies, providing training and market information to help companies grow, and strengthening community infrastructure.

Inspiring and Training More Innovators Another important strategy to increase the density of networks is to provide the skills and training that allow more people to become innovation generators. In particular, emphasis should be placed on educating the workforce to develop the skills and interest necessary to become innovators. These skills include not only technical skill sets, but also innovation skills such as creativity, communication, collaboration, and the ability to test ideas and learn from failures. With these skills, individuals can become innovation generators in their own ventures or in Maine’s startup and existing companies, helping them to expand and grow through innovation.

[An] important strategy to increase the density of networks is to provide the skills and training that allow more people to become innovation generators. The University of Maine has led the country in developing a curriculum to foster innovation skills through its Innovation Engineering program. This program is offered as either a minor or graduate certificate and is designed to enhance the expertise developed in any major. It provides students with a toolkit and system for innovating in their field, whether it is music, food science, forestry, or engineering. This program complements the university’s entrepreneurship courses because it focuses specifically on innovation skills, and it encourages more students to pursue innovation whether they envision themselves starting a business or not. It teaches students a system for identifying innovation opportunities, generating ideas, communicating those ideas effectively, and a “fail fast, fail cheap” approach to building viable business models. This program has been shared with all seven campuses of the University of Maine System to broaden statewide impact. In addition, other universities around the country are now licensing the curriculum from Maine to develop their students’ innovation skills. Also, the University of Maine and other partners are training business leaders and helping

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companies implement this systematic approach to continuously growing and adapting. It is also important to inspire individuals to pursue these skills by celebrating entrepreneurial and innovation success stories in Maine. Many schoolchildren in the state know that Farmington resident Chester Greenwood invented earmuffs in the late 1800s, but few are introduced to the entrepreneurial and innovation successes of todayâ&#x20AC;&#x2122;s companies such as the veterinary diagnostics developed by IDEXX in Westbrook or the tidal energy turbines developed by Ocean Renewable Power Corporation. In addition, students need opportunities to develop entrepreneurial and innovation-related skills at a young age. There are many promising programs in the state that are beginning to build an innovative youth culture in the state such as Build-a-Biz, which encourages youth to try creating a business; Project Login, which supports robotics programs and Coder Dojo clubs; and the Maine State Invention Convention, which takes the traditional middle school science fair and turns it into an opportunity to create a real, marketable product. AN EMERGING MODEL FOR MAINE: BLACKSTONE ACCELERATES GROWTH

lackstone Accelerates Growth, a recent initiative of the Maine Center for Entrepreneurial Development, Maine Technology Institute, and the University of Maine, is an emerging model for innovation in rural areas that builds upon these strategies. The Blackstone Charitable Foundation has funded the effort as part of its approach to encouraging entrepreneurship across the country. While the activities they have funded in other states have focused on providing specialized services to early-stage entrepreneurs, the Maine initiative specifically addresses the rural nature of the state by working to build a stronger community of innovators by increasing the density and efficiency of innovation networks. One of the key elements of the Blackstone Accelerates Growth initiative is the development of interconnected hubs of innovation across Maine. The hubs, in many ways, are social networks of innovation generators and facilitators that cut across sector lines. Instead, they are based on local community networks. The first two hubs were started in the Bangor and Portland regions to build upon an existing critical mass of innovators and facilitators: the Bangor region because of the innovation activity associated with the University

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of Maine, and the Portland region because its more urban nature has spawned a small cluster of innovationbased companies and associated services such as intellectual property attorneys, training programs, and capital resources. Each hub has activities that bring innovators together, from informal gatherings such as Pub Hub in the Portland area and Big Gig in the Bangor area to more structured events such as mentor-matching nights. These events provide opportunities for individuals from diverse backgrounds to interact face-to-face to exchange valuable information and ideas. Furthermore, these events happen on a regular basis so the interactions are frequent enough that people can form trust relationships more easily. Geography is not a barrier to finding other innovators, and while the participants may not be able to benefit from sharing knowledge with others in the same field or industry, they can make new discoveries by crossing fields. In addition, they are still able to share information about resources and common experiences in taking innovative products or services to market. Having piloted the model in the Bangor and Portland regions, the initiative is now expanding into other parts of the state, with the Midcoast area being the first addition. As in Portland and Bangor, a local hub manager helps organize, coordinate, and promote activities to make connections among innovators. Each hub may take on its own local flavor, with activities that make the most sense for the types of business activities that take place in the region, but the guiding principles for each hub are the same: provide direct assistance to high-potential companies, facilitate interactions to build local social networks of innovation generators and facilitators, celebrate the innovators in the region so that others are inspired to become innovation generators, and provide training and support systems for innovation. Brokers play a key role in the innovation hubs. The partners in the Blackstone initiative regularly organize and participate in the hub activities. Some events are structured to facilitate specific interactions among innovation generators and facilitators. At the informal events, the partners purposefully introduce people with common interests or those in similar situations, rather than just relying upon serendipitous meetings. In addition, regional partners are engaged to act as brokers. For instance, in the Bangor region, the Chamber of Commerce facilitates a local angel investment group that brings together investors and entrepreneurs. Economic

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development organizations can also play an important brokering role. Eastern Maine Development Corporation’s staff refers businesses for mentoring and training and encourages participation in networking events. Furthermore, hub managers and partners broker relationships among entrepreneurs and companies in different hubs, such as an entrepreneur in Rockland with a company in Bangor or a researcher at the University of Maine. In this way, the local innovation hubs comprise a much larger, diverse statewide network. While these network-building activities increase the frequency and quality of interactions thereby making the networks more efficient, the networks still need a sufficient number of actors to overcome the density problem of rural networks. To increase the percentage of innovators throughout the state, Blackstone Accelerates Growth incorporates several activities to create more innovation generators. These efforts include the Blackstone Accelerated Ventures program, Top Gun entrepreneurship training, the Blackstone Innovate for Maine Fellowship, and Blackstone Innovation Scholarships. The Accelerated Ventures program seeks to take high-potential companies, including early-stage companies such as PIKA Energy and Cerahelix that have demonstrated success in attracting funding and partners but still need specific support to fully commercialize their innovations; second-stage companies such as Fluid Imaging Technologies that need assistance to achieve scale; and more mature companies that are seeking growth through the development of new products and services such as R.H. Foster and Howard Tool. While the selected early- and second-stage companies are already actively innovating, making them more successful and more prominent can create opportunities for new innovations to occur in other businesses as supply and distribution chains are developed to support them. Providing support to encourage more mature companies to innovate directly adds to the number of innovation generators. The Top Gun program provides intensive training and mentoring to first-time entrepreneurs to accelerate scalable companies. This program has the effect of increasing the number of innovation generators by providing skills to innovate in the future even if the entrepreneur’s initial idea does not work. In addition, several of the participants have been entrepreneurs who have had small enterprises for years, but then have an interest in achieving scalable growth through innovation.

Again, this activity is an example of providing resources to help existing companies originally not focused on innovation to join the numbers of innovation generators. Another advantage of Top Gun is the network that is formed among its participants. Each annual Top Gun class in the Bangor and Portland regions becomes a strong node within the innovation hub networks. In the past year, the Maine Center for Entrepreneurial Development has created an extension of Top Gun, called Top Gun Prep. As the name implies, it covers basic innovation business principles and serves as preparation for participation in the full Top Gun program. Top Gun Prep is delivered virtually throughout the state. Though this program does not have the advantages of face-to-face interactions, it begins the process of engaging potential innovators throughout the state, regardless of their location. The program can inspire would-be innovators to become active. Northern Maine Development Corporation in Aroostook County and Sunrise Economic Development Council in Washington County have provided scholarships to budding entrepreneurs to participate in Top Gun Prep to enlarge the network of innovators in their regions. Another key strategy to increase the number of innovation generators is to accelerate the next generation of innovators. In Blackstone Accelerates Growth, this strategy is primarily focused on college students who are in the process of acquiring career skills and making decisions about career options. The Blackstone Innovation Scholarship program provides tuition for students throughout the University of Maine System to take courses in Innovation Engineering. The scholarships provide incentives to students who might have an interest in innovation to develop skills that will help them become successful innovators, whether they start their own company or become intrapreneurs who innovate within established companies. Blackstone Accelerates Growth also includes the Innovate for Maine Fellowship program to connect Maine’s best and brightest college students with growing Maine companies. As part of the fellowship, students receive intensive training in Innovation Engineering, professional development skills, and an introduction to Maine’s entrepreneurial landscape. Each student receives an internship placement with a growing Maine company, ranging from entrepreneurial startups to established innovation-driven companies such as Auburn Manufacturing, which makes high-temperature textiles. Host companies are selected based on their growth

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potential and the quality of the innovation project they present for students to work on during the internship. The students are also matched with a mentor who helps the student work through innovation challenges. Survey results from the first two cohorts of students suggest that this program is effective in both encouraging students to find work in Maine after graduation and in building their innovation skills. Two years into the initiative, Blackstone Accelerates Growth is already seeing early positive results. The number of innovation generators and entrepreneurs is increasing through work to accelerate the next generation of innovators and entrepreneurs. Specific technical assistance is being provided not only to early-stage companies, but also to help second- and third-stage companies grow. And perhaps most important, the number of participants in hub activities is growing, innovators and entrepreneurs are getting more recognition in their communities, and resources for innovators are being coordinated more effectively. Ultimately, success will depend upon a change in the culture that facilitates innovation and encourages more people to get involved. Policies that invest in the institutions that feed the innovation soil, support of resources that help companies innovate and grow, and an attractive business environment and quality of life are all important to innovation success and thus the prosperity of the state. However, a grassroots movement to educate and inspire more innovators and to build supportive, connected networks that cut across industry sectors is required to change the culture. Blackstone Accelerates Growth is making strides toward this goal. ENDNOTES 1. http://statetechandscience.org/statetech.taf?page=state& state=ME&sub=rcic&year=1

REFERENCES Barkley, David L., and Mark S. Henry. 1997. “Rural Industrial Development: To Cluster or Not to Cluster?” Review of Agricultural Economics 19(2): 308–325.

Maine Department of Economic and Community Development (DECD). 2012. Maine Comprehensive Research and Development Evaluation 2011. Maine DECD, Augusta. National Association of Development Organizations (NADO). 2011. Growing Rural Innovation-Based Economies: Kansas Opportunity Innovation Network—Part 1: Case Study Overview. NADO, Washington, DC. Porter, M. 2000. “Location, Competition, and Economic Development: Local Clusters in a Global Economy.” Economic Development Quarterly 14(1): 15–34. Rockmann, Kevin W., and Gregory B. Northcraft. 2008. “To Be or Not to Be Trusted: The Influence of Media Richness on Defection and Deception.” Organizational Behavior and Human Decision Processes 107:106–122. Sorenson, Olav, and Toby E. Stuart. 2001. “Syndication Networks and the Spatial Distribution of Venture Capital Investments.” American Journal of Sociology 106(6): 1546–1588. U.S. Small Business Administration (SBA). 2006. The Small Business Economy: A Report to the President. U.S. Government Printing Office, Washington, DC. http:// archive.sba.gov/advo/research/sb_econ2006.pdf Wilson, Jeanne M., Susan G. Straus, and Bill McEvily. 2006. “All in Due Time: The Development of Trust in ComputerMediated and Face-to-Face Teams.” Organizational Behavior and Human Decision Processes 99(1): 16–33.

Renee Kelly is director of economic development initiatives for the University of Maine, serving as a liaison to the state’s economic development community to identify opportunities for the university to partner with state, regional, and local organizations to improve Maine’s economy. She is also part of the leadership team for the Blackstone Accelerates Growth initiative in Maine and serves on the boards of several economic development and service organizations.

Brenner, Thomas, and Tom Broekel. 2010. “Methodological Issues in Measuring Innovation Performance of Spatial Units.” Industry and Innovation 18(1): 7–37. Granovetter, Mark. 1973. “The Strength of Weak Ties.” American Journal of Sociology 78(6): 1360–1380. Hargadon, Andrew. 2003. How Breakthroughs Happen: The Surprising Truth About How Companies Innovate. Harvard Business School Press, Boston.

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INNOVATION AND ENTREPRENEURSHIP POLICY

Transforming Maine’s Economy: Innovation and Entrepreneurship Policy by Catherine Searle Renault Innovation and entrepreneurship are major drivers of economic growth. Catherine Renault suggests that support for them is a primary role of state government in order to increase the well-being of citizens through the provision of well-paying jobs that cannot be easily exported. Today, the state’s role is described as “enhancing the innovation ecosystem,” with the goal of increased productivity, innovation, and competitiveness. Renault outlines policies that can build this ecosystem, each of which is part of an overall policy environment that will support innovation and entrepreneurship.

INNOVATION AND ECONOMIC GROWTH

n 1987, Robert M. Solow was awarded the Nobel Prize in Economics for his work on the theory of economic growth. Using computers newly available for economic research in the 1950s, Solow looked at the growth of various economies in the world, expecting to confirm the Keynesian theory that growth was related to the labor and capital in a given country. Much to his surprise, labor and capital explained only a small portion of the observed growth. Researchers (Romer 1986, 1990) eventually concluded, and subsequent research has confirmed, that as much as 80 percent of economic growth is due to new knowledge, specifically new knowledge that has been brought to the market— innovation. We each have our own experiences of this phenomenon. Think about the impact of Google on our everyday lives and our country’s economy. Fifteen years ago, Google was just an idea in the mind of two graduate students, Sergey Brins and Larry Page. Today, it is a $50 million revenue company with over 42,000 employees. Its products are so ubiquitous that we regularly use their company name as a verb, as in, “Did you Google that?” The Internet is another illustration of the impact of innovation on economic growth. The Boston Consulting Group calculates the Internet contributes more than 4.7 percent of our nation’s economy, more than the federal government (Dean et al. 2012). Twenty-five years ago,

the technology that became the Internet was the backbone of ARPANET, a Department of Defense network for the sharing of research findings. It wasn’t until it was turned loose as a commercial network in the mid-1990s that the Internet exploded into the phenomenon that we have today. This pattern has been repeated many times and not just with technologies, although the application of new scientific and technical knowledge has enabled many improvements in productivity that have accelerated growth. Remember when it took days to send packages to each other, and important documents were mailed or faxed? FedEx exploited the opportunity by marrying advanced logistics with a consumer focus and promising prompt delivery “when it absolutely, positively has to be there overnight.” A business model innovation as much as a technical innovation, FedEx changed the way we do business. Innovations in medicine, in energy, in the consumer space, all drive our economy. And to a large extent, these innovations come out of entrepreneurial companies. It is estimated that firms that went public in the 1980s and 1990s accounted for 40 percent of employment in publicly traded companies in 2000 (Davis et al. 2007; Davis and Kahn 2008). INDUSTRIAL POLICY

hile it may seem obvious that supporting innovation and entrepreneurship is essential to driving

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economic growth, many in the United States have derided policies to do just that as industrial policy. Often framed as “picking winners and losers,” industrial policy is considered as unwarranted involvement by government in a free market. Since the free market is perfect, this theory goes, government should not get involved. There are three problems with this argument. First, most governments around the world are managing their innovation economies to a far greater level than would ever be contemplated here. In China, entire cities have been built around new universities and industrial complexes. The European Union is explicitly supporting “industrial policy that will put the EU economy on a dynamic growth path strengthening EU competitiveness, providing growth and jobs, and enabling the transition to a low-carbon and resource-efficient economy” (European Commission 2010: 4). The second problem with the free-market, antiindustrial policy position is that there are numerous instances where the free market is not in fact fully efficient. There are substantial information asymmetries, meaning that not all entrepreneurs or innovators have the same information. And most importantly, innovation, and the basic research that underlies it, is a public good, shared by all citizens. Left to themselves, single firms and individuals will underinvest in research and development (R&D). Free markets will not produce the correct amount of innovation and growth. The third problem with the industrial policy red herring is that the U.S. government has in fact been doing industrial policy for years. It is government funding that produced the Internet, radar, lasers, shale oil drilling methods, and numerous other technologies that are the underpinnings of today’s economy. Therefore, there is a role for government in investing in R&D at a level that increases innovation, productivity, and growth for all. Furthermore, there is a role for government in providing training and information so that all entrepreneurs and innovators have the opportunity to compete on a level playing field. THE ROLE OF STATES

n this discussion about the role of government, there is a distinction between the role of federal and state governments. As a general rule, the federal government cedes to the states programs that deal directly with individual firms and with regional initiatives, citing

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the states’ abilities to directly respond to local conditions. In turn, the states leave to the federal government the support of basic research and research that supports national priorities such as defense, health, and agriculture. In practice, these national needs are met by partnerships between the federal government and universities, including many state institutions, so the lines of responsibility are blurred. But, since World War II, when Vannevar Bush (Hart 1998) articulated the importance of continued federal support of research, and the National Science Foundation was created, government has funded a large portion of basic research in this country. Since the early 1980s, however, the states have taken an increasingly active position in science- and technology-based economic development, filling in the blanks left by the federal government’s avoidance of industrial policy and trying to produce increased economic growth for their citizens. Today, the state’s role is described as “enhancing the innovation ecosystem,” with the goal of increased productivity, innovation, and competitiveness. The ecosystem model is relatively recent, having been articulated less than 10 years ago by Iansiti and Levien who postulated: “There are certainly strong parallels between business networks and biological ecosystems. Both are characterized by a large number of loosely interconnected participants that depend on one another for their effectiveness and survival” (2004: 5). Supporting this ecosystem has come to mean four things: (1) building and supporting a state’s research and development capacity; (2) encouraging a state’s entrepreneurial community; (3) increasing the productivity of a state’s economy though the commercialization of new products, services, processes, business models and marketing strategies; and (4) supporting sectors and/or clusters. Each of these is part of an overall policy environment that will support innovation and entrepreneurship, leading to economic growth. RESEARCH AND DEVELOPMENT CAPACITY

hile not all innovation is based on technology, many new ideas have come from R&D in science, technology, engineering, and mathematics (STEM) disciplines. And it is now better understood that innovation and creativity flourish in open, collaborative environments such as universities, R&D laboratories, and research-oriented companies like Apple and Google

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(Johnson 2010). Therefore, states support and build their R&D capacity. There is a distinction, however, between public and private research and development capacity. It takes different methods to encourage the two. R&D Tax Credit: An Incentive for Private Research and Development

Since it is clear that companies that do R&D are far more likely to innovate than others, best practice in supporting private R&D is the use of the R&D tax credit. Atkinson (2010) models the impact of increases in federal and state R&D tax credits and found that the increased economic activity from a 6 percent increase in the federal credit would exceed the loss of tax revenues in 15 years. Atkinson and Andes (2008) suggest that states should link their tax credits to the federal credit, allowing firms to take the higher amount. While the federal government R&D tax credit has been in statute for more than 30 years, it is still not permanent. In addition, most of the states have an R&D tax credit (Miller and Richard 2010). The state tax credit has been widely studied by economists and has been found to be effective in increasing R&D spending. For instance, Wu (2008) found that the existence of a state R&D tax credit has a positive and significant effect on the number of high-technology establishments in a state. However, it also appears that corporations decide where to conduct their R&D based on the size of the credit, so the credit affects location decisions (Wilson 2007). Maine has three R&D tax credits. Taken together, they are used by a small number of companies, and according to the Maine Revenue Service, cost Maine taxpayers $5.5 million in lost revenue in FY13. The research expenditure tax credit was used by 85 taxpayers; the super credit by 70; and the high-technology credit by 60. However, it is not known how many companies use more than one credit. A study conducted ten years ago on the Maine R&D tax credit concluded that the legislature should consider whether Maine’s small firms are able to use the credits as well as large firms and whether changes should be made to expand their applicability and therefore their effectiveness (Luger, Feller, and Renault 2004). Other states allow transferability of credits, meaning that small companies performing R&D that is pre-revenue, and therefore without a tax liability, can sell their credits to others, thereby monetizing the credit. Another concept is having credits that are refundable, meaning that firm can get cash refunds if the credits exceed their tax liability.

Building Public Research and Development Capacity

In addition to funding R&D activities directly in the states through competitive grant programs, federal agencies, such as the National Science Foundation, National Institutes of Health, the Department of Energy, and Department of Defense, fund capacity building in the states through grants for new laboratories and equipment. The rationale is actually a national security argument— that it is important that the country’s R&D capacity be broad-based and not too geographically centralized. One program that has been important to Maine is EPSCoR (Experimental Program to Stimulate Competitive Research), which supports R&D capacity expansion in the states that receive smaller amounts of competitive federal funds. Through the EPSCoR program, Maine has built its Advanced Structures and Composites Laboratory, the Laboratory for Surface Science and Technology, and the Forest Bioproducts Research Institute (all at the University of Maine). EPSCoR requires state support in the form of a match, as well as a strategic plan for science and technology and an EPSCoR committee. Maine statute gives these responsibilities to the Maine Innovation Economy Advisory Board.

Since the 1980s, many states have also been investing heavily in building their R&D capacity. Since the 1980s, many states have also been investing heavily in building their R&D capacity. Popular programs include funding for new laboratories and equipment and attracting “star” scientists. The latter, exemplified by the Georgia Research Alliance Eminent Scholars program, endows chairs for new professors in fields deemed critical for a state’s economy. Since its inception in 1990, Georgia has invested in more than 65 eminent scholars, resulting in over 6,000 new jobs, 300 new companies, and thousands of new scientific discoveries. While Maine has not gone in the direction of attracting this type of talent, the state’s colleges, universities, and nonprofit laboratories all report difficulties with the recruitment and support of senior faculty due

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to lack of funds. In response, Maine’s 2010 Science and Technology Plan called for investments to “attract and keep high-quality researchers and graduate students who can win competitive federal research grants” (MIEACB 2009: 13). However, the trend to cut investments in R&D over the past decade has curtailed the development of new programs such as this one. Maine’s strategy since the mid-1990s has been to invest in laboratories and equipment. A series of bonds, initiated by Governors King and Baldacci, approved by the legislature, and supported by the public, have been used to build new research facilities at the University of Maine, the University of New England, and at nonprofit research organizations in the state. These investments have been episodic and uneven (Figure 1), however, despite more than ten years of evidence that they have paid off for Maine taxpayers. Many commentators, from the 2006 Brookings report to the annual R&D evaluations, have called for a planned, level, and sustained investment in this type of funding.1 Since bond funding is only appropriate for building long-term assets such as laboratories and equipment, other annual General Fund appropriations are also

needed to support basic research by providing the matching funds needed by the research institutions to win competitive and EPSCoR federal funding. Since the late 1990s, this has come through a line item in the budget called the Maine Economic Improvement Fund (MEIF). While this budget item has stayed relatively stable at around $14,700,000 for the last five years, an increase in MEIF funding would have direct effects on an influx of further federal research funding and subsequent spillover effects. One important caveat is that appropriate technology-transfer policies and procedures at the colleges, universities, and nonprofit laboratories in the state is also critical, so that discoveries made in these laboratories can be protected, licensed, and commercialized. Without this critical link, the state’s investment in R&D will be considerably less effective. The Maine Technology Asset Fund, for instance, the program operated by the Maine Technology Institute (MTI) that dispersed the last two bond investments, has required recipients to work hard to develop technology-transfer policies that encourage commercialization of new discoveries here in Maine. BUILD ENTREPRENEURIAL CAPACITY

Figure 1: Maine’s Investments in Innovation, 1996 to 2013 $80,000,000

Total R&D – General Fund Appropriations

$70,000,000

Total R&D – General Obligation Bond Authorized

$60,000,000

$50,000,000

$40,000,000

$30,000,000

$20,000,000

$10,000,000

$– 97

6–

9 19

7–

9 19

8–

9 19

9–

9 19

0–

0 20

1–

0 20

2–

0 20

3–

0 20

4–

0 20

5–

0 20

6–

0 20

7–

0 20

8–

0 20

9–

0 20

0–

1 20

1–

1 20

2–

1 20

Source: Biennial budget data, compiled by PolicyOne Associates and Innovation Policyworks LLC.

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3–

1 20

ost countries and states have programs and policies designed to support small businesses and entrepreneurs. These programs are ubiquitous because all places have dramatically more small businesses than large businesses and because small businesses create jobs. The latter assertion turns out to be somewhat misleading, and economists have been trying to sort out the data for years. Starting with David Birch’s research in the 1980s into gazelles or rapidly growing companies, there has been substantial interest in the type of firms that create the most

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economic growth. For instance, the Small Business sold to larger companies. This structure is popular in the Administration sponsored research in 2007 that found Internet and biosciences sectors. Large company startups that increasing small business births by 5 percent would are usually new divisions designed to facilitate entry into result in a small increase on Gross State Product (Bruce a new product or business while social entrepreneurs are et al. 2007). Acs, Parsons, and Tracy (2008) found that focused on making the world a better place, rather than high-impact firms are relatively old, rare, and contribute creating wealth. to the majority of economic growth. These authors Aulet and Murray found that there are different suggest that the best economic development strategy is types of entrepreneurs, those who are innovation-driven to focus scarce resources on cultivating high-growth vs those small and medium enterprises that serve local firms, rather than entrepreneurship overall. In contrast, markets with “traditional, well-understood business Breitzman and Hicks (2008) found that small firms ideas and limited competitive advantage” (2013: 4). were a significant source of innovation and patent They point out that the small and medium enterprises activity, developing more patents per employee than can be important in their local communities and form larger businesses, with more significant patents as the majority of employment. But, like Blanks’ small measured by citations and originality. business entrepreneurs, their intention is primarily to More recently, economists have parsed the data stay small. So, in a world where public investments are further to discover that the real issue is not the size of the by necessity limited, small and medium enterprises have firm, but its age that matters. Stangler and Litan (2009) less leverage on the economy than do innovation-driven looked at 2007 Census data to discover that firms that entrepreneurs. The authors conclude: “If job creation are between one and five years old account for roughly and economic prosperity are the goals for a government, two-thirds of job creation. But, the picture is actually [innovation-driven] entrepreneurship must be a major more nuanced than that. Haltwinger, Jarmin, and element of government strategy and policymaking” Miranda (2010) have done the most careful statistical (Aulet and Murray 2013: 9). study of the issue and conclude that startups are critical To what extent is this direction appropriate for a to economic growth, but also that they are the most rural state such as Maine? Do we have innovation-driven volatile. That is, startups are responsible for the majority entrepreneurs? The answer is emphatically “yes.” Experts of job growth and job destruction. However, if a young in rural economic development say (Markley and Stark firm survives, it will tend to grow faster than its more 2009: 1), mature small counterparts. So, while public policies Entrepreneurship development can be a Triple Bottom should support rapidly growing young firms, policyLine development strategy. By helping entrepreneurs… makers should also understand that many will fail. to recognize opportunities and build new ventures, Another piece of this dynamic is that there are many communities can experience improvements in the types of entrepreneurs, and not all require the same, or economy, the environment, and the diversity of resiperhaps any, public interventions. Steve Blank, a Stanford dents actively participating in civic life. professor widely known for his work in entrepreneurship, says there are six types of entrepreFigure 2: Scalable Entrepreneurs neurs.2 Blank describes lifestyle startups, small business startups, scalable startups, buyable startups, large company startups, and social Scalable startups. Entrepreneurs start all of these, but Transition Company Startup they are quite different. Lifestyle entrepreneurs work to live their passion, while small business entrepreneurs work to feed their families. • Business Model found • Cash-flow breakeven Scalable startups are born to be big, and like • Product/Market fit • Profitable Google, Skype, Facebook, and Twitter, are built on visions of changing the world and growing • Repeatable sales model • Rapid scale rapidly (Figure 2). Buyable startups are born to • Managers hired • New Senior Management flip according to Blank, meaning that they are ~ 150 people built completely with the intention of being Source: steveblank.com View current & previous issues of MPR at: digitalcommons.library.umaine.edu/mpr/

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Another controversy in the entrepreneurship literature is whether entrepreneurs are born or made, that is, can you train someone to be an entrepreneur? The answer seems to be that entrepreneurship is quite opportunistic; people respond to opportunities that they see and become entrepreneurs without really planning on it (e.g., Aldrich and Martinez 2001). On the other hand, a Babson College study found that students who took two electives on entrepreneurship in college were significantly more likely to start a company upon graduation (Lange et al. 2011). MAINE’S SUPPORT FOR ENTREPRENEURS

n Maine the commitment to entrepreneurship support, especially scalable entrepreneurs or innovation-driven entrepreneurs, has been limited. The Applied Technology Development Centers program was started in 1999 with the legislature creating seven incubators focused on the seven technology sectors, also legislatively defined. The legislature also defined where each of the incubators would be located, without any data about actual concentrations of firms in the sectors. For instance, the biotechnology incubator, now closed, was located in Fairfield, far from either the Jackson Laboratory or the resources at the University of Maine in Orono or the southern Maine bioscience assets at the University of New England or the IDEXX-based group of bioscience companies around Portland. The legislature has also cut the funds to this line item time and time again. In this fiscal year, the total is down to only $178,838. However, both the MTI and the Blackstone Foundation have recognized the importance of investing in Maine’s scalable entrepreneurs, and their grants have recently supported the remaining incubator/accelerator programs in the state: the Maine Center for Entrepreneurial Development, the Target Technology Center at Orono, and the Maine Aquaculture Innovation Center. These three programs have banded together to provide substantially improved services statewide to train scalable entrepreneurs through programs such as Top Gun and Top Gun Prep. At the same time, a number of private events have emerged across the country such as Start-up Weekend and various business plan competitions that continue to prime the pump by encouraging and challenging entrepreneurs, young and old, to think big. Across the country, many colleges and universities now teach entrepreneurship and some K–12 programs

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have been created to introduce entrepreneurial concepts early on. In Maine, these programs are few and far between, with the primary example being the Foster Center for Student Innovation at the University of Maine and its Innovation Engineering curriculum that has been rolled out to some of the other campuses of the University of Maine System. POLICIES TO SUPPORT PRODUCTIVITY AND COMPETIVENESS IMPROVEMENTS

here are only three ways to increase economic growth: increase the number of workers, increase productivity, or growth in high-productivity industries. Productivity means economic output per unit of input. The unit of input can be an hour of labor or some combination of labor, equipment, and energy. So, increasing the number of workers increases the size of an economy, but doesn’t necessarily increase the average wage of a worker in that economy. On the other hand, when all sectors become more productive, prosperity is more evenly shared. The third way to increase growth is called the “shift effect.” When an economy loses lowproductivity jobs and gains high-productivity jobs, the overall economy grows, but there are clearly winners and losers. According to Atkinson (2013: 5), “the lion’s share of productivity growth…comes…from all industries, even low-productivity ones, boosting their productivity.” But, he also describes the competitiveness of an economy as “the ability of a region to export more in value added terms that it imports” (Atkinson 2013: 2). So, innovation can increase competitiveness by increasing the ability of firms to export (outside the region) and increase productivity through the application of better processes, increased use of equipment, and energy efficiency. State-level policies designed to support innovation in firms enable access to new technologies, or support innovation, adoption, and commercialization. Scarce state resources, however, should be focused primarily on firms that are exporting, or plan to export, products outside the region or the country, the traded sector. These firms bring new money into the economy, rather than recirculating monies that are already there. Increasing Access to New Innovations One of the most imperfect markets is the market for information, especially information about new innovations. While thousands of new patents are issued each

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year, it is difficult to access to those patents and other innovations that are never publicly revealed. Not only are the numbers overwhelming, but much competitive advantage is maintained through secrecy, so even with the Internet, it is difficult to discover what technologies and innovations might be available to improve the productivity of a particular firm. This problem is especially acute when it comes to technologies created at our nation’s colleges and universities. The transfer of technologies from research institutions into organizations capable of commercializing them is challenging, overly bureaucratic, and legalistic, but incredibly necessary. Reforms have been suggested (Renault et al. 2008; Litan, Mitchell, and Reedy 2007) and some universities have recently instituted radical changes. For instance, the University of New Hampshire has created UNH Innovation, which “comprises licensing; services such as the InterOperability Lab and equipment or facilities rentals; and ventures and economic development” (UNH press release October 29, 2013). There are plans to create a mentorship program and increased opportunities for students to work directly with businesses. In a press release announcing the new organization), Jan Nisbet, senior vice provost for research at UNH, said, “This creates a clear path into the university if you’re interested in our technology, our equipment, and our expertise. Centralizing our efforts to commercialize the university’s intellectual assets will allow us to promote and participate in local economic development as well as diversify revenue streams beyond just licensing income.” In some states, there has been a concerted attempt to deal with the problem that technologies created in universities and other research organizations require a great of additional work before they are ready to be licensed and commercialized. This work is often referred to as translational research, and new centers are appearing at leading universities to bridge the gaps between the laboratory bench and the factory floor. A leading example is the Despande Center at MIT. The center awards research grants and provides other types of assistance to MIT faculty whose work shows the potential to benefit society, transform markets and industries, and improve the quality of life for people across the globe. A related issue is the appropriate protection, through patenting, trademarks or copyrights, or intellectual property developed by companies. In Maine, a program called the Patent Program, located at the University of

Maine School of Law, has been operating since 1999. The mission of the program is to support economic development by helping Maine inventors and small businesses to understand how to identify and protect their intellectual property. The program, however, suffers from the issues discussed earlier, in that it does not discriminate between companies with the ability to scale their innovations and people for whom invention is a hobby. In addition, funding for this program has also been declining for over a decade, and it does not have the resources to meet the demand for its services. In March 2014, the law school announced that the program is being cut, due to budget constraints,

There are two big hurdles to the adoption and commercialization of new innovations by companies, startups, or existing firms: capital and know-how.

TECHNOLOGY ADOPTION AND COMMERCIALIZATION: ACCESS TO CAPITAL

here are two big hurdles to the adoption and commercialization of new innovations by companies, startups, or existing firms: capital and know-how. Most states now offer a variety of programs to deal with access to capital; a few, such as Maine, also encourage and teach the process of commercialization. Access to capital for technology adoption is primarily access to equity capital. Sources of debt, like banks, are typically uneasy with the process of adoption of new technology because there is by definition no track record to go on. Therefore, the high-risk profile of technology adoption and commercialization is more suited to the high-return profile of equity capital. The type of capital required depends entirely on where the innovation is in its product life cycle. Figure 3 shows a typical product life cycle and the types of capital that are appropriate at various stages of development. Early, prerevenue, funding, often referred to as the “valley of death,” is not easily obtained in private markets.

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Therefore, many states have instituted public programs that support projects at this stage of development, essentially betting that some of the projects will be successful and yield increased follow-on investment and successful, growing companies. In Maine, the programs are administered by the MTI, and funded annually through a General Fund appropriation. Since its inception in 1999, MTI has invested over $105 million in 1,300 technology projects and has documented a return to Maine taxpayers of 14:1. Following prerevenue grant programs, many states also support matching funds for federal programs aimed at translational research and commercialization, notably Small Business Innovation Research funds. Again, Maine’s version of this program is housed at MTI, and has been demonstrated to be successful in increasing the win-rate of Maine companies who apply to this extremely competitive program. Matching funds for Small Business Innovation Research awards increases the amount of federal funds flowing to small, innovative firms in the state and increases their likelihood of finding follow-on capital and ultimately commercializing their products.3 Often angels, private investors with a high net worth who invest in early-stage firms, are active in states

supporting innovative companies. In Maine, a group called Maine Angels, made up of individual investors, meets regularly to review investment opportunities. Generally, angel groups are private, although in many ecosystems like Maine’s, the angels are an integral part of the fabric that supports entrepreneurs with innovative ideas. Some states organize angel groups, but their operation is generally privately led. Many states, however, see a public purpose in encouraging angel investment. Therefore, they have tax credits aimed at lowering the risk associated with these early-stage investments. Like the R&D tax credits previously discussed, so-called seed-stage tax credits have been shown to be effective in increasing angel investments, leading to greater sustainability and growth of innovation-based companies. Maine’s Seed Capital Tax Credit is one of the oldest in the country, dating back to 1990. Since 2002, the credit has been helped create 1,800 jobs and maintain another 5,000. It has recently been extensively reviewed by the legislature and extended past its original $30 million statutory cap. Unfortunately, the bill to extend the credit ran into the budgetary realities in the 2012–13 legislative session, and as a result, there was no credit in 2013, and the amounts available will be limited in the years thereafter. This is in stark contrast to other Figure 3: Types of Capital Appropriate for Stages of a Company’s states that have more broadly supported Development similar programs. For instance, in New Revenues Jersey in 2013 Gov. Chris Christie (R) signed into law a $25 million angel investor tax credit program to encourage early investment in emerging busiStage Pre-Seed Seed Early Scale-up nesses. The program provides tax credits for up to 10 percent of a qualified investment in businesses with fewer Venture Funds, Banks Source Family and Angels/Angel Groups/ than 225 employees that conduct Friends SBIR/MTI research, manufacturing, or technology commercialization. Amount Following angel funding, the next $25,000 $250,000 $2,500,000 step closer to commercialization for innovation-driven and/or scalable companies is venture funding. For that $0 reason, most states have some form of a Valley of Death Time state venture capital fund that invests in relatively high-risk, high-reward firms. In the past year, the U.S. Department of Treasury has added significant funding Source: steveblank.com to these state venture funds through a 44

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$1.5 billion program called the State Small Business Credit Initiative. Venture capital is a highly effective method for accelerating scalable enterprises and is credited with producing 21 percent of the nation’s current economy, 11.9 million jobs (IHS Global Insight 2011). Maine’s fund, Maine Venture Fund (formerly known as the Small Enterprise Growth Fund) was formed in the mid-1990s with a state investment in the form of a bond. It received additional funding in 2010. The fund, a nonprofit, is operated as an evergreen fund, which means that profits from investments are put back into the fund to invest in other companies. Since its inception, the Maine Venture Fund has invested $13.4 million in 45 Maine companies. A final type of access to capital is less glamorous, but nevertheless critical to supporting the adoption of new technology, especially by more mature firms. This comes in the form of tax credits for the purchase of new equipment and training of workers. Many states allow companies to deduct these expenses and/or give explicit tax credits against property taxes. The latter is used in Maine, as part of the BETR/BETE system of business equipment tax relief. However, the program is regularly raided by the legislature to balance the budget, and often companies will only be able to claim a percentage of the credit: in 2013, the amount was only 60 percent. The credit for business equipment purchases is extremely controversial in Maine, largely because many large national companies take advantage of it and are widely believed not to require such assistance from Maine taxpayers. A solution more closely aligned with innovation policies would be to have business equipment tax credits associated with companies that have patents or exports, or no property taxes on companies that invest more than 15 percent of their revenues in research and development. Innovation Engineering Last, the know-how associated with the process of technology commercialization is another information asymmetry—some firms know how to do it and others do not. Therefore, providing technical assistance to firms to increase the likelihood of commercialization is consistent with supporting an innovation-based economic growth strategy. For most companies, innovation is a luxury, something to be attended to when all other activities are complete. But, to benefit from the strategy of never-ending innovation, companies need to have a system for innovation. In Maine, many companies are

implementing Innovation Engineering, a system for innovation developed by University of Maine alumnus Doug Hall. The University of Maine’s Foster Center, the Maine Manufacturing Extension Partnership, Maine Center for Entrepreneurial Development, and MTI are all supporting the rollout of Innovation Engineering as a replicable system for increasing the speed of innovation, while reducing the risk.4 SUPPORTING CLUSTERS

or 15 years, clusters have been the buzzword in economic development. Popularized by Harvard professor Michael Porter, cluster theory suggests that regions have strengths not just in a single sector, but also in the intersection of a number of sectors that share workforce, educational, and research assets, as well as support services. Examples frequently cited are the wine making cluster in California’s Napa Valley or the biotechnology cluster in Research Triangle Park, North Carolina. In the latter, there are medical schools and research laboratories, pharmaceutical companies, biotechnology startups, as well as manufacturing companies that specialize in packaging for drugs, testing firms that do FDA-compliant protocols for drugs under development, venture capitalists, attorneys, and advertising agencies, all with particular expertise in biotechnology. From a political point of view, supporting the development of a cluster is more palatable than working with a single company, as it avoids the appearance of picking winners and losers and spreads the risk substantially. From a policy point of view, cluster programs have suffered a bad reputation nationally because practically every state has declared that it has a biotechnology cluster, thus making the distinction meaningless. In Maine, the MTI has invested from time to time in cluster-development activities. This program is currently under review amid concerns that MTI has spread its funds too thin and invested in some sectors that are too small to become sustainable. FINAL THOUGHTS

utside Maine, the state is considered to be a leader in innovation-based economic development, and the MTI in particular has been recognized for some of its programs. This leadership comes from Maine’s broad array of programs, even though the total funding from

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the state is modest compared to that of other states, whether in actual dollars or on a per capita basis. This leadership position is also due to the longstanding evaluation of Maine’s R&D investment, started in 1999, and until recently, performed annually. Evaluations such as the one done in Maine inform the legislature about the effectiveness of state investments in meeting strategic economic development goals and the efficiency of the programs in leveraging state monies to gain new private investment. Ongoing evaluation is critical not only to transparency and accountability of state investment, but is also essential to improving the delivery of the programs themselves. Innovation is a primary role of state government. It is a major driver of economic growth and the ability of the state to increase the well-being of its citizens through the provision of well-paying, nonexportable jobs. Innovation, like economic development and education, is so essential that many states are now housing their innovation policy advisors in the governor’s office, rather than in an agency or department. In Maine, the Office of Innovation is in the Department of Economic and Community Development and is currently staffed by a long-time traditional economic developer, rather than by an expert in technology-based economic development. In the future, innovation policy needs to be elevated to a level that is consistent with its importance to the state’s future. ENDNOTES 1. For further discussion of Maine’s R&D funding, see this issue’s article by Evan Richert. 2014. “R&D: Cornerstone of the Knowledge Economy.” Maine Policy Review 23(1): 48–56 2. http://steveblank.com/2011/09/01/why-governments -don’t-get-startups. 3. Details on the Small Business Innovation Research Program are available in the recorded testimony of Charles W. Wessner to the Small Business and Entrepreneurship Committee of the U.S. Senate. Available at: http://www7.Nationalacademies.org /ocga/testimony/SBIR_Program.asp. 4. For more information on Innovation Engineering, see the interview with Doug Hall, this issue: Lukens, Margo. 2014. “Interview with Doug Hall on the Role of Training in Innovation.” Maine Policy Review 23(1): 75–79

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REFERENCES Acs, Zoltan J., William Parsons, and Spencer Tracy. 2008. High-Impact Firms: Gazelles Revisited. Small Business Research Summary No. 38. Small Business Administration, Office of Advocacy. http://archive.sba.gov/advo/research/rs328tot.pdf Aldrich, Howard E., and Martha Argelia Martinez. 2001. “Many Are Called, but Few Are Chosen: An Evolutionary Perspective for the Study of Entrepreneurship.” Entrepreneurship Theory and Practice 25(4): 41–56. Atkinson, Robert D. 2010. Create Jobs by Expanding the R&D Tax Credit. The Information Technology and Innovation Foundation, Washington, DC. http://www.itif.org/files/2010-01-26-RandD.pdf Atkinson, Robert D. 2013. Competitiveness, Innovation and Productivity: Clearing Up the Confusion. The Information Technology and Innovation Foundation, Washington, DC. http://www2.itif.org/2013 -competitiveness-innovation-productivity-clearing -up-confusion.pdf Atkinson, Robert D., and Scott Andes. 2008. The 2008 State New Economy Index: Benchmarking Economic Transformation in the States. The Information Technology and Innovation Foundation, Washington, DC. http://www.itif.org/files/2008_State_New_Economy _Index.pdf Aulet, Bill and Fiona Murray. 2013. A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy. Ewing Marion Kaufmann Foundation, Kansas City, MO. Breitzman, Anthony, and Diana Hicks. 2008. An Analysis of Small Business Patents by Industry and Firm Size. Small Business Research Summary No. 335. Small Business Administration, Office of Advocacy. http:// archive.sba.gov/advo/research/rs335tot.pdf Bruce, Donald, John A. Deskins, Brian C. Hill, and Jonathan C. Rork. 2007. Small Business and State Growth: An Econometric Investigation. Small Business Research Summary No. 292. Small Business Administration, Office of Advocacy. http://archive.sba.gov/advo /research/rs292tot.pdf Davis, Steven J., John Haltiwanger, Ron Jarmin, and Javier Miranda. 2007 “Volatility and Dispersion in Business Growth Rates: Publicly Traded versus Privately Held Firms.” NBER Macroeconomics Annual 2006, edited by Daron Acemoglu, Kenneth Rogoff, and Michael Woodford. The MIT Press, Cambridge, MA. 107–180. Davis, Steven J., and James A. Kahn. 2008. “Interpreting the Great Moderation: Changes in the Volatility of Economic Activity at the Macro and Micro Levels.” Journal of Economic Perspectives 22(4): 155–180.

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Dean, Daniel, Sebastian DiGrande, Dominic Field, Andreas Lundmark, James O’Day, John Pineda, and Paul Zwillenberg. 2012. The Internet Economy in the G-20: The $4.2 Billion Opportunity. Boston Consulting Group. https://www.bcgperspectives.com/

Maine Revenue Service. 2011. Maine State Tax Expenditure Report: 2012–2013. A Report Prepared for the Joint Standing Committee on Taxation, Augusta, ME. http:// www.maine.gov/revenue/research/tax_expenditure _report_11.pdf.

European Commission. 2010. An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Brussels.

Markley, Deborah, and Nancy Stark. 2009. Entrepreneurship Development in Rural America: Insights into Triple Bottom Line and Wealth Creation Impact of Entrepreneurship Strategies. Center for Rural Entrepreneurship and CFED. http://community-wealth .org/sites/clone.community-wealth.org/files/downloads/ paper-markley-stark.pdf

Haltwinger, John C., Ron S. Jarmin, and Javier Miranda. 2010. Who Creates Jobs? Small vs. Large vs. Young. NBER Working Paper No. 16300. Cambridge, MA. http://www.nber.org/papers/w16300 Hart, David M. 1998. Forged Consensus: Science, Technology and Economic Policy in the United States, 1921–1953. Princeton University Press, Princeton, NJ. Iansiti, Marco, and Roy Levien. 2004. “Strategy as Ecology.” Harvard Business Review (March): 1–12. IHS Global Insight. 2011. Venture Impact: The Economic Importance of Venture Capital-Backed Companies to the U.S. Economy: Sixth Edition. National Venture Capital Association, Arlington, VA. http://www.nvca.org/index. php?option=com_content&view=article&id=255& Itemid=103 Johnson, Steven. 2010. Where Good Ideas Come From: The Natural History of Innovation. Riverhead Books, New York. Lange, Julian E., Edward Marran, Ajay Solai Jawahar, Wei Yong, and William Bygrave. 2011. “Does an Entrepreneurship Education Have Lasting Value? A Study of Careers of 4,000 Alumni.” Frontiers of Entrepreneurship Research 31(6): Article 2. http://digitalknowledge.babson.edu/fer/vol31/iss6/2 Litan, Robert E., Lesa Mitchell, and E.J. Reedy. 2007. Commercializing University Innovations: Alternative Approaches. NBER Working Paper. National Bureau of Economic Research, Cambridge, MA. http://ssrn.com /abstract=976005 Luger, Michael I., Irwin Feller, and Catherine S. Renault. 2004. Evaluation of Maine’s Public Investments in Research and Development: Interim Report 2003. University of North Carolina at Chapel Hill and Kenan Institute of Private Enterprise, Chapel Hill. http://198.66.139.25/resources/tourism/Maine_2003 _Interim_Evaluation.pdf. Maine Innovation Economy Advisory Board and Maine Office of Innovation, Department of Economic and Community Development (MIEACB). 2009. 2010 Science and Technology Action Plan: A Bold Approach to Stimulate Maine’s Economy. Economic and Community Development Documents, Paper 1. http://statedocs .maine.gov/decd_docs/1

Miller, Chad R., and Brian Richard. 2010. “The Policy Diffusion of the State R&D Investment Tax Credit.” State and Local Government Review 42(1): 22–35. Renault, Catherine S., Jeff Cope, Molly Dix, and Karen Hersey. 2008. “A New Paradigm for Technology Transfer: How State Universities Can Collaborate with Industry in the USA.” Industry and Higher Education 22(2): 1–6. Romer, Paul. 1986. “Increasing Returns and Long-Run Growth.” Journal of Political Economy 94(5): 1001–1037. Romer, Paul. 1990. “Endogenous Technological Change.” Journal of Political Economy 98(5): S71–102. Stangler, Dane and Robert E. Litan. 2009. Where Will the Jobs Come From? Kauffman Foundation Research Series: Firm Formation and Economic Growth. Ewing Marion Kauffman Foundation, Kansas City, MO. http:// www.kauffman.org/what-we-do/research/firm-formationand-growth-series/where-will-the-jobs-come-from Wilson, Daniel J. 2007. Beggar Thy Neighbor? The In-state, Out-of-state, and Aggregate Effects of R&D Tax Credits. Working Paper 2005-08, Federal Reserve Bank of San Francisco. http:// www.frbsf.org/economic-research/files /wp05-08bk.pdf Wu, Yonghong. 2008. “State R&D Tax Credits and HighTechnology Establishments.” Economic Development Quarterly 22(2): 136–148.

Catherine Searle Renault is principal and owner of Innovation Policyworks LLC, a Brunswickbased consulting firm specializing in innovation policy and practice. She is the former director of innovation and science advisor to Governor John Baldacci, with over 20 years of technologybased economic development experience in rural states across the country.

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R&D: CORNERSTONE OF THE KNOWLEDGE ECONOMY

R&D: Cornerstone of the Knowledge Economy by Evan Richert Thirteen years ago the State Planning Office projected that the state’s low per capita income would reach the national average if 30 percent of the state’s adults had at least four-year degrees and if businesses, academia, and government were spending $1,000 per employed worker on research and development. Evan Richert, in a detailed analysis of Maine’s R&D expenditures, argues that although Maine has made progress in achieving that goal, business needs to nearly double its effort to reach its share of the total. This will require continued retooling of traditional industry and emergence of new, high-performing R&D businesses. Richert recommends an annual commitment by state government of 5 to 7 percent of the total requirement, which would help businesses, universities, and research institutions leverage the rest.

f…

• at least 30 percent of Maine’s adults had at least four-year college degrees • industry, universities, and research institutes in the state spent about $1,600 per employed worker in the state (or about $1 billion) annually on research and development • industry accounted for about 70 percent of the R&D expenditures • it is probable that per capita income in Maine would equal or exceed the nation’s.

This article reports on the relationship among higher education, R&D investments, and income and reviews progress made in Maine in each of these areas over the last 15 years. 30 AND 1000

n 2001 the Maine State Planning Office (SPO) published the report 30 and 1000. The 30 referred to a goal of 30 percent of adults with at least fouryear college degrees, and the 1000 referred to a goal of $1,000 per year of research and development per employed person in the state. The publication was a

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culmination of a three-year ramp-up in the state’s contribution to R&D that included • a $20 million R&D bond approved by voters in November 1998, the first of its kind in Maine • establishment in 1999 of the University of Maine System’s Economic Improvement Fund as an ongoing program for university-sponsored R&D • establishment in 1999 of the Maine Technology Institute [MTI] as an ongoing program with a focus on industry and commercialization of R&D • establishment in 2000 of the Maine Patent Program • initial state funding for biomedical research laboratories in 2000 • initial funding of the Small Enterprise Growth Fund (now the Maine Venture Fund) • an expanded Seed Capital Tax Credit Program to invigorate angel investing in early-stage businesses The initial impetus that eventually led to publication of 30 and 1000 was not R&D itself. Rather, it was

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R&D: CORNERSTONE OF THE KNOWLEDGE ECONOMY

a question posed by then Governor Angus S. King Jr.: Why are Maine’s incomes chronically lower than the national average? The subtitle of the report was, “How to Build a Knowledge-Based Economy and Raise Incomes to the National Average by 2010.” At the time, Maine’s per capita income was persistently 85 percent to 88 percent of the national average, which represented a penalty on the state’s economy of $3 billion (Maine SPO 2001). Gov. King’s question was a big one with many-sided answers. A rural location distant from large metropolitan areas is likely part of the reason why Maine’s incomes are lower than the national average, but at the time there were states with rural population densities distant from large metropolitan centers that had higher incomes (e.g., Vermont, Kansas, Oregon). There were also too many exceptions among the states to the commonly cited maladies—high energy costs, relatively high tax burden, and the regulatory environment, for example; these factors may have been partly to blame, but did not seem to be the driving forces. Meanwhile, the work of several economists and business thinkers—Peter Drucker, Michael Porter, Richard Florida, and W. Edwards Deming, among others—pointed to the rising knowledge economy and the imperative of innovation as central to the success of regional and state economies.1 The knowledge economy, as successor to the industrial and post-industrial service economies, increasingly relied on knowledge workers for its labor input. These workers cover a wide spectrum of occupations, including science, technology, engineering, publishing, digital and other media, design professions, and the arts. Their common denominator is the discovery, generation, use, management, or distribution of knowledge and information, often involving intellectual property. The development of this workforce requires quality education at every level, kindergarten through postsecondary. And research and development—both basic and applied—underlie the innovation that fuels either their work or the processes and technologies that expedite their work. Research and development is a surrogate for the innovation that enables economic growth. This led to an investigation of the relationship of educational attainment and of investments in R&D to per capita income. Among the 50 states and District of Columbia, SPO found a strong, statistically significant correlation between the percentage of adults with at least four-year degrees and the states’ per capita incomes. It also found a statistically significant correlation between

educational attainment and the amount per employed worker expended in the states on R&D (by all parties— businesses, academia, and research institutes). Finally, the combination of educational attainment and R&D per employed person explained a majority of the differences in per capita incomes between the states. The resulting regression formula predicted that if Maine, as of 2000–2001, had achieved a 30 percent share of adults with four-year degrees and roughly $1,000 of R&D per employed person, its per capita income would have equaled or exceeded the national average. THE RELATIONSHIPS REVISITED

hese relationships hold true today. A review of state data on personal income, educational attainment, and R&D expenditures per employed person in the civilian labor force found the statistically significant correlations shown in Table 1.2 A regression using percentage of adults with at least a bachelor’s degree and R&D spending per employed person as the independent variables and per capita personal income as the dependent variable predicts that if (as of 2010) at least 30 percent of Maine’s adults had at least a bachelor’s degrees, and businesses, academia, and research institutes in the state spent $1,567 per employed person annually on research and development, the state’s per capita personal income would have equaled the 2010 national per capita income of $40,129. (The summary outputs of the regression are available from the author on request.)

Table 1:

Correlations of Per Capita Income, Percentage of Adults with Bachelor’s or Higher Degrees, and R&D Spending Per Employed Person, States and District of Columbia Variables

Correlation (r2)

Per capita income and percentage of adults with BA+ degrees

0.74

Per capita income and R&D spending per employed person*

0.43

Percentage of adults with BA+ degrees and R&D spending/employed person

0.56

*Excluding three outliers: DC (very high R&D and per capita income, mostly federal government); New Mexico (high R&D and low per capita income—R&D concentrated in a single federal lab); and Wyoming (low R&D and rapidly rising per capita income attributable to recent domestic oil and gas boom)

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The 30 percent of adults with at least bachelor’s degrees is the same target as projected in the 2001 30 and 1000 report. The $1,567 per employed person represents more than a 50 percent increase in the target in current dollars and about a 27 percent increase in real dollars—a sign not just of inflation since the original 30 and 1000 but also of the increases in R&D elsewhere in the United States. This level of R&D spending per employed person multiplied by an employed labor force in Maine (in 2010) of 633,000 would yield total R&D spending of about $1 billion. WHERE MAINE STANDS

s of 1998, when Maine began its ramp-up of R&D investments, the state’s performance in both percentage of adults with at least four-year degrees and R&D spending per employed person fell well short of the targets of 30 and 1000: only an estimated 19 percent of adults had at least a four-year degree, and $255 per employed person was spent for R&D (by all types of entities).

Table 2:

From 1998 to 2010, the improvements in both categories were substantial: the percentage of adults with at least a four-year degree reached 27.3 percent and R&D spending per employed person as of 2008–2010 (in current dollars) was $1,016. In real dollars, the increase was from $255 to $759 per employed worker, an increase of 198 percent. The R&D investment for 2008-2010 also represented an average of about 1.3 percent of Maine’s gross domestic product, up from about 0.5 percent in 1998 (Table 2). Per capita personal income, meanwhile, has moved up to about 92 percent of the national level. It is not possible to ascribe the growth in income to these factors alone or to assert that they were the primary influences, but their correlations with income suggest they are at least important contributing factors. Thus, Maine is a little less than three percentage points from the target of 30 percent of adults with fouryear or higher degrees. It is still about 45 percent below the revised target of about $1,600 of total R&D expenditures per employed worker, which would translate to just over 2 percent of today’s gross state product.3

Maine

U.S. Average

19.2%

24.4%

$255

$1,106

0.5%

2.3%

$23,500

$27,300

86.1%

---

1998 Percentage of adults with 4+ yr degrees R&D spending/emp person R&D spending as percentage of gross state product Per capita personal income Maine as percentage of U.S. 2010 Percentage of adults with 4+ yr degrees (ave. 2008–2012)

27.3%

28.5%

R&D spending/employed person (current $$, ave. 2008–2010)

$1,016

$2,783

1.3%

2.8%

$36,881

$40,129

91.9%

---

R&D spending as percentage of gross state product* Per capita personal income Maine as percentage of U.S.

*This level of R&D spending is somewhat higher than reported by the National Science Foundation, because the NSF data are incomplete for nonprofit institutions outside of universities and colleges. These institutions are disproportionately important to R&D spending in Maine. Adjustments were made to Maine and United States based on reviews of annual reports of the major research institutions in the state and based on NSF’s estimate of under reporting for these institutions nationwide (NSFA 2010, 2012, 2013: Table 10, footnote f).

THE BIGGEST SHORTFALL: INDUSTRY

Educational Attainment, R&D Spending, and Per Capita Personal Income, Maine and United States, 1998 and 2010

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esearch and development performers include businesses, universities and colleges, research institutions outside of universities and colleges, and government. These performers receive money for R&D from both private and public sources. Nationally, the share of R&D expenditures by type of performer is heavily weighted to businesses: overall, more than 70 percent of R&D spending is by businesses. In a few states, including the District of Columbia, that are strong both in R&D investments and in per capita incomes, businesses play a smaller role. But these jurisdictions are heavily influenced by the presence of federal government agencies and laboratories. In most states with both strong R&D investments and high per capita incomes, business R&D spending ranges from 65 percent to more than 90 percent of the total. Of the 10 states (including DC) with at least the national average

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TABLE 3: Percentage of R&D Performed by Business, by Jurisdictions of $2,700 of total R&D spending per with R&D Expenditures/Employed Person >$2,700 and Per employed person and per capita incomes Capita Personal Income >U.S. Average above the national average, seven are outside of the DC Beltway; business in these states accounts for 68 percent Total R&D/ Performed Per Capita Employed to 91 percent of total R&D spending by Personal Jurisdiction Person Note Business Income (Table 3). (2008–2010 % (2010) In Maine, businesses account for Average) only 56 percent of total R&D spending, United States $2,783 73 $40,129 which ranks among the bottom third of Maine $1,016 56 $36,881 states in the share of business spending Federal on R&D. This modest share likely District of Columbia $15,483 10 $69,304 government reduces the impact of R&D on incomes. dominated Intuitively, business R&D spending Massachusetts $6,687 68 $51,102 translates most quickly into commercialization, jobs, and income. And statistiStrong federal Maryland $6,406 24 $49,691 government cally, there is a positive, significant presence correlation between business R&D spending alone and per capita personal Connecticut $5,866 91 $55,048 incomes (r2 = .33; detail available from Washington $5,615 82 $42,923 the author on request). Delaware $5,266 91 $41,133 Business R&D spending per California $5,101 81 $42,487 employed person in Maine averaged Strong federal $573 per year from 2008 to 2010. To get Virginia $2,917 51 $44,605 government to 70 percent, which would be close to presence the national average, of the revised target New Hampshire $2,788 83 $44,373 of $1,600 in total R&D spending per employed person, Maine businesses Minnesota $2,762 84 $42,294 would need to nearly double their R&D spending. Academia, other nonprofits, and federal agencies are much closer to and electronic products industry spends 6.5 percent of what might be considered reasonable shares of the target sales, led by its semiconductor subsector, which spends (Table 4). 12.2 percent, and its communications equipment subsector, which spends 10.1 percent. The publishing THE CHALLENGE TO INDUSTRY industry, led by software publishing, spends 8 percent. The top 15 to 20 industrial sectors or their significant t is not surprising that Maine’s businesses lag far subsectors spend at least 3 percent of sales on R&D. behind in R&D expenditures. The industrial sectors Maine—as measured by location quotients (a in which Maine has traditionally been strong relative to measure of specialization in an industrial sector vs the the nation tend to be sectors that do not invest heavily United States)—does not have a significant presence in in R&D. Conversely, Maine is weak in the sectors that any of these high R&D-spending sectors. Maine does do invest heavily in R&D. have competitive strength in several industrial sectors According to the National Science Foundation, that spend on R&D, but all of these spend less than the business sectors that invest in R&D spend on average 2.6 percent average for all R&D-spending businesses, 2.6 percent of their sales revenues on R&D. The most and for the most part considerably less. For example, the intense R&D industries spend considerably higher paper-manufacturing industry reinvests in R&D at shares, e.g., the chemicals industry spends 5.9 percent about half the average rate (1.3 percent of sales). of sales, led by its pharmaceuticals and medicines Figure 1 summarizes the situation. The bars represubsector, which spends 13.4 percent. The computer sent the percentage of the business sector’s sales spent on

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R&D: CORNERSTONE OF THE KNOWLEDGE ECONOMY Table 4:

Maine Existing and Target R&D Expenditures by Performing Sector

It should be noted that a low LQ does not mean that there is not any important Performing Sector employer in that sector in Maine. For (with funds from all sources)* example, IDEXX Laboratories, which Universities, develops and manufactures diagnostic Total R&D Colleges, Other Federal tools for veterinary, food, and waterBusiness Spending Nonprofit Agencies testing markets, is a major employer in the Organizations category of professional, scientific and 2008-10 Average technical services. But Maine’s LQ for this Annual Total ($000) $643,000** $363,000 $264,000** $16,000 sector is 0.68, indicating that a large cluster has not yet grown up around this Per employed person $1,016 $573 $417 $25 activity. Similarly, Fairchild Semiconductor Suggested Target has had a long presence in Maine, but Annual Total ($000) $1,012,000 $708,960 $283,584 $20,256 without any particular advantage to Per employed person $1,600 $1,120 $448 $32 compete with Silicon Valley or similar locations, a strong cluster never grew up Needed Increase (2010 $$) around it, and Maine’s LQ in semiconducAnnual Total ($000) $369,800 $345,960 $19,584 $4,256 tors and other electronic components— Per employed person $584 $547 $31 $7 one of the business sectors most heavily *Performing sector is different from funding source. Funding sources include private invested in R&D and innovation—is investments and contributions, federal government, and state government. In 2010, for vanishingly small at 0.09. example, federal funds accounted for 48 percent of university and college R&D spending At the same time, R&D spending and 6 percent of business R&D spending (source: NSF 2013). data are not available for certain niches— **Includes adjustment to NSF data made to account for under-reporting of nonprofit R&D represented at the five- or six-digit expenditures. level of the North American Industrial Classification System (NAICS)—that may R&D, and the sectors (and their significant subsectors) in fact be high R&D performers and in which Maine in are listed in descending order. The figure includes only fact has above average location quotients. These niches sectors that spend at least 0.5 percent of sales on R&D, often are small components of a larger business sector, as reported by the National Science Foundation. The and to the extent that they may be higher R&D connected dots represent location quotients: an LQ of performers, they are masked by the data available at only 1.0 indicates average specialization in a sector based on the more general level. percentage of nonfarm wage employment in that sector For example, the general sector of finance and compared with the United States as a whole. Greater insurance is not a high R&D performer, investing just than 1.0 implies greater than average specialization, 0.2 percent of sales in R&D. But a small subsector which in turn implies competitive advantage in that within finance and insurance, financial transaction sector. Most of the half dozen R&D-spending sectors processing, may be. WEX (Wright Express), which has shown in this table for which Maine demonstrates LQs pioneered fleet cards and developed proprietary software greater than 1.0 are concentrated in the right half of the to do so, is based in Maine and helps the state achieve a chart, where sector R&D spending is below average. location quotient of 1.89 in this subsector (NAICS The exception is the transportation-manufacturing 522320). Similarly, architectural and engineering sector that includes aerospace; Maine’s relatively strong services as a whole invest just 1.0 percent of sales reveLQ in this subsector is due primarily to the presence of nues in R&D, and for this general sector Maine’s LQ is Pratt & Whitney. On the left half of the chart, where the below average. But a subsector, surveying and mapping, sectors most heavily invested in R&D are included, includes innovative technologies such as geographic Maine’s LQs tend to be well below 1.0, often virtually information systems that invite R&D and product zero. Maine’s LQ for one strong R&D-spending sector, development. Maine businesses employ fewer than 500 “other information,” which includes web portals, is at in this subsector, but they include companies such as about the national average. DeLorme, J.W. Sewall, and KAPPA Mapping. Further,

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R&D: CORNERSTONE OF THE KNOWLEDGE ECONOMY

the University of Maine has a strong spatial information science program and a related research institute. This subsector (NAICS 541360 and 541370) in Maine, as small as it is at present, has an above average LQ vs. the U.S. LQ, at 1.24.4 RISING TO THE CHALLENGE

roadly speaking, there are two paths that Maine can follow to greater industry investment in R&D and innovation that, in turn, can lead to job and income growth:

One path retools sectors in which Maine has been traditionally strong, as represented by high LQs, but that are typically low R&D performers. This retooling uses applied R&D to develop new products and processes for export to the rest of the world. Outstanding examples are available in several of the state’s legacy sectors. For example, the wood products sector overall is a very low R&D performer (less than 1 percent of sales reinvested in R&D), but Maine is a leader in new dimensions of the sector. These include engineered wood composites and forest bioproducts, both of which are investing heavily in R&D and trying

Figure 1: R&D Expenditures as Percentage of Sales by Industry Sector* and LQ, Maine vs. United States

(*for sectors investing at least 0.5 percent of sales in R&D, 2010)

14%

5.0 R&D as % of Sales

ME Location Quotient

4.5

12%

10%

3.5 3.0

2.5 6%

2.0 1.5

Location Quotient, ME vs U.S.

R&D Expenditures as % of Sales

4.0

1.0 2% 0.5 0%

Ph a con rmac e du cto utica ls a r, o th nd Co m mm er ele c c edicin un om ica es t p Pu blis ions e onen Da ts h q Co i u ng ta p mp inc ipme Pro roc ute nt l Na s e r f e o ssi and vig ssi ft on atio ele ng & ware al, nal ctr ho sci o ,m st n ent eas ific ic pro ing u , te du Oth ring ch c , ser ts Pes er inf and c En orm on Ch vices gin ticid em atio trol e e, t ica n in inst urb , ferti l lize cl w rum s ine ent , po r, o e b the Re w p ort s er al e r als sta tran ag ch sm te a em iss nd ica i o r Oth ne l Ag ent Ae r q er a Ele com rosp icultu l & l uip ctr ea ace ra pu ica pro l imp sing ter l eq du and le uip me ele cts a ment nd ctr nt, Tra on app nsp ic p parts lian rod equ N ipm onm ces, a Ma ucts eta nd ent chi l c li n —a Pai o nt, uto c min mpo ery coa Medi era , ae n cal l pr ents tin r o sp g, a e od u dh quipm ace, esi arm cts ve, ent ore and and d oth sup p Oth er ch lies em er H So i ap, ealth mach cal ine car cle ry ani es e ng Tra com rvice nsp s po eq un Pla ds stic uip— Pap sa nd ships e F rub &o r Fur abric Tex b the ate nit e tile r r ur pr d s, a pp e and meta oduc are l t s r p el rod l, a uct nd ated p s lea the roduc rp ts r W od o Tel eco od p ucts mm rod uct un s i Ba Pri Beve sic catio Re r n ns age che tin sin g mi , sy a ca nth and r nd to F ela bac ood ls etic t mf ed co rub g su pr ber , fib ppor oduc t ac ts ers tivi , an tie df ilam s ent s

0.0

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to commercialize the results. Composites, including those developed at the University of Maine’s Advanced Structures and Composites Center, are being used by Maine businesses to produce decking, marine infrastructure, and bridges. As a business leader in forest bioproducts, Old Town Fuel and Fiber is developing the means to process wood into cellulosic sugars to make plastics and ethanol, using technology developed at the University of Maine. In fact, the university has located its Forest BioProducts Research Institute on the grounds of Old Town Fuel and Fiber mill. Elsewhere in the paper-manufacturing sector, Sappi Fine Papers in Westbrook has successfully transformed itself into a world leader in the production of release paper, a specialty paper that creates the texture on products ranging from sporting equipment to clothing. The special coating is applied and cured with electron beams, and the wide use of release papers is in constant development by Sappi’s in-house R&D division, also located in Westbrook. The other path involves sectors that are high R&D performers and in which Maine’s LQs are low—but also in which new technologies and applications provide new openings for Maine businesses to penetrate the sectors. Maine, through educational programs, academic R&D infrastructure, and entrepreneurs with intellectual property in these areas, has gained traction in several such sectors. For example, in the high R&D-performing pharmaceuticals sector, Cyteir Therapeutics, a spinoff company from the Jackson Laboratory, will become a presence in the pharmaceuticals industry if it succeeds in its mission to develop lowside-effect medicines to treat cancer and other diseases of the immune system. Several companies are developing and commercializing chemical, biological, and particle-detection and analytical instruments. Measurement and control instruments are one of the top-ten R&D-performing sectors nationally. Among the companies are spinoffs from the University of Maine’s Laboratory for Surface Science & Technology (LASST), such as Orono Spectral Solutions (OSS), which has developed materials and methods that enable trace-level detection of chemical and biological agents; and Environetix, which has developed a wireless sensor system for measuring heat and vibration in extreme environments such as jet engines. Another UMaine spinoff, Sensor Research and Development, specializes in instruments to deliver and detect gases; and Fluid 54

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Imaging Technologies, a spinoff from the Bigelow Laboratory for Ocean Sciences in East Boothbay produces particle analysis instrumentation using digital imaging technology. The process filtration industry is tiny in Maine. However, a startup company, Orono-based Cerahelix, has developed a nanofiltration membrane using DNA and ceramics that filters solutions, including water for reuse and recycling, to high purity under harsh conditions. This could lead to an important presence in the kind of specialized manufacturing sector that tends to invest in R&D. The Maine Technology Institute is heavily engaged in promoting both paths to higher R&D performance and commercialization. One strategy is its “cluster initiative program,” which has supported both the retooling of traditional industries and the emergence of new industries through R&D and commercializing the results. According to MTI’s website (www. mainetechnology.org), clusters are “concentrations of companies that serve similar customers and draw on similar knowledge and workforce skills in the development of innovative products and services. They are actively supported by common organizations such as specialized suppliers, industry-knowledgeable universities, trade associations, legal and financial experts, funding sources and government agencies.” The program has supported a bioplastics cluster project to make a biodegradable plastic from Maine potatoes for use in a range of textile, medical, bottling and other products. Among other things, the effort joins two traditional Maine industries, agriculture and textiles, to explore the potential of PLA (polyactic acid) derived from potato starch in the manufacture of fabric. True Textiles, which has a plant in Guilford, has been one of the leaders of the project. The Maine Technology Institute also supports a cluster of industries in environmental and energy technology, areas of high R&D performance that have been emerging in Maine. The Environmental & Energy Technology Council of Maine (E2Tech) is building private-sector capacity in the targeted industries of energy efficiency, renewable energy, advanced materials, environmental services, and alternative fuels for transportation. These industries constitute what is collectively referred to as the Cleantech sector and is an example of how changing economic and environmental conditions and changing demands in markets open opportunities for growth in R&D-performing sectors.5

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USING STATE FUNDS AS LEVERAGE

state’s role in R&D is best described as catalytic. State agencies themselves are involved with R&D; for example, environmental, agricultural, and natural resource agencies conduct independent research to advance their missions. But most state R&D appropriations are not for R&D performed by state agencies themselves, but rather for independent or semi-independent entities or to institutions of higher education; the actual R&D performance is by the recipients of funds coming through those entities or institutions. And in large part, the state funds are leveraged for much larger investments of public (mostly federal) and private dollars. Thus, in Maine, about 95 percent of R&D expenditures6 are funneled through external or semi-independent entities, led by MTI, for distribution to various business and other performers or directly to universities and research institutions. Additional state dollars were provided directly to businesses in the form of venture capital through the Maine Venture Fund and R&D tax credits. What do the state R&D dollars leverage? Direct matches of grants through MTI or to universities appear to be on the order of between $1.50 and $4.00 for each state dollar. However, it appears that each state dollar funneled through or to these organizations generates $10 to $14 of total public and private financing for research and development (Colgan and Andrews 2009; MTI 2011, 2012; University of Maine 2011, 2012). In other words, state dollars accounted for 7 percent to 10 percent of the total activity they helped generate. Other state dollars invested through tax credits or venture capital may have equal or greater total rippling effect. It is reasonable to estimate that an annual state investment of 5 percent to 7 percent of the target total R&D expenditures would provide the help needed by R&D performers to leverage both much larger private investment and much larger public dollars from federal agencies. This translates into a state commitment of $50 million to $70 million per year (2010 dollars). The state’s commitment has never reached this level, though significant progress has been made over the last 15 years, with some slowdown in the last few years. The state’s general fund appropriation has been fairly steady: from FY 2002–03 through FY 2011–12, it was between $20 million and $25 million per year (Maine DECD 2012). In addition, several general obligation bond issues for R&D research and facilities totaling about

$130 million were approved during that period. Assuming five-year payouts of the bonds brings the estimated annual average commitment from FY 2002–2003 through FY 2011–2012 to between $32 million and $37 million per year. The most recent proposed R&D bond issue approved by the legislature in 2012 was vetoed by the governor. To reach the target of $50 million to $70 million per year would require an additional commitment by the state of about $15 million to $35 million annually. To reach this level may require periodic bonds to finance R&D. The larger challenge, however, is to increase the annual general fund appropriation to the base level—say, $50 million—needed to help move Maine to $1 billion of total R&D spending (by all parties from all sources). CONCLUSION

state’s per capita income is strongly associated with the educational attainment level of its population and with R&D expenditures by businesses, universities and colleges, and research institutions. R&D expenditures appear to be a surrogate for innovation in products and processes in a state’s economy. Since this relationship was highlighted in the late 1990s, considerable progress has been made in Maine: the state has gained in both higher educational attainment and R&D investments relative to the nation. The gap in per capita income has also narrowed. But 30 and 1000 has become 30 and 1600—or, for a better turn of phrase and converting R&D investment per employed person to total R&D investment, 30 and 1 billion. As far as Maine has come, it has that much farther still to go, especially in the retooling of legacy industries for innovation and the development of new business sectors that are high R&D performers. ENDNOTES 1. For discussion of this topic see, Peter F. Drucker. 1969. The Age of Discontinuity. William Heineman Ltd, Toronto; 1967. The Effective Executive. HarperCollins, New York; Michael E. Porter. 1990. The Competitive Advantage of Nations. The Free Press, New York; Richard Florida. 2002. The Rise of the Creative Class. Basic Books, Cambridge, MA; W. Edwards Deming. 1982. Quality, Productivity, and Competitive Position, MIT, Cambridge, MA. 2. For personal income: U.S. Bureau of Economic Analysis, Table SA1-3 Personal Income Summary by State, 2010 www.bea.gov/itable (Interactive Data)

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For educational attainment: U.S. Census, American Community Survey, Table DP02, Selected Social Characteristics by State, 2008–2012 Average. Available from http://factfinder2.census.gov/.

For R&D expenditures per employed person: National Science Foundation (2010, 2012, 2013, Table 9); U.S. Department of Labor, Table 14, States: Employment Status of the Civilian Noninstitutional Population by Sex, Race, Hispanic or Latino Ethnicity, Marital Status, and Detailed Age, 2010 Annual Averages. Available from http://www.bls.gov/lau/#ex14.

3. The Maine Economic Growth Council (2013), in its report Measures of Growth in Focus 2013, set 3 percent of Maine’s gross domestic product as the goal for R&D expenditures. The 2010 Science and Technology Action Plan set a goal of $1.4 billion of total R&D spending by 2015, which it estimated would be 3 percent of gross state product, and a companion goal of $42,000 per capita income (Maine Innovation Economy Advisory Board 2009:11–12) 4. NAICS codes are available at http://www.naics.com/ search 5. For illustrations of how innovation can reinvigorate existing sectors or help build new ones in Maine see, James S. (Jake) Ward. 2014. “Research, Innovation, and Commercialization at the University of Maine.” Maine Policy Review 23(1): 57–58. 6. Based on 2009 NSF data from State Government R&D Expenditures and Higher Education R&D Expenditures.

Maine Innovation Economy Advisory Board and Maine Office of Innovation, Department of Economic and Community Development. 2009. 2010 Science and Technology Action Plan: A Bold Approach to Stimulate Maine’s Economy. Economic and Community Development Documents. Paper 1. http://statedocs .maine.gov/decd_docs/1 Maine State Planning Office (SPO). 2001. 30 and 1000. Maine SPO, Augusta. Maine Technology Institute (MTI). 2011. Twelfth Annual Report to the Maine Legislature, FY 11: July 2010–June 2011. MTI, Brunswick. National Science Foundation, National Center for Science and Engineering Statistics (NFS). 2010. National Patterns of R&D Resources: 2008 Data Update. NSF 10-314. Arlington, VA. http://www.nsf.gov/statistics/nsf10314/ National Science Foundation, National Center for Science and Engineering Statistics (NFS). 2012. National Patterns of R&D Resources: 2009 Data Update. NSF 12-321. Arlington, VA. http://www.nsf.gov/statistics/nsf12321/ National Science Foundation, National Center for Science and Engineering Statistics (NFS). 2013. National Patterns of R&D Resources: 2010–11 Data Update. Detailed Statistical Tables NSF 13-318, Arlington, VA. http://www.nsf.gov/statistics/nsf13318/ University of Maine. 2011. Annual Report of Vice President for Research (VPR) (FY 2011). UMaine, VPR, Orono. University of Maine. 2012. Annual Report of Vice President for Research (VPR) (FY 2012). UMaine, VPR, Orono.

REFERENCES Colgan, Charles S., and Bruce H. Andrews. 2009. Evaluation of Maine Technology Institute Programs for Awards Ending July 1, 2006–June 30, 2008. Center for Business and Economic Research, University of Southern Maine, Portland. Maine Department of Economic and Community Development (DECD). 2012. Maine Comprehensive Research & Development Evaluation 2011. Maine DECD, Augusta. Available at http://www.maine.gov /decd/reports-pubs/ Maine Economic Growth Council. 2013. Measures of Growth in Focus 2013: Performance Measures and Benchmarks to Achieve a Vibrant and Sustainable Economy for Maine. Maine Development Foundation, Augusta. http://www.mdf.org/publications /Measures-of-Growth-In-Focus-2013/644/

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Evan Richert was the director of the Maine State Planning Office under Gov. Angus King. He owns a land use and town planning consulting practice, is town planner for Orono, and is on the board of directors of Bangor Target Area Development Corp., which owns and manages the Target Technology Center, a commercial incubator.

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RESEARCH, INNOVATION, AND COMMERCIALIZATION AT THE UNIVERSITY OF MAINE

Research, Innovation, and Commercialization at the University of Maine by James S. (Jake) Ward IV

he state of Maine endorsed and supported the growth and expansion of R&D beginning in 1998. As Evan Richert points out in his paper in this issue, educational attainment and R&D spending per worker correlate with per capita income (Richert 2014). Maine has made direct investments (R&D dollars/worker) into the University of Maine System through the Maine Economic Improvement Fund (MEIF) as well as periodic capital infrastructure investments through R&D bonds. However, are these investments positioned to help increase necessary industrial investments in R&D? The legislature designated seven sectors for R&D investments. These sectors were a combination of traditional (strong presence in Maine) and new and emerging (low presence). The University of Maine undertook targeted efforts to support these legislatively designated technology sectors in Maine. The creation by statute of the Maine Economic Improvement Fund—an annual state appropriation to the University of Maine System— was not only dedicated to these seven sectors but also requires UMaine to • leverage additional R&D funding from federal, state, and private sources • partner and collaborate on applied research to solve Maine and the nation’s problems • commercialize and contribute to Maine’s economy • support workforce development Since 1998, the university has created several centers to develop partnerships and collaborations with other researchers, institutions, and industries both in Maine and outside the state. The centers need to be responsive to existing industrial collaborations and needs while drawing attention to recent innovations. Richert (2014) states that industries that are traditionally strong in Maine spend significantly less on R&D

than the top R&D sectors throughout the nation, and sectors that nationally have high investments in R&D are less commonly found in Maine. For industries that spend little on R&D, UMaine centers often offer access to cutting-edge research and scientists. Companies already at the forefront of R&D in their fields can bring that expertise to UMaine researchers and students. Since the establishment of the MEIF, the University of Maine has made tremendous progress on improving the innovation ecosystem and has used state R&D dollars to create the capacity and environment for industry to increase its R&D activity. The results reflect the university’s increased capacity to generate innovations and support industry R&D (Table 1).

TABLE 1: University of Maine R&D,

FY2005–2013

Number of UMaine FTE positions hired/ supported on MEIF-leveraged R&D funds

6,094 (avg. 677/yr)

Number of UMaine company contracts Number of UMaine patents filed

2,867 132

Table 2 identifies University of Maine strengths relative to the seven state-identified sectors and their traditional or emerging status (for a more complete description of sector strengths and opportunities, visit umaine.edu/econdev). State investments at the University of Maine have led to world-class facilities and significant innovation opportunities. However, stimulating Maine’s traditional and emerging industries remains a challenge. Financial incentives alone will not work. Culture and creativity in the leadership and workforce must be developed, supported, and rewarded.

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RESEARCH, INNOVATION, AND COMMERCIALIZATION AT THE UNIVERSITY OF MAINE

TABLE 2: State-identified Sectors for R&D Development

Industry presence in Maine

Sector

Agriculture & Forestry

Traditionally very strong presence in Maine

Typical industry R&D spending as a percentage of sales

Low

UMaine leveraged grants and contracts, FY2005– FY2013

$74,168,898

UMaine R&D Strengths

Oldest pulp & paper program in U.S., with strong industry support First in nation nanocellulose production capability Only forest bioproducts commercial-scale R&D facility*

Aquaculture & Marine

Traditionally very strong presence in Maine

Low

$77,414,471

Among the best aquaculture R&D and incubation facilities in the U.S.

Biotechnology

Low to moderate presence in Maine

High

$31,873,718

Graduate School of Biomedical Sciences linking six Maine non-profit research entities such as Jackson Lab and University of New England

Composites & Advanced Materials

Strong presence in textiles and boatbuilding; other areas low presence

Environmental Technology

Low to moderate presence in Maine

Information Technology

Low to moderate presence in Maine

Precision Manufacturing

Moderate presence in Maine, with niches in certain sub-sectors such as transportation equipment

Cross Sector

Traditional sectors: Low Engineered wood products: High

$81,198,379

Medium

$55,516,315

Internationally-recognized composites research center One-of-a-kind offshore wind laboratory* Only forest bioproducts commercial-scale R&D facility* One-of-a-kind offshore wind laboratory* Advanced supercomputing capacity

Medium-High

$72,202,692

Geographic information analysis research Innovative Media Research & Commercialization Center

Electronics: High Metals: Low to Medium

$15,524,982

Advanced Manufacturing Center for prototyping and manufacturing process improvements

$9,116,345

Total external dollars in the seven sectors

$339,228,616

*Some programs overlap more than one sector.

James S. (Jake) Ward IV is the

REFERENCES Richert, Evan. 2014. “R&D: Cornerstone of the Knowledge Economy.” Maine Policy Review 23(1): 48–56.

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vice president for innovation and economic development at the University of Maine. His office supports economic development by acting as a liaison for business and industry, facilitating technology transfer, and handling patenting, licensing and commercialization activities for the university. The office also supports federal and state government relations for the university’s R&D mission. Prior to this role, he served as the assistant vice president for research, economic development and government relations.

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STATE INVESTMENT IN UNIVERSITY RESEARCH AND COMMERCIALIZATON

State Investment in University Research and Commercialization: What Is Measurable and What Is Meaningful? by Kris Burton There are serious challenges in measuring the impact of universities on their state economies and in measuring the return on investment in universities by state legislatures. Kris Burton discusses the metrics currently used in looking at societal investment in research and the commercialization of research results. She asks if more meaningful metrics are needed, and if so, are they possible to obtain?

“Y

ou can’t manage what you can’t measure” is an oft-repeated adage in business, government, sports, and any other statistically driven undertaking. It is often incorrectly attributed to the National Medal of Technology–winning statistician W. Edwards Deming, known as the “Father of the Quality Movement.” But what Deming actually said is, “It is wrong to suppose that if you can’t measure it, you can’t manage it—a costly myth” (Deming 1994: 35). Another equally well-used proverb is the Law of the Hammer: “If all you have is a hammer, everything looks like a nail.” These simple concepts suggest a serious challenge in establishing metrics to measure progress in any endeavor: that which may be easily and discretely measured may be attributed more importance than is merited. And reflexively, the importance of that which is difficult to measure may be overlooked or undervalued in decision making. This challenge certainly applies when considering the methods and metrics by which universities measure their impact on their state economies and by which state legislatures measure their return on investment in universities. The overall positive economic impact of societal investment in research and the commercialization of research results are generally well known and accepted, but how is impact measured on the state level? What metrics are currently used? Are more meaningful metrics needed, and are they possible to obtain?

ORIGINS OF CONTEMPORARY UNIVERSITY TECHNOLOGY COMMERCIALIZATION

he establishment of the land-grant university system by the Morrill Acts of 1862 and 1890 set the stage for the integral role in the state economy expected from land-grant universities. The original mission was to teach agriculture, military tactics, and mechanical arts. Fast forward through more than 150 years of widely accessible education emphasizing science, technology, and research, these institutions conduct $41 billion in university-based research (APLU 2012). There are established economic metrics for measuring the direct impact of salaries and other multipliers from these institutions. What has been more difficult is measuring the impact of, and return on, research investment on the economy. In the 1970s, the United States faced double-digit inflation and unemployment due in large part to loss of manufacturing. Experts were predicting the loss of America’s lead in high technology to Japan and Germany. U.S. universities and government laboratories were performing approximately $75 billion in research every year, but few products were reaching the market as a result of these activities. At that time, the federal government granted only nonexclusive licenses to companies to use patented research results, and there were few who took advantage of these licenses. Of 28,000 government patents, fewer than 5 percent were commercially licensed.

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Legislation sponsored by senators Birch Bayh of Indiana and Bob Dole of Kansas proposed a novel solution to the slow transfer of government-sponsored research results to industry. The 1980 Bayh-Dole Act allowed universities, nonprofits, and small businesses the opportunity to elect ownership of intellectual property resulting from research grants. In electing ownership, universities were expected to file patents and actively seek collaborations with industry to put inventions to use. Passage of Bayh-Dole created a a largely unfamiliar and somewhat controversial role for for universities. Major universities responded quickly by establishing patent offices to attend to the duties required to secure patents. Administrators quickly realized that obtaining patents is a costly endeavor. A handful of institutions began to have big-money wins that brought pressure on most offices to expand office skill sets beyond patenting to licensing, marketing, and sales. By 1990, patent offices in most cases expanded to become technology transfer offices. By 2000, outside interest groups began to criticize universities for what was perceived as emphasizing financial return on patent licenses over the promotion of the better good globally. The Association of University Technology Managers (AUTM) responded by launching the Better World Project in 2005, “to promote public understanding of how academic research and technology transfer benefits you, your community and millions of people around the world.”1 The global economic crisis of 2008 brought the expectations of the Bayh-Dole Act full circle, with increased emphasis on jobs and economic development through university research and technology commercialization. Many technology transfer offices are now integrated into the economic development arm of universities and play an active role in startup formation, business coaching, and education in addition to their established responsibilities. Understanding the evolution of their academic role in technology transfer reveals the logic and progression in the selection of metrics used and reported by universities for measuring impact. CURRENT PRACTICES IN MEASURING RESEARCH INVESMENT IMPACT

early all university technology transfer offices (TTOs) report common performance metrics based on the metrics collected annually by the AUTM.

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These include the number of patent applications and issued patents, the number of new invention disclosures, the number of technology licenses and license options completed, new startup companies, and income from licenses. These are typically normalized against annual research expenditures. These metrics are simple to count and indicative of valid activity. Without research there can be no patents; therefore patents filed become a surrogate measure for research productivity. Patents issued and licensed become an indicator of research novelty and relevance, and royalty received may be an indicator of research value. These metrics present some weaknesses, however, and do not capture the entire value of technology transfer activities nor of research activities as a whole. Patent applications and issued patents have little to no inherent value without being put to use. Overemphasizing patent applications can compound expenses quickly, and even issued patents can be far too narrow to be of value, or may be obsolete by the time of issuance. Licenses are an important indicator, but encompass only a fraction of the knowledge and value transferred to industry through university research programs. Royalty revenue can be an excellent opportunity to bring some return on investment back to a university, but must be balanced against efficient transfer of knowledge, building long-term industry collaborations, and the general public good. Some universities become very fortunate with a blockbuster patent, but most do not break even on technology transfer activities most years. In a 2010 study commissioned by NASA to determine best practices in metrics across university, government, and private TTOs, technology consulting firm Fuentek emphasizes the need for qualitative metrics in addition to the traditional quantitative metrics. “Numbers alone are insufficient to demonstrate the value that technology transfer brings to the larger research and development (R&D) organization, the regional or national economy, and the public. High-performing TTOs augment their quantitative metrics reporting with success stories and anecdotes” (Hiser, Pollack, and Schoppe 2010: 1). The report goes on to describe examples such as advantages of new products, cost savings, health and/or safety benefits, human impact, and economic impact (Hiser, Pollack, and Schoppe 2010). Nearly all universities now include these qualitative impact measures in regular reports. In addition to the annual compilation of statistical metrics, AUTM began publishing a national annual A Better World

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report in 2006 to emphasize the impact of technology transfer on global society. The University of Maine has the advantage of having integrated TTO activities within the office of Innovation and Economic Development. This integration is a present trend among leading universities, particularly among land-grant universities, which are facing increased expectations to positively and efficiently affect state economies. Recognizing this trend and the need for an integrated, holistic accounting of university economic impact, and in response to a 2010 report by the National Research Council, Managing University Intellectual Property in the Public Interest, which is critical of traditional metrics, the Association of Public Land Grant Universities (APLU) launched the Commission on Innovation, Competitiveness and Economic Prosperity (CICEP) Universities Designation. The commission identified 20 recommended metrics by which a university can best measure its impact on the state and national economy. It expands the traditional AUTM metrics to include measurements related to relationships with industry, workforce development, and business acceleration. The University of Maine expects to receive its CICEP University Designation in 2014. AUTM also has an institutional economic engagement index that is under development. This index takes an interesting approach, including metrics that are generally overlooked by stakeholders outside of the university, but are crucial to promoting success and avoiding pitfalls. These include items such as institutional policies, for example, conflict of interest and financial, business environment assessment, and accessible web presence. The Carnegie Foundation’s community engagement classification is another integrated measure of impact. This designation “describes collaboration between institutions of higher education and their larger communities (local, regional/state, national, global) for the mutually beneficial exchange of knowledge and resources in a context of partnership and reciprocity.”2 It includes metrics outside those usual for economic development, research and technology transfer impact and is helpful in completing an overall view of the university’s footprint on the community. This classification is voluntary and is held by University of Maine. Additionally, the National Institutes of Health, the National Science Foundation, and the White House

Office of Science and Technology Policy have undertaken STAR METRICS™—Science and Technology for America’s Reinvestment: Measuring the Effect of Research on Innovation, Competitiveness and Science. This project was developed after a successful pilot project was conducted with several institutions and is in the early stages of adoption. It is aimed at quantifying the impact of federal research and includes economic development metrics not previously collected with parity and consistency, such as social and workforce outcomes. The identification and selection of metrics that are consistently measurable, yet meaningful, is a topic of ongoing interest. Table 1 summarizes the national initiatives mentioned herein. TABLE 1: Examples of National Initiatives

to Measure University Research Impact on Technology Transfer and Economic Development

Organization

Current and New Metrics Initiatives

Association of Public Land Grant Universities

Innovation and Economic Prosperity (IEP) Universities Designation AUTM Annual Report

Associate of University Technology Managers

Better World Project Institutional Economic Engagement Index

Carnegie Foundation

Community Engagement Elective Classification

NIH, NSF and the White House Office of Science and Technology Policy

STAR METRICS™—Science and Technology for America’s Reinvestment

CHALLENGES IN MEASURING IMPACTS OF STATE RESEARCH INVESTMENT

t is arguable that the only true measure of an impact on the state economy is tax revenue earned by the state in return for a state investment in research. There has been emphasis lately from state leadership in several states, including Maine, and by private think tanks such as the Brookings Institution (West 2012) to emphasize a dollar-in, dollar-out (DIDO) approach to evaluating research economic impact. It should be noted that measuring the effectiveness of research expenditure towards its intended purpose is

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Measuring the Maine Economic Improvement Fund Since its establishment in 1997, the Maine Economic Improvement Fund (MEIF) has been a key component in Maine’s science and technology plan. Through 2010, independent outside consultants reported a 14:1 return on investment to taxpayers for the state’s MEIF investment. The University of Maine, as one of several MEIF recipients, reports that for every dollar invested, the university leverages and imports approximately five research dollars from sources outside Maine. The legislation governing MEIF requires an annual evaluation of program impact. In its review of the University of Maine System (UMS) fiscal year 2012 MEIF expenditures, the state Office of Program Evaluation & Government Accountability (OPEGA) asked what metrics UMS uses to measure accomplishments attributable to MEIF and whether there are others that might be used. While it is important to maintain consistency of measurement over time, it is also vital to periodically re-evaluate to ensure that what is measured is meaningful and is being used to support policy decisions. Metrics reported by MEIF recipients include the following, although not all metrics apply to each recipient: • federal grants leveraged • other income received from grants, contracts

• stacking and dilution of funds from multiple public and private sources

• patents applied for and obtained • companies served by region

• wide variety of ways a dollar can be allocated to facilities, equipment, and other expenses

• company revenue and employees • publications

• the impact of direct spending vs indirect spending and selection of economic multipliers, for example, more money from salaries is spent locally than is money spent on equipment unless it is locally sourced

• startup companies • licenses • students enrolled in STEM • square footage of R&D facilities • new equipment UMS reports all of the above applicable metrics, as well as qualitative details and success stories in its annual report. Compared to the list of common and emerging metrics described in the first sections of this paper, this list hits all of the major elements without duplication or excess granularity. These metrics serve to capture the integrated value of research investment by including company collaborations, student enrollment, and new equipment.

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• tracking a single dollar over the lapse in time between award, allocation, expenditure and result • multiple types of research project results

• private capital received

not a new challenge, nor one particular to states and universities. Businesses and consultants have been engaged in this task for generations, and the academic literature is well stocked with case studies, models, and formulae. There are at least two universal complications with measuring dollar-to-dollar returns on research and development: one is the unpredictable nature of R&D, and the other is the need to know the depreciation or obsolescence rate of the knowledge generated. If industry finds this difficult, states and universities will find it at least equally so. Businesses often decide to reduce R&D risk/expense as much as possible by obtaining technologies and research from universities! While dollar-in, dollar-out (DIDO) may be the gold standard for accounting return on investment, there are some reasons why perfecting this method is currently difficult and may be an exercise in diminishing returns if the calculations are consistently and forthrightly reported. Consider the following challenges in reporting DIDO metrics, particularly on an annual basis:

• the induced impact of direct spending on changes in household income • the unpredictable nature of early-stage research typically undertaken by universities • accounting for depreciation or obsolescence of results It might be possible to obtain something acceptably close to DIDO by tracking a dollar through its process and selecting the transaction points where it has the

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most impact. Consider, for example, a single hypothetical state dollar invested toward the construction and operation of a research facility in year 1 at a state research university. The state dollar is matched with three federal dollars, and perhaps another dollar from private gift sponsorship to complete construction and first year of operation. Because of the existence of the facility, researchers begin to win federal grants in year 1 or year 2. A federal grant awarded in year 1 is received and expended by the university over years years 2 through 5. An industrysponsored research project is conducted at the facility concurrently. Both projects pay for portions of staff and student salaries, equipment, facility maintenance, and operation. Jobs are supported during the project, and equipment purchased during the studies becomes the property of the university, which it can use for future projects. Suppose that in year 4, an invention with commercial potential emerges from the federally funded research project. The university elects to retain ownership of the invention, files a patent, and begins to seek a commercial licensee. The technology, however, needs further development before it is commercially deployable, but no funding is available. The technology remains on the university books for two years until year 6, when an outof-state commercial partner gets budget-cycle approval to fund the development project. A second patent is filed, paid for by the out-of-state licensee, but owned by the university. The university licenses both patents to the company in their field of use; however, the product from the license is not sold until year 9. In the meantime, the university licenses the same patents to a local startup in a different field of use, where first revenues are not expected until year 11. The startup employs three people, who are paid primarily by federal Small Business Innovation and Research grants (SBIR), so the university waives initial license fees in favor of a small equity position, which it liquidates in year 16. The example could go on and multiply the scenario by several research facilities at the university and hundreds of research projects that are awarded, received, and executed over a number of years. DIDO measurements for state tax revenue generated by the single state dollar in year 1 would require obtaining income tax from project salaries and company salaries, company tax (minus credits), and other applicable taxes better left to a tax professional to describe. The

point is illustrated that normalizing metrics year over year to find the DIDO would require intensive effort to calculate and obtain data, some of which is not accessible to the university. Assuming DIDO could be achieved, the present value of investments still maturing or otherwise not captured are lost. For example, the value of unlicensed patents or prerevenue licenses, the benefit to state companies assisted by faculty and staff on nonuniversity or nonresearch projects, the enhanced reputation of the university (which attracts more businesses and students), and the higher value of graduates with research experience to state companies. According to the John William Pope Center, which has made critical, somewhat controversial, but nonetheless thoughtprovoking arguments about the impact of university research expenditures, “Measuring the returns to research—including losses on research—is an area where microeconomic methods perform very poorly. While one may estimate the effects that the salaries of researchers will have on the local economy, it is difficult to derive the effects of discovery and innovation, which have large random components” (Schalin 2010: 17). For these reasons, meaningful metrics for evaluating research investments used must include a mix of (1) macroeconomic, that is, looking at the overall health of the economy and return on investment of an entire university over time; (2) microeconomic, measured by metrics that may be readily and consistently counted; and (3) qualitative accounts of impacts made. CONCLUSION AND LOOKING FORWARD

niversity facilities allow states to leverage and import external research funds and enable companies to engage in more, broader, lower-risk research than they could undertake solely in-house. The outcome of research is knowledge—knowledge manifested in new processes, materials, and know-how. The knowledge created can be transferred in the form of publications or patents and also by further research collaboration, networking, consultancy, and teaching. Patents and other forms of intellectual property owned by the university may be licensed to private companies, resulting in new or more profitable products and services, which in turn support or create jobs during and after the project, tax revenues, and reinvestment back in research and development.

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There are improvements in measuring the impacts of the state’s investments in university research that could be implemented immediately, several to consider, and several to watch as they develop. Universities should consider the following actions: 1. Systematize and prioritize the collection and targeted dissemination of qualitative metrics and success stories. 2. Continue to use traditional metrics, but consider a deeper analysis to determine which activities bring the most benefit to each campus and state economy, depending on local assets and needs. For example, relationship-building activities may be more effective than technology-driven activities. Student internships, fellowships, and research opportunities may bring most value in some regions. Increasing research collaborations and industrial relationships focused on areas of strength may bring more impact than striving to increase invention disclosures in a number of different technology areas. Teaching and internship activities may have more impact than certain areas of research. While striving towards DIDO, universities should understand as well as possible the best internal allocation of resources. 3. Consider using an index-based measure of technology transfer activities to augment the traditional count-based measures. Index-based measures quantify the distribution of outcomes rather than their sum, meaning the data is not skewed by unusual outcomes or easily manipulated (Kurman 2011). 4. Engage in national and international efforts, such as those listed in Table 1, to identify and implement best metrics to the extent that they are meaningful to university and state goals. -

REFERENCES Association of Public Land Grant Universities (APLU). 2012. The Land-Grant Tradition. APLU, Washington, DC. http:// www.aplu.org/document.doc?id=780 Deming, W. Edwards. 1994. The New Economics. MIT Center for Advanced Educational Services, Cambridge, MA. Hiser, Karen, Norman Pollack, and Laura A. Schoppe. 2010. How’d We Do?: Establishing Useful Technology Transfer Metrics. Fuentek, LLC. http://www.fuentek .com/blog/2010/10/how%E2%80%99d-we-do -establishing-useful-technology-transfer-metrics/ Kurman, Melba. 2011. “An Index-based Measure of University Technology Transfer.” International Journal of Innovation Science 3(4): 167–176. Schalin, Jay. 2010. State Investment in Universities: Rethinking the Impact on Economic Growth. Pope Center Series on Higher Education, Raleigh, NC. http:// www.johnlocke.org/acrobat/pope_articles/edreport.pdf West, Darrell M. 2012. “Improving University Technology Transfer and Commercialization.” Issues in Technology 20. http://www.brookings.edu/~/media/Research /Files/Papers/2012/12/05%20tech%20transfer%20west /DarrellUniversity%20Tech%20Transfer.pdf

Kris Burton is the director of technology commercialization at University of Maine. As part of the Office of Innovation and Economic Development, she manages relationships between industry and the university and drives the evolution of university discoveries from invention to product. Previous experience includes market and product development at large and small businesses, as well as technology transfer in academia and the federal government.

ENDNOTES 1. Association of University Technology Managers (AUTM). 2014. A Better World Report. http://www .betterworldproject.org/Background_Information.htm [Accessed April 10] 2. Carnegie Foundation. 2014. Community Engagement Elective Classification. http://classifications .carnegiefoundation.org/descriptions/community _engagement.php [Accessed April 10].

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WORKFORCE SKILLS FOR INNOVATION ECONOMY

Do We Have the Workforce Skills for Maine’s Innovation Economy? by John Dorrer Over the last five decades, with the shift from goods-producing to service industries, skill requirements have changed dramatically for most workers. John Dorrer describes how a workforce with superior skills is the key to economic growth and innovation and suggests that while much has been done in reforming K–12, postsecondary, and adult education systems to accommodate Maine’s changing economy, it is not enough. To meet the challenges facing Maine, more innovation and adaptation will be required from policymakers, institutional leaders, employers and Maine people themselves.

OVERVIEW

convergence of economic and demographic forces is shaping a set of formidable challenges for securing Maine’s future. A workforce with superior skills is the key to economic growth and innovation. Maine’s aging population, slow population growth, and the ensuing projections have extraordinary implications for the workforce and our economic prospects. The constancy of technology innovation, globalization, and industry restructuring will remain dominant factors shaping Maine’s competitiveness. Together, these forces will assert big impacts on the availability of jobs, the nature of work, and the demand for new skills. Successful alignment of skill development with job creation and economic dynamism will unquestionably drive future productivity and growth. To get this done, unprecedented collaboration and bold solutions will be required from policymakers, business leaders, and educators to ensure our institutions produce highly capable workers with the right skills and qualifications. Students, workers, and parents, too, will need to be more vigilant in directing education and skills investment decisions to ensure access to good jobs with high wages. For more than three centuries, Maine’s economy has been largely defined by an endowment of natural resources and the industriousness of its people. Harvesting trees for ship building and using waterpower to drive lumber mills defined Maine’s early industries. For most of the twentieth century, the output from

technologically advanced paper mills and an assortment of manufacturers provided a dominant share of gross state product. More recently, a steady shift to services has shaped where Maine people work and the skills they need. Manual skills and industrial discipline were once highly valued. More jobs today require advanced intellectual, communication, and analytical skills. Wrenching change and great disruption has marked each successive chapter in Maine’s economy. Over the course of the state’s economic history, a chain of events has dislocated workers and required widespread adaptation from workers, businesses, and institutions. The skills and motivation of Maine workers were consistently recognized and highly valued in the context of this evolving economy. The future will demand no less. In these unsettling times, a comprehensive vision for Maine’s future remains absent. Promising developments and technological innovations in our midst, however, provide a potential path forward in shaping the next economy. Harvesting the wind and oceans for energy production, processing wood and bio-fibers for alternative fuels and composite materials, and restoring agricultural lands for food production are among fragile, evolving economic sectors with growth potential. In a more prevalent way, significant innovation across all industries and throughout our lives will persist. Ubiquitous applications of information technology will reshape our environments, jobs, and market possibilities. Maine citizens confront a more complex society and highly competitive global economy. To successfully

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navigate the opportunities ahead, Maine’s workforce must be better educated and more highly skilled.

development strategies and educational systems in the broad global context.

ECONOMIC DYNAMISM AND GROWTH

COMING UP SHORT: SKILLS AND WORKFORCE QUALIFICTIONS IN THE GLOBAL ECONOMY

nnovation is fundamental to a growing economy. By innovation, we mean the introduction of a new or significantly improved product, process, or method in business practices, workplace organization, or external relations. In the 1940s, the economist Joseph Schumpeter first introduced important concepts identifying creativity as the driver of economic development. Schumpeter asserted that capitalism can only be understood as an evolutionary process of continuous innovation and creative destruction. In 1969, Peter Drucker published The Age of Discontinuity in which he advanced the notion for both countries and companies that the future belonged to knowledge work and knowledge workers. This type of work depended on high levels of knowledge and skill. More recently, Robert Atkinson and Stephen J. Ezell argue that economic growth hinges on the ability to create new products, services, processes, or ways of doing business (Atkinson and Ezell 2012). The authors describe how technology and innovation ultimately drive long-run economic growth and show how countries now compete on the basis of their “national innovation ecosystems”—comprised of knowledge, risk capital, and regulatory, institutional, and technological factors. Atkinson and Ezell call on governments to rethink their economic growth strategies and policies by making support for technology and innovation a central tenet. For states to thrive, Atkinson and Ezell say they must compete more on the basis of innovation and entrepreneurship and less on cost. Elements of a competitive approach demand • a workforce and jobs based on higher skills • strong global connections • dynamic firms including strong, high-growth startups • industries and individuals embracing digital technologies • strong capabilities in technological innovation With this multifaceted approach to competition, states will need to assess the efficacy of their economic

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n a world where complex technologies, knowledge development, advanced manufacturing, and sophisticated transactions drive economic output and competitiveness, a highly educated workforce becomes an essential ingredient for success. Investments in human capital have consistently yielded significant private and social returns. High wage premiums and reduced unemployment have been consistently reported for those with college degrees and advanced skills. A recent study surveying adult skills conducted by the Organization for Economic Cooperation and Development (OECD 2013a) presents compelling new data on adults’ proficiency in literacy, numeracy and problem solving in technology-rich environments. Key findings include the following: (1) Proficiency in literacy, numeracy and problem solving in technology-rich environments is positively and independently associated with the probability of participating in the labor market and being employed, and with higher wages. (2) In all countries, individuals who score at lower levels of proficiency in literacy are more likely than those with higher proficiency to report poor health, believe that they have little impact on the political situation, and not participate in associative or volunteer activities. In most countries, individuals with lower proficiency are also more likely to have lower levels of trust in others. High education levels and advanced skills are the hallmark of high-performing economies and nations well endowed with social capital. Yet in many developed economies, there remains a paradox. Millions of individuals remain unemployed or employed in jobs not commensurate with their level of education and training. On the demand side, some employers are unable to fill critical positions because of a lack of qualified applicants. A recent report from the McKinsey Global Institute stressed this paradox, “And, even as less-skilled workers struggle with unemployment and stagnating wages, employers face growing shortages of the types of highskill workers who are needed to raise productivity and drive GDP growth” (Dobbs et al. 2012: 1). The report in further analyzing forces of supply and demand in the global labor supply puts forth the following implications:

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• A potential shortage of about 38 million to 40 million high-skill workers, or 13 percent of demand for such workers. • A potential surplus of 90 million to 95 million low-skill workers around the world, or around 10 percent of the supply of such workers. • A potential shortage of nearly 45 million medium-skill workers in developing economies, or about 15 percent of the demand for such workers. The study argues that “absent a massive global effort to improve worker skills…—there will be far too few workers with the advanced skills needed to drive a highproductivity economy and far too few job opportunities for low-skill workers” (Dobbs et al. 2012: 1) The shape and scale of human capital investments across the globe will determine economic competitiveness and living standards. Monitoring global workforce trends and developments becomes fundamental for U.S. and Maine policymakers. The mobility of capital and advancing education and skills levels across the globe will continue to factor in to our own economic prospects. The United States once led the world in the educational preparation of its workers. A recent OECD study, however, ranked the United States thirteenth among developed countries in postsecondary attainment with 43 percent of young Americans ages 25 to 34 having postsecondary credentials (OECD 2013b). The OECD study on adult skills in the world’s developed economies found that in numeracy, the United States performs around the average when comparing the proficiency of 55- to 65-year-olds, but is lowest in numeracy among all participating countries when comparing proficiency among 16- to 24-year-olds (OECD 2013a). U.S. adults also ranked below average in literacy as well in problemsolving skills in technology-rich environments in comparison to their peers in developed economies. Public spending on active labor market programs as percentage of GDP remains below most of our major economic competitors, according to the OECD analysis. How could this be at the same time that we have come to widely acknowledge the primacy of human capital as the key driver for economic competitiveness and prosperity? In testimony before the U.S. Senate Budget Committee in a hearing on “The Impact of Federal

Investment on People, Communities and Long Term Economic Growth,” Anthony P. Carnevale, director of Georgetown University, Center on Education and Workforce, reported that the United States spends 1.4 trillion on human capital developments annually in the public and private sectors, an amount that is roughly 10 percent of GDP. Postsecondary and K–12 education make up 41 percent; formal and informal employer based training accounts for most of the other 59 percent. Yet, with 10 percent of GDP going to human capital investments, there are troubling signs that these investments are not producing the results our economy needs (Carnevale 2013)

The shifting demands for skills derive from the changing nature of the U.S. labor market. Survey results from a number of sources report employer dissatisfaction with the preparedness of graduates for entry-level positions. According to a survey of 217 employers, more than one-third of the respondents (34 percent) report that their newly hired high school graduates are deficiently prepared. About one in five employers (22 percent) report their two-year college graduates to be deficiently prepared, while less than onefifth (17 percent) report four-year college graduates to be deficiently prepared (Casner-Lotto, Rosenblum, and Wright 2008). A 2012 survey from the Chronicle of Higher Education found that 31 percent of employers are dissatisfied with the average skills of their workers (Chronicle 2012). In another survey, more than half (53 percent) of business leaders say their companies face a “very major” or “fairly major challenge” in recruiting nonmanagerial employees with the skills, training, and education their company needs, while another 31 percent say it’s “somewhat of a challenge” (Bridgeland, Milano, and Rosenblum 2011: 7). So what is it that employers want from graduates and how should our education and training institutions respond? A survey of employers conducted by Hart Associates for the American Association of Colleges and Universities in 2010 yielded the results reported in Table 1.

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WORKFORCE SKILLS FOR INNOVATION ECONOMY TABLE 1: Learning Outcomes Where Employers Seek

More Emphasis

Learning Outcomes

Percentage of Employers

The World Around Us Science and Technology

Global Issues

The Role of the U.S. in the World

Cultural Diversity

Civic Knowledge, Participation and Engagement

Intellectual and Practical Skills Written and Oral Communication

Critical Thinking and Analytical Reasoning

Complex Problem Solving

Teamwork Skills in Diverse Groups

Creativity and Innovation

Information Literacy

Quantitative Reasoning

Personal and Social Responsibility Ethical Decision-Making

Integrative and Applied Learning Applied Knowledge in Real World Settings

Source: Hart Research Associates (2010)

FIGURE 1: Skill-Based Job Creation in the United States,

2001–2009 (millions of employees)

Type of Job

Jobs Lost

Interactions Exchanges involving complex problem solving, experience, context (e.g., lawyer, nurse)

4.8

Transactions Exchanges that can be scripted, routinized, automated (e.g., bank teller, retail cashier) Production Process of converting physical materials into finished goods e.g., factory worker, farmer)

-0.7

-2.7

Source: Manyika et al. (2011)

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The shifting demands for skills derive from the changing nature of the U.S. labor market. Recent research from the McKinsey Global Institute analyzed jobs in the U.S. economy based on job skills and functions rather than occupational title, the more conventional method (Manyika et al. 2011). Using data from the U.S. Department of Labor’s Bureau of Labor Statistics, the analysts examined job creation and job loss over the period 2001 to 2009. They classified jobs into three major categories including jobs requiring complex interactions or exchanges involving high-level problem solving, experience, or context; jobs associated with transactions that are scripted, routinized, or automated; and jobs involving production of goods or the process of converting physical materials into finished goods. Using the skills-based approach, the study reported that 4.8 million jobs were created involving interactions, 700,000 jobs requiring routine transactions were lost, and another 2.7 million production jobs were lost (Manyika et al. 2011). The nature of such skill shifts over a relatively short time frame puts extraordinary stress on workers who are on the job-losing end and demands substantive innovations from workforce-development and job-training programs (Figure 1). At a practical level, the results of the Manpower Group’s annual talent shortage survey conducted in 2013 reveal that employers in the United States and worldwide continue to identify “the lack of available skilled talent and the struggle to fill vacancies as having a negative impact on business performance” (Manpower Group 2013: 24). Describing a survey by the McKinsey Center for Government Peter Cookson reports: “Colleges and universities appear to overrate the degree to which they prepare students for the life of work. According to McKinsey, ‘72 percent of educational institutions felt their graduates were ready for the job market, but only 42 percent of employers agreed.’”1 INNOVATION AND SKILLS: BUILDING BLOCKS FOR MAINE’S ECONOMY

echnology innovations and the introduction of new work processes have been constant forces on Maine farms, in the woods, and in factories, offices, and laboratories. Over the course of Maine’s economic history, government, education, and business have collaborated to ensure that public policy, education, and training systems aligned with market

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WORKFORCE SKILLS FOR INNOVATION ECONOMY Table 2:

and technological forces to ensure workers had the requisite skills to fuel productivity growth for employers. In Maine’s early economic history, agriculture was dominant, employing significant numbers of people. The one-room schoolhouse with one teacher teaching basic skills was well aligned with the needs of this sector, at least for a time. Next came the establishment of land grant universities. These new institutions added significant education, training, and research capacity to support this vital economic sector as new skills and knowledge were required to improve yields and increase productivity. With time, the agrarian economy gave way to industrialization and a wave of mass manufacturing, leading to the creation of urban centers and the migration of workers from the farms to the factory. Textile mills, shoe shops, and towering paper mills defined Maine’s economy and influenced the establishment of education standards and curriculum modification for workforce preparation. Compulsory education and vocational training were introduced as part of workforce development strategy for the times. Over the last five decades, there have been dramatic shifts from goods-producing to service industries. Skill requirements have changed dramatically for most workers as have the expectations of our education and training institutions. We are also asking much more of our students. While much has been done in reforming K–12, postsecondary and adult education systems to accommodate the changing Maine economy, it is not enough and more innovation and adaptation will be required from policymakers, institutional leaders, employers, and Maine people themselves. INNOVATION AND MAINE’S CHANGING SKILL REQUIREMENTS Past Trends The economic shifts and structural changes throughout the Maine economy have been unrelenting for some time now. An examination of broad shifts in occupational employment over the last 12 years indicates the nature of these shifts. Occupations in management, business, science, and the arts represent a growing share of employment as production, transportation, and material-moving share declines. These shifts have significant consequences for the types of skills Maine workers need to find a job and advance a career (Table 2).

Distribution of Occupational Employment, Maine, 2000 and 2012

Occupational Category

2000 (%)

2012 (%)

2000–2012 (% Change)

Management, Business, Science and Arts Occupations

31.5

34.6

+3.1

Sales and Office Occupations

25.9

24.5

-1.4

Natural Resources, Construction and Maintenance Occupations

12.0

11.1

-0.9

Production, Transportation and Material Moving Occupations

15.3

11.7

-3.6

Source: American Community Survey, U.S. Census Bureau (https://www.census.gov/acs/)

The Case of Manufacturing The loss of jobs in manufacturing and supporting sectors has had devastating consequences for thousands of Maine workers and has redefined the fate on entire regions of the state. According to a report by the Maince Center for Workforce Research and Information, “employment in manufacturing accounted for 43 percent of nonfarm jobs 60 years ago; in 2011, it accounted for just 8.5 percent of jobs. During the same period, jobs in service-providing industries nearly quadrupled” (Maine CWRI 2012: 1) Technology innovation and globalization especially have altered Maine’s manufacturing landscape. For Maine workers, moves from employment in manufacturing to jobs in the emerging service economy have been extraordinarily challenging. To maintain high wage levels, these workers are often required to obtain more education and acquire new skills. Along with skills mismatch, affected workers have been forced to relocate to find new employment, often accompanied by the loss of real and social assets. The story about Maine’s manufacturing sector however is not simply one of decline as one might conclude from news reports. Maine manufacturing output per worker rose 56 percent between 2000 and 2011 (Maine CWRI 2012). Technology application has unquestionably played a critical role in driving productivity increases. In turn, the application of new technologies has demanded new and higher-level skills from the manufacturing workforce. Between 2000 and 2012, Maine lost 32,000 manufacturing jobs. At the same time, educational preparation of the manufacturing workforce increased. In 2000, nearly 25 percent of workers reported some college or an associate’s degree. By 2010, more than 31 percent Maine’s manufacturing

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WORKFORCE SKILLS FOR INNOVATION ECONOMY TABLE 3: Job Postings in Maine by Major

Occupational Groups, 2013

Occupation Family

Job Postings

Sales and Related

15,315

Percentage of Postings 12.6

Healthcare Practitioners and Technical

15,193

11.7

Office and Administrative Support

14,209

12.5

Management

10,750

8.8

Transportation and Material Moving

7,370

6.0

Business and Financial Operations

6,812

5.6

Computer and Mathematical

6,711

5.5

Installation, Maintenance, and Repair

6,376

4.4

Food Preparation and Serving Related

5,389

5.2

Personal Care and Service

4,525

3.7

Arts, Design, Entertainment, Sports, and Media

4,192

2.8

Healthcare Support

4,117

2.6

Production

4,108

3.4

Education, Training, and Library

3,456

3.4

Community and Social Services

3,169

3.4

Architecture and Engineering

2,387

1.8

Legal

2,187

0.8

Construction and Extraction

1,802

1.2

Building and Grounds Cleaning and Maintenance

1,479

2.0

Protective Service

1,202

1.5

Life, Physical, and Social Science

960

1.0

Military Specific

109

0.1

122,550

100

Farming, Fishing, and Forestry Total Job Postings

Source: Burning Glass Technologies, Labor Insight

workforce had some college education or an associate’s degree. In 2000, 14.5 percent of workers held bachelors degrees or above and 16.3 percent of the workforce reported holding such degrees in 2012.2 These trends point to the changing nature of skills and knowledge required of workers in Maine’s evolving manufacturing sector. Current Labor Market Developments An examination of Maine’s current labor market using data from Internet job postings reveals more 70

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detailed information about types of jobs in demand and the skills sought by employers. There were 122,550 Internet job postings in Maine for 2013, a significant increase over the 59,941 jobs posted in 2012 (http:// burning-glass.com/) (Table 3). This is consistent with an improving economy and increased hiring by Maine employers over the past year. Sales and office/administrative support jobs dominate current demand with a 25 percent share of all job postings. But, when we combine major occupational groups where high-skill, professional, and technical jobs are concentrated, including health care practitioners and technical, management, computer and mathematical, business and financial operations, education, training and library, architecture and engineering, life, physical and social sciences, and legal occupations have a nearly 40 percent share of all postings (Table 3).3 Further dissection of these job postings provides more refined information about skill needs and job performance requirements (Table 4). Topping the list of skills stressed by Maine employers are communication and coordination skills (45 percent), business environment skills (34 percent), and problem solving (22 percent). These skills sets are fundamental to the modern workplace, where interactions with fellow employees and customers most often define the nature of work and drive performance. Employers require adherence to a set of behaviors and values from their employees that reflect the organization and define its culture. There is also significant emphasis on information technology skills including software and programming skills (22 percent), database and data warehousing (3.6 percent), business intelligence (3 percent), and programming, development and engineering (3 percent). Other significant skills clusters are identified for the business sector (project and process flow, finance and accounting, marketing, and human resource development) and health sector (advanced patient care, basic patient care, mental and behavioral health, therapeutic methods). As Maine employers search for the right candidates to fill jobs, technical and occupation-specific skills are an essential requirement that candidates must meet. These skills, however, are not enough, and employers place a high premium on communication, social, and organizational skills that are integral to most modern work environments and effective job performance. Increasingly, these high-performance skills are not only for the college-educated workforce. They are found across the spectrum of jobs in the

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WORKFORCE SKILLS FOR INNOVATION ECONOMY TABLE 4: Skills Maine Employers Want from

economy and are essential for those who seek upward mobility. OCCUPATIONAL PROJECTIONS 2010 TO 2020

rojecting occupational employment is an inexact science. Projections from the Maine Department of Labor call for the addition of 35,000 jobs between 2010 and 2020. Georgetown University’s Center on Education and the Workforce (CEW 2013) projects a gain of 65,000 over the same period. The combined forces of globalization, technology innovation, market developments, and new management regimens profoundly influence job types, job numbers, and skill requirements. For this reason, determining occupational growth and decline remains challenging. Of the jobs projected by 2020 by the Maine Department of Labor, 12,023 or 34.1 percent will require a degree (associate, bachelor, master, doctoral, professional) and another 3,053 or 8.7 percent will require non-degreed postsecondary education/training. (See Table 5.) And, while most jobs will not require postsecondary education, there is no doubt that these jobs will demand higher levels of literacy, technology skills, self motivation, and organization in more complex and competitive work environments. Georgetown University’s Center on Education and Workforce (CEW 2013) projects jobs by major occupational categories and offers a more optimistic outlook over those prepared by Maine Department of Labor analysts. (See Table 6.) Georgetown researchers call for the addition of 10,970 managerial and professional jobs, 2,260 jobs in science, technology, engineering, and math (STEM), 360 new jobs in social sciences, 4,390 new jobs in education, and 5,020 additional jobs for health care practitioners and technical workers. These job categories involve higher skill levels and typically require postsecondary credentials. They represent 35 percent of all new jobs projected between 2010 and 2020. On a percentage basis, these results are comparable to what Maine Department of Labor analysts project as the percentage of jobs requiring postsecondary education. Clearly, more than one-third of projected new jobs between 2010 and 2020 will require postsecondary credentials and advanced skills. In addition to filling demands generated from growth, Maine employers face the impending retirements over the same period of thousands of experienced, credentialed, and skilled workers.

Maine Job Postings, 2013

Percentage of Job Openings

Skill Cluster Common Skills: Communication and Coordination

45.2

Common Skills: Business Environment Skills

34.6

Common Skills: Problem Solving

22.9

Software and Programming Skills

22.7

Customer Service: Basic Assistance

13.8

Common Skills: Project and Process Flow Skills

12.2

Admin Support: General

9.7

Sales: General

9.2

Health: Advanced Patient Care

6.4

Health: Basic Patient Care

6.2

Finance: Accounting, Bookkeeping, and Tax Preparation

6.1

Repair: General

5.4

Health: Medical Specialties

5.2

Common Skills: Language

4.4

Customer Service: Sales

4.0

Business: Process and Planning

3.9

Health: Mental/Behavioral

3.8

IT: Databases and Data Warehousing

3.6

Marketing: General

3.5

IT: Business Intelligence

3.1

Health: Therapy

3.1

IT: Programming, Development, and Engineering

3.1

Legal: General

2.8

Finance: Basic Financial Transactions

2.7

Source: Burning Glass Technologies, Labor Insight

Maine will need thousands of scientists, engineers, computer specialists, management specialists, and marketing experts to move its economy forward. Ensuring that Maine is able to meet these demands requires long-range planning and preparation. The skills and credentials needed for this work are built on a foundation gained from a superior K–12 education. Reforms to elevate standards in Maine K–12 education must continue to ensure that the achievements of the state’s graduates are rising. Skill enhancement and professional

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WORKFORCE SKILLS FOR INNOVATION ECONOMY Table 5: Maine Occupational Projections, 2010–2020, by Educational Requirements

Educational Requirements Total

Average Employment

Percent of Total Employment

Change in Employment

2010

2020

2010

2020

Net

641,551

676,770

100

35,228

5.5

Doctoral or Professional Degree

16,577

18,742

2.6

2.8

2,165

13.1

Master’s Degree

11,712

12,846

1.8

1.9

1,134

9.7

Bachelor’s Degree

81,771

86, 570

12.7

12.8

4,799

5.7

Associate’s Degree

43,583

47,498

6.8

7.0

3,925

9.0

Postsecondary Non-degree

35,724

38,777

5.6

5.7

3,053

8.5

Some College, No Degree

2,607

2,785

0.4

178

6.8

High School Diploma or Equivalent

282,635

291,936

44.1

43.1

9,301

3.3

Less Than High School

166,942

177,625

26.0

26.2

10,683

6.4

Source: Maine Department of Labor, Center for Workforce Research and Information, 2010-2020 Occupational Projections. (Available from: http://www.maine.gov/labor/cwri/jobseekers2.html)

preparation must be offered through rigorous postsecondary programs where curriculum content is updated regularly to reflect contemporary work environments and employer standards. To maintain effective alignment between the demands of employers and postsecondary education systems, Maine will need steady investments in the quality of our postsecondary institutions. Such investments however must be accompanied by constant interaction between employers and educa-

tors including a rigorous evaluation focused on the adequacy of skills and preparation that graduates bring to the workplace. SUMMARY AND RECOMMENDATIONS

anagement, business, science, and arts occupations, typically where jobs require high skill levels and postsecondary credentials, have shown significant growth since 2000 according to U.S. Census survey data. TABLE 6: Occupational Projections by Job Types, Maine 2010 to 2020 Occupational projections from multiple sources suggest that one-third of new jobs generated Growth 2010 2020 Job between 2010 and 2020 will Occupation Rate Jobs Jobs Gains (%) require postsecondary degrees and advanced skills. The chalManagerial and Professional Office 82,920 93,890 10,970 13 lenges are not merely to have Science, Technology, Engineering and Math (STEM) 21,370 23,630 2,260 11 enough well-trained engineers Social Sciences 2,940 3,300 360 12 and scientists to support an Community Services and Arts 31,050 34,970 3,920 13 expanding innovation economy that values technical skill sets. Education 39,730 44,120 4,390 11 And, while there will be large Healthcare Professional and Technical 33,080 38,100 5,020 15 numbers of jobs in Maine open Healthcare Support 20,940 24,340 3,400 16 to those with a high school Food and Personal Services 105,260 117,110 11,850 11 education, many of these jobs will also require higher literacy, Sales and Office Support 165,260 178,860 13,600 8 numeracy, communication, Blue Collar 146,680 155,350 8,670 6 and technology skills from Total 649,240 713,670 64,430 10 those seeking to advance careers Source: Center on Education and the Workforce, Georgetown University (CEW 2013) and earnings. We must ensure a 72

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solid foundation of academic, social, and technical skills for all who are expected to contribute to advancing our society and economy. More complex social, market, and political environments require higher levels of knowledge, skills and competencies from all of us who must navigate and make choices within them. Escalating standards for effective job performance and career advancement are being advanced from a more demanding social and technology-intensive workplace. Employer surveys and a myriad of labor market studies all point to inadequacies with the current state of the workforce and call for strengthening workforce skill sets in critical thinking, problem-solving and communication. The signals and feedback from many different directions are quite clear. Since, 1984, with the release of A Nation At Risk, the United States has struggled to recalibrate education and training system to achieve higher standards for performance in an increasingly competitive world. Employers continue to provide consistent feedback about the inadequacies of our graduates entering the workforce. There are insufficient numbers of college graduates in STEM disciplines to fill available jobs. At the same time, employers, both nationally and here in Maine, call for higher levels of communication, critical thinking, and problem-solving skills from those they are seeking to hire. Ensuring that Maine’s innovation economy will flourish in the years ahead means that the K–12 education system must produce more graduates with higher levels of academic qualification pegged to international standards such as those being promoted by the Common Core. We can no longer push those with inadequate preparation on to the next level without compromising quality. Postsecondary institutions must also be clear about entry requirements and more effectively communicate academic standards to be met by those seeking to enroll in various disciplines. Employers must provide regular feedback about how well prepared graduates are to perform in rapidly evolving work environments. There should not be a false choice between promoting STEM education over the liberal arts. Instead, we need instructional rigor from both to ensure a workforce that is educated and trained for the diverse demands of society and work. It is the job of education and training systems to prepare workers and citizens for a more complex and competitive world, but it is not their job alone. Students, parents, and workers, too, must assume more responsibility in understanding the changing nature of work,

pathways to qualification, and requirements for advancement. Too often, these fundamental processes remain hidden and unexamined by those whose futures will be shaped by them. ENDNOTES 1. Cookson, Peter. 2012. “Education and Jobs: The Great Mismatch.” http://www.quickanded.com/2012/12 /education-and-jobs-the-great-mismatch.html 2. These figures were calculated using data from the following website: http://lehd.ces.census.gov /applications/qwi_online/ 3. Data in Tables 3 and 4 were obtained from Burning Glass Technologies, Boston, MA, using proprietary software, Labor Insight.

REFERENCES Atkinson, Robert D., and Stephen J. Ezell. 2012. Innovation Economics: The Race for Global Advantage. Yale University Press, New Haven, CT. Bridgeland, John, Jessica Milano, and Elyse Rosenblum. 2011. Across the Great Divide: Perspectives of CEOs and College Presidents on America’s Higher Education and Skills Gap. Civic Enterprises, Corporate Voices for Working Families, Washington, DC. http://www .civicenterprises.net/MediaLibrary/Docs/across_the _great_divide.pdf Carnevale, Anthony P. 2013. Hearing on the Impact of Federal Investment on People, Communities, and Economic Growth. U.S. Senate Committee on the Budget, February 26, 2013. Washington, DC. http:// www.budget.senate.gov/democratic/public/_cache /files/1258374a-6445-40e0-ad29-4f794ed2b21c/carnevale -budgetcommitteetestimony-02252013.pdf Casner-Lotto, Jill, Elyse Rosenblum, and Mary Wright. 2008. The Ill-Prepared U.S. Workforce: Exploring the Challenges of Employer-Provided Workforce Readiness Training. The Conference Board, New York. http://www .shrm.org/Research/SurveyFindings/Articles/Documents /BED-09Workforce_RR.pdf Center on Education and the Workforce, Georgetown University (CEW). 2013. Recovery: Job Growth and Education Requirements through 2020: State Report: Maine. http://www9.georgetown.edu/grad/gppi/hpi/cew /pdfs/Maine2020.pdf Chronicle of Higher Education and American Public Media. 2012. The Role of Higher Education in Career Development: Employer Perceptions. Chronicle of Higher Education, http://chronicle.com/items/biz/pdf /Employers%20Survey.pdf.

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WORKFORCE SKILLS FOR INNOVATION ECONOMY

Dobbs, Richard, Anu Madgavican, Dominic Barton, Eric Labaye, James Manyika, Charles Roxburgh, Susan Lund, and Siddarth Madhav. 2012. The World at Work: Jobs, Pay, and Skills for 3.5 Billion People. McKinsey Global Institute, Boston. http://www.mckinsey.com/insights /employment_and_growth/the_world_at_work Hart Research Associates. 2010. Raising the Bar: Employersâ&#x20AC;&#x2122; Views on College Learning in the Wake of the Economic Downturn. Hart Research Associates, Washington, DC. https://www.aacu.org/leap/documents/2009 _EmployerSurvey.pdf. Maine Center for Workforce Research and Information and Maine Department of Labor (CWRI). 2012. Maine Manufacturing Jobs: Trends, Issues,and Outlook, 2012. Center for Workforce Research and Information Documents.Paper 20. http://statedocs.maine.gov/cwri _docs/20/

John Dorrer is an economist and research administrator who focuses on workforce development, human capital and labor market policies. He has held senior leadership and teaching positions in government, the nonprofit sector, and at educational institutions in Maine and Massachusetts. He currently serves on several boards including the Federal Reserve Bank of Boston, New England Public Policy Institute, Maine Center for Economic Policy, and Women Unlimited, Inc.

Manpower Group. 2013. 2013 Talent Shortage Survey: Research Results. Manpower Group, Milwaukee, WI. http://www.manpowergroup.com/wps/wcm/ connect/587d2b45-c47a-4647-a7c1-e7a74f68fb85/2013 _Talent_Shortage_Survey_Results_US_high+res .pdf?MOD=AJPERES Manyika, James, Susan Lund, Byron Auguste, Lenny Mendonca, Tim Welsh, Sreenivas Ramaswamy. 2011. An Economy That Works: Job Creation and Americaâ&#x20AC;&#x2122;s Future. McKinsey & Company, Boston. http://www .mckinsey.com/insights/employment_and_growth /an_economy_that_works_for_us_job_creation Manyika, James, Susan Lund, Byron Auguste, and Sreenivas Ramaswamy. 2012. Help Wanted: The Future of Work in Advanced Economies. McKinsey & Company, Boston. http://www.mckinsey.com/insights/employment _and_growth/future_of_work_in_advanced_economies Organization for Economic Cooperation and Development (OECD). 2013a. OECD Skills Outlook 2013: First Results from the Survey of Adult Skills. OECD Publishing. http:// dx.doi.org/10.1787/9789264204256-en Organization for Economic Cooperation and Development (OECD). 2013b. Education at a Glance: United States country Note. OECD Publishing http://www.oecd.org /edu/United%20States%20_EAG2013%20Country %20Note.pdf

MAINE POLICY REVIEW

Winter/Spring 2014

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INTERVIEW WITH DOUG HALL

Interview with Doug Hall on the Role of Training in Innovation by Margo Lukens In this interview with Margo Lukens, Doug Hall gives his current thinking on the teaching of innovation and the urgency for doing so. Hall has been working in the field of innovation for most of his career. He has served as partner and mentor in the University of Maine’s program, which offers an Innovation Engineering minor open to undergraduate students in any major and a certificate for graduate students. Hall says that “the world of the guru is done” and that “companies, colleges, and countries need to empower their people to lead the transformation from the inside out.”

PREFACE

y involvement with innovation, as well as the genesis of Innovation Engineering at the University of Maine, has stemmed from my work as an English professor—teaching, advising students, and chairing the department. In the liberal arts, we often confront questions about the utility and relevance of our subject matter to students’ lives and future work in the world. When I met Doug Hall in spring 2005 and got introduced to the innovation tools and methods he was using, I felt inspired and confident that we could build curriculum to offer these tools and methods to students in any major field of study at the University of Maine. Teaching students to address problems and opportunities by diversifying their thinking, to use writing as a thinking and prototyping tool, as well as to articulate and persuade, and to use Fermi estimation and simple mathematical formulas to evaluate and refine ideas, gives them the skills and confidence to create their own future in the field about which they care the most. It also supplies them with a common language (and, again, the confidence) to engage in collaborative, interdisciplinary projects—terms that describe most inventive processes and even most businesses nowadays. In my role as director of the Innovation Engineering academic programs, I have worked to convey the message that training in innovation skills is important for everyone. The name Innovation Engineering has made it easy to attract faculty and students from engineering programs, as well as those interested in entrepreneurship

and business innovation. However, it is really our purpose to bring these methods for creating a sustainable future to faculty and students in every field and specialization. In the interview that follows, Doug Hall gives his current thinking on the teaching of innovation, and the urgency for doing so.

ML: A lot of people think that innovation and creativity are innate talents. Why do you think people have this idea? And why do you think it is possible to teach people to be innovative? DH: The belief that innovation is magic comes from a lack of education in how ideas are created. Research finds that there are some simple principles that explain how ideas are created. A study we did [at Eureka International] of 6,000 teams testing more than 30 variables, with independent evaluation of the quantity and quality of ideas, found that the creation of valuable ideas or as we brand them, meaningfully unique ideas, involves three variables. First, stimulus to spark ideas and connections; second, diversity of thought creates an exponential impact on the processing of the stimulus; and third, fear, as the greater the fear, the fewer ideas that are created. The cultural mindset that creativity is an innate talent is no different from when we believed that manufacturing quality was a result of personal craftsmanship. This mindset held that when there were quality problems, they were the result of bad workers.

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INTERVIEW WITH DOUG HALL

This mindset that workers were the problem nearly destroyed U.S. industry in the 1970s. Salvation came in 1980 when statistician W. Edwards Deming of Powell, Wyoming, returned to the United States from Japan where he had taught the Japanese a systems approach to quality. Deming taught that 94 percent of manufacturing quality problems are due to the system and only 6 percent due to the worker. Systems thinking as taught by Deming transformed manufacturing, product supply, and even our sales and finance systems. However, so far, the marketing, innovation, and leadership functions have resisted systems thinking. Much of this is self-serving, as it helps them justify being paid more than others for the benefit of their magical wisdom. When people ask whether it is possible to teach people to be innovative, I say no. I don’t think that it’s possible to teach people to be creative. The very statement implies that there is something wrong within the person. Rather, I know that it’s possible to teach people who are willing to learn a reliable and reproducible system for creating meaningfully unique ideas. I know it’s reliable, as it is multiplying across the world at an exponential pace. In the three years since we went public with the systems approach, it has been adopted by thousands of companies, from small startups all the way to Fortune 100 companies. The value of innovations created, documented, and quantified is nearing $200 billion.

meaningfully unique take the lion’s share of the profits as a reward for their proactive leadership of innovation. Conversely, those who offer products, services, or nonprofit causes that can be easily be replaced with other options, realize endless downward pressure on their price and profitability. Historians note that this is not the first time that a shift closer to a true free market caused price decreases. At the turn of the century before last, a similar shift to free market occurred. From 1870 to 1910, customers were suddenly given greater access to information on alternatives. During that time period, customers became more aware of alternatives to those in their local area. This occurred when 5.1 million telephones were installed, railroads became a national network, the number of registered brands grew by a factor of ten, and national advertising was born. The net impact of this was a 30 percent decrease in the Consumer Price Index. The result of the Internet free market shift is summed up in the words of Charles Dickens — “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness,… it was the season of Light, it was the Season of Darkness, we had everything before us, we had nothing before us.…” This was how I opened a lecture to the UK Marketing Society Annual Meeting at the Royal London Opera House in December, 2013. This shift in companies, colleges, universities, countries, governments, and nonprofits is not going to stop. Some will adapt and some will not.

ML: What is the value of teaching people to innovate in the United States? In the world at large? And why is innovation of so much interest at the turn of the twenty-first century?

ML: What are the most important innovation skills to develop? What kinds of things will people do with these skills?

DH: In economics we teach about the impact of a true free market where buyers and sellers have complete and open information about price and value. Historically, few markets have actually been true free markets. Because customers don’t have full information, companies are able to find customers who are willing to pay more than they should or would if they had full information about alternatives. This lack of information allows those who are not world class to survive, when they wouldn’t in a true free market. The reason it’s important to teach people to innovate today, and to think without borders, is that the Internet has moved the market closer to a true free market. In a true free market, those whose ideas are 76

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DH: Deming taught that the two things you needed to know to build quality offerings were the Theory of Variance, and the Plan-Do-Study-Act learning cycle (also known as the Deming Cycle—it’s a modified version of the Shewhart Cycle). Continuous quantitative research on hundreds of thousands of individuals, teams, innovations and projects finds that there are three fundamental principles to innovation: leverage stimulus, diversify thinking, and drive out fear. In the context of teaching Innovation Engineering (as you do at UMaine and we do worldwide), we package these principles into four classes: Create, Communicate, Commercialize, and Systems. The Create class addresses stimulus and diversity. The Communicate

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class helps drive out fear by articulating the idea in a customer-focused manner (in the case of a product or service sold external to the organization) or a stakeholder-focused manner (in the case of an internal system improvement). These classes excite undergraduate, graduate and executive education students with important learning at each level. In Create, students learn a systematic way to create ideas, the incredible power of the Internet as a stimulus tool, and the fact that innovation is not random. The Communicate course gives students the ability to use writing as a tool for thinking more deeply; they learn to motivate others through organization of their thoughts. When they get to Commercialize, they learn the power of math used as a tool for thinking about their ideas, and that it doesn’t have to be scary. Best of all is the sheer joy they experience when they embrace the “fail fast, fail cheap” method of testing ideas. After the first three courses, the Systems course teaches students how to lead a major innovation project. This might be in the context of a small team or within a large organization. Because many people find themselves working in organizational contexts, it is really important that they develop the ability to map, model, invent and reinvent systems. Upon completing the sequence, many people remark on the confidence they feel when they understand the power of the whole package Innovation Engineering delivers.

ML: What is the best way to acquire these skills? Is it different from the way one might learn another skill, such as playing the guitar or baking a soufflé? DH: The best way that I know is a new form of teaching called “Cycles to Mastery.” It’s a new teaching technology that blends competency-based learning, the Deming Cycle and control charts, Benjamin Bloom’s “mastery learning” system, formative assessment, and in its best embodiment, supplemental instruction. In brief, the system includes sequences of instructional videos, exercises to apply skills, extended exercises, case studies, and reflective writing that create neverending spirals of increased mastery, as well as increases in the mastery standard itself. In effect, instead of grade inflation, the system drives learning inflation. Innovation Engineering is, as the name says, a new field of study that embraces the spirit of engineering education. It’s about applied innovation, not theory, it includes real world applications, and it has clear grading

standards for all assignments. Maybe most importantly, Innovation Engineering brings a disciplined, systematic mindset to innovation efforts.

ML: So, in fact, the idea of practicing innovation skills to achieve mastery is similar to the discipline required in learning to play a musical instrument. Is there a particular age demographic on which we should focus training efforts? How might we make the case for policies supporting this education? DH: In my opinion we should focus our education efforts on the willing. And the willing are of all ages. I have met an 85-year-old CEO in Wyoming who embraced and applied the learning in record time. I’ve also met 22-year-old students who tried to game the classes. The entire population is not ready to make the transformation to an innovation mindset. Multiple studies indicate that about 15 percent are ready to make the shift. For example, research among company managers finds that 15 percent primarily spend their time being proactive, and 85 percent primarily spend their time being reactive. These results are in line with Bass’s diffusion measurements, which found that innovators were 2.5 percent of the population and early adopters (those who seek out new offerings) made up 12.5 percent.

[Innovation Engineering is] about applied innovation, not theory, it includes real world applications…. I believe that the role of government is to support education and infrastructure. Public education makes it financially feasible for everyone who is willing to be able to increase their impact on the world. With today’s rising education costs, this feasibility is threatened. However, the drive for education will not decline. This is why I support the introduction of Innovation Engineering minors and graduate certificates at leading universities, as well as in community colleges and through employee education programs inside companies.

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INTERVIEW WITH DOUG HALL

ML: Should training for different age groups or industries use different approaches? What schools, organizations, or institutions should be involved? Who should be teaching, and how should the teachers be trained? DH: Other than the obvious difference of learning maturity—12-year-olds vs 20- and 50-year-olds—I have seen no evidence that the training content should be different for different age groups or industries. The principles being taught are fundamentals. This is not to say that there are not unique elements in different industries. The model we are pursuing with schools is that Innovation Engineering is embedded within a broader major degree or graduate program. Innovation Engineering teaches the fundamentals. It is only, and in my mind will only ever be, a minor or graduate certificate. It is a tool for empowering someone’s personal passion. For example, you can get a degree in English with a minor in Innovation Engineering. This means you know how to create, communicate, and commercialize meaningfully unique ideas in the field of English.

…the world of the guru is done. Companies, colleges, and countries need to empower their people to lead the transformation from the inside out. There are schools that wish to go further, and there are many related fields. One university I am working with is creating new innovation bachelor’s and master’s degrees. In a case like this, Innovation Engineering will be embedded within the degree. The degree will then have a concentration in a related field of innovation. Examples of the concentration options include design, R&D, management, and entrepreneurship. We are also having conversations about embedding Innovation Engineering within health care administration masters programs. When it comes to who should be teaching, my bias is towards those who are willing to embrace the 78

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entire mindset. This can be found on campus and off. Adjunct instructors from industry who are practicing “Innovation Engineering Black Belts” bring a reality base that is invaluable. Note that adjuncts can be particularly effective teachers using the Cycles to Mastery technology, as the content is delivered via continuously refined digital videos; the teacher’s role in the classroom is to be a coach to the students, which is what they do when they work as an Innovation Engineering Black Belt. When it comes to on-campus faculty, it’s very important that they do as much as they teach. This can be through doing pro bono work for nonprofits or by leading or coaching innovation projects for their university or home department. In addition, as of January 1 of this year, a path has been developed for professors to do commercial consulting work as licensed members of the Innovation Engineering Network. In summary, to be respected by students and true to the soul of the Innovation Engineering movement, those who are teaching must also be doing. You can’t teach what you are not living. One of the smartest things the UMaine team of teaching pioneers did was to bring together cross-disciplinary teams to do the teaching. An engineer, a musician, and a writer taught the first courses. This is being true to the true power of diversity.

ML: What is your vision for the future of innovation education? DH: A renaissance of professionalism is coming to innovation. Overall, Innovation Engineering is experiencing exponential growth. However, around the world it’s uneven. There are places where the mindset shift has occurred and there is rapid growth. One university is training 40 of their top leaders and academics as Innovation Engineering Black Belts. They are already using the system to address their most challenging campus problems. There are other places where it’s seen only as a class, a department, or a project. Let me tell you about a phone call I had with the CEO of a Fortune 500 company. After I explained the purpose of Innovation Engineering he said, “After the last recession in 2008–2009, we came to realize that the world had changed forever. We have no choice: we have to change our culture. We don’t need a few experts, we need everyone in the company engaged in this new innovation mindset.”

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Quite simply, the world of the guru is done. Companies, colleges, and countries need to empower their people to lead the transformation from the inside out. When Deming was asked whether leaders were changing fast enough he would famously answer, “They don’t know about it. How could they know? How could they know? How could they know there was another way of thinking?” The education community is under attack on its impacts and budgets. The solution is not protection of the existing way of education, but rather to be proactive leaders into the future. Consider this a personal invitation for those who want to lead the transformation to an innovation mindset. Readers can contact me directly at doug@InnovationEngineering.org. -

Margo Lukens is professor of English at the University of Maine, where she has been on the faculty since 1992. Since 2007, she has been director of academic programs in Innovation Engineering at the University’s Foster Center for Student Innovation. She has served as chair and coordinator of undergraduate programs in the English department and has been a faculty associate of the Franco-American Center since 2007.

Doug Hall’s purpose is to transform innovation from a random gamble to a reliable system. After working for Procter & Gamble for 10 years, he left the company to start the Eureka! Ranch, an organization that helps multinational corporations to invent ideas for profitable growth. In 1999, he began teaching others how to invent, which led to the creation of the Innovation Engineering movement. He is the author of four books and has starred in three network television/radio programs.

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STUDENT PERSPECTIVE

Innovation Engineering BRIANNA HUGHES

he three Innovation Engineering (IE) courses I took for my graduate certificate in Innovation Engineering were without doubt the most valuable courses I have taken at the University of Maine. Knowing how difficult and variable the job market is, I wanted to diversify my skill set as much as possible before I graduated with my Ph.D. in food science (expected in May 2014). Adaptability and versatility are crucial to success in any field, and everything I had heard about IE suggested it would be tremendously beneficial to me. My classmates were from a variety of other disciplines, but we worked together as colleagues. Instead of typical classes where people tend to group with like-minded people, IE challenged us to see different ways of thinking as an advantage. Over the first couple of weeks, there was a change from initial resistance to group work to excitement, and we were encouraged to form a new group each week. While the tools and techniques seemed silly at first, they were effective at forcing us out of our comfort zones and into an out-of-the-box, nothing-is-off-the-table mindset. It is amazing what a group is capable of when everyone is uninhibited and barriers to communication have been lifted.

Innovation is a term used almost ubiquitously now, but having a systematic method to train people to innovate in a way that increases speed and decreases risk could not be more relevant today. I find that I am applying IE principles not only to my field, but also to my daily life. I think differently now. IE is not taught like other classes; it is a method that is learned and practiced over and over again. The exhilaration of discovery carries forward long after the lesson and helps students to realize that they are capable of making opportunities for themselves. Finishing the IE graduate certificate was a transformative experience for me, and I feel better prepared for the future because of it. -

Brianna Hughes, of New Gloucester, Maine, is a Ph.D. Candidate in Food and Nutrition Sciences and a Blue Sky Graduate Fellow. Her Innovation Engineering project, â&#x20AC;&#x153;Maine: Hungry for Innovation,â&#x20AC;? focused on strengthening the connection between the School of Food and Agriculture and the Maine food industry. She plans to pursue a career in research and development in the food industry.

Kate Crabtree Photography

KATHRYN SMITH

recently graduated from the University of Maine with a major in business management and a minor in Innovation Engineering and am currently finishing up work to get my IE Black Belt. The courses and internships I have had throughout the program have been some of the most valuable learning experiences of my entire undergraduate career at UMaine. Innovation Engineering courses focused on helping me to develop a toolbox of work- related skills that I will be able to use after graduation. I was able to test these skills with the internships that I had. The first internship was awarded through the Innovate for Maine program where I was paired with Bourgeois Guitars in Lewiston.

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While there, I used my IE skills to help solve real problems within the business. I got to design and build a UV curing booth, which cut the month-long cure time in half, an amazing learning experience that gave me realworld hands-on experience outside the classroom. I am more prepared for what lies ahead in my professional life because of this experience. My second IE internship is with the 610 Project through the Sustainable Solutions Initiative. I am finishing up work with a Ph.D. student who has been working with a shellfish committee and clammers on the coast of Maine. We have been trying to build capacity within the community to clean up and reopen

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STUDENT PERSPECTIVE

clam flats that are currently closed due to contamination. We are also looking at ways to educate tourists who come in the summer and unknowingly dig clams without peck licenses or in restricted flats. This has been an awesome experience because I have been able to further develop my IE skills while working toward more positive economic and ecological conditions within communities in Maine. After all of the experiences I have had, I feel so much more prepared to go out into the working world. Especially because of my internships, I feel much more confident of my abilities to be a successful and contributing member of any organization I work for. I think what IE has done for me is that it changed my mindset; I know now that I can do anything I put my mind to, and I have developed a variety of skills through my IE experiences to do so. -

Kathryn Smith, a Gorham, Maine, native, graduated in December 2013 from the University of Maine with a degree in business management with a focus in entrepreneurship and a minor in Innovation Engineering.Â She is also involved with the Dream Factory Club, an organization that grants dreams to critically and chronically ill children.

Foster Center for Student Innovation, University of Maine, Orono

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Volume 23, Number 1

MAINE POLICY REVIEW

ENCOURAGING INNOVATION

Encouraging Innovation Thoughts from Ted Ames, Prize Winner by Linda Silka

Competitions and prizes are being increasingly turned to as tools for stimulating innovation. Maine is fortunate to be home to Ted Ames, winner of a MacArthur “genius grant.” Ames continues to be a major force for finding innovative solutions to problems in Maine’s marine fisheries. In this interview with Linda Silka, he shares his thoughts and reflections not only on the impacts on innovation and of receiving this recognition, but also his understanding of the kinds of opportunities Maine needs to create for future generations if innovation is going to flourish.

key question throughout this issue of Maine Policy Review is how to strengthen innovation. The search for ways to enhance innovation has taken on new urgency in the face of problems that seem intractable. Various strategies have been touted as ways to increase innovation: new forms of training, strengthened educational programs, improved mentoring, and the development of prize competitions aimed at increasing innovation. The Nobel Prize is perhaps the most familiar such international award, but it is by no means the only one that highlights and promotes innovation and creativity. The Institute of Physics Prize for Innovation is now awarded annually, and a new prize for mathematics innovation has just been announced with significant dollars awarded to winners. Among the range of innovation awards, the MacArthur Fellows Program, colloquially known as the MacArthur “genius grant,” typically generates the most buzz. Annual announcements of the awards are eagerly awaited and garner much press coverage for the recipients. Who better to give us insight into the impact of such prizes than someone who has won the genius grant and has had a few years to reflect on the impacts. We are fortunate in Maine to have our own MacArthur Fellow—Ted Ames—who won the award in 2005 for his innovative work on ocean fisheries. Ted has been a lifelong advocate for marine fisheries and has called for using our best problem solving to save these endangered resources before they are beyond hope. I had the opportunity to interview Ted in late 2013 about his thoughts on innovation in general and his views on

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whether prizes are an effective strategy. We covered many topics, including whether prizes are an effective way to make people more creative and whether they have positive effects in other ways. If so, how might we encourage and magnify these effects? More broadly, this interview explores Ted’s views on Maine’s historic fishing economy and strategies for tapping the innovative talents of the state’s citizens to halt the decline of the Gulf of Maine fisheries. Ted has had a lifetime of immersion in fishing issues. He has been a groundfisherman and a lobsterman. As a young person (at 21 and after three years in the Navy), he moved to Missouri and began studying electronics engineering. After moving back to Maine and starting to fish again, Ted attended the University of Maine to study biochemistry. He taught at the high school level for many years and continued to fish. This diversity of experiences has figured in Ted’s insights and recommendations for how we keep from undermining natural innovation skills. He suggests that we need to provide opportunities for young people to explore different realms at an early age so they avoid getting stuck in a single point of view. TED’S FOCAL ISSUES

ed has long been concerned with the depletion of the fisheries. His work has focused on questions such as, How can we better understand what devastated the Maine fisheries? How can we get different

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ENCOURAGING INNOVATION

parties with conflicting understandings of the situation involved in the requisite discussions? How can data contribute to the discussion and understanding? And how can we move beyond merely understanding the problem to arrive at solutions so that future generations will not face a world without this valuable resource? PERILS OF INNOVATION

ed comes from a fishing family and grew up on Vinalhaven, an island in Maine’s Penobscot Bay. His father’s fishing career included fishing off the coast of Newfoundland, where he began to see large trawlers from Europe trolling the rich cod fishery along Newfoundland’s coast. Ted remembers his dad’s reminiscing about earlier times when there were schools of fish in the Newfoundland waters that extended well beyond what the eye could see. The prolific schools of fish sometimes extended for 10 to 15 miles. The Newfoundland economy was built around this seemingly inexhaustible fishery. Yet, innovative new factory ships were so efficient they effectively wiped out large segments of Newfoundland’s fish populations. Innovations are not inevitably good. As Ted observes, the efficiency of new fishing technology—the so-called factory ship—has become so advanced that they can devastate fishing grounds. And what happened in Newfoundland has now happened throughout the Gulf of Maine. What was once one of the most productive fishing grounds in the world has become the site of dramatic declines in ground fish populations. But Ted notes it is not just the loss of fish stocks that should be of concern. Focusing on just the loss of fish misses crucial parts of the story for we have not begun to figure out all the unintended consequences beyond the impacts on the fishing stocks. Self-contained factory ships include processing innovations that allow for onboard cleaning, storing, and freezing of the fish. So as the factory ships decimated fishing grounds, they also disrupted the ecology of the local fishing communities. In the past, local fishing villages and the fishing fleets were deeply interconnected. The boats came ashore with fish that would be processed in the local communities. Eastport, Maine, for example, once housed nine sardine factories for processing the fish landed by local fishing fleets. Now there are no sardine processing plants left in the entire state. Past fishing practices produced what economists call multiplier effects. Jobs were generated that depended on a strong

local fishing economy when the boats came ashore— people purchased fishing equipment, sought repairs, restocked supplies, purchased housing, ate in restaurants, frequented local bars, and so on. Factory ships have little need to come to shore, which leads to diminished coastal communities. From Ted’s purview, innovation and advances are far from unalloyed goods. Any attempt to address such a complex situation needs to consider an array of impacts in holistic fashion. The capacity to focus attention on a more whole-ecosystem approach, according to Ted, is the sort of thing that innovation prizes can encourage, producing perspectives likely to be overlooked in the pursuit of short-term economic incentives.

From Ted’s purview, innovation and advances are far from unalloyed goods. INNOVATION IS NEEDED TO ENSURE KEY DIMENSIONS ARE NOT MISSED

n making this point, Ted notes that there are many ways that we miss dimensions that may be key to solving our problems. We need to pay attention to the ecosystem, carefully observing the interconnectedness of its elements, and we need to consider multiplier effects. In addition, Ted points to the great importance of attending to scale. This problem of scale is, according to him, at the heart of many mismatches of problems and proposed solutions. What does he mean? He points out that because management was evaluating fish only at very large scales and found a slight reduction in total numbers of fish, they were unable to detect the disappearance of small populations. Fishermen, operating at the same scale as the fish, could see that stocks in an area were becoming overfished and could respond rapidly. Had management been aware of declining population components, they could have responded appropriately. Through Ted’s years of fishing and discussing challenges with other fishermen he has seen the extent of scale mismatch. Everyone—fishermen, managers, policymakers, and coastal community leaders—has a vested

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interest in maintaining healthy fisheries. When fishermen go out to their familiar and habitual fishing grounds, they may discover that fish are disappearing, or alternatively, that the fishing remains productive. The policymakers, in their focus on maintaining fisheries, aim to develop policies that will further the goal of maintaining healthy fisheries, but they take as their purview large parts of the Gulf of Maine. The scale of the policymakers’ focus differs from the scale of the fishermen’s, but does the scale match the behavior of the fish? Does it match the behavior of the fishermen? As Ted notes, schools of fish are not like fields of wheat in Kansas: fish move around. The scale different people focus on as they try to understand the problem or develop a solution may or may not work. So how do we think about this? How do we pay attention to these scale questions and build appropriate management plans? Ted has been urging discussions of these points for years. So, what does this have to do with prizes? According to Ted, one of the things that happened upon his being name a MacArthur Fellow is that people began listening to what he had been saying about scale. The award gave him what he refers to as a bully pulpit, and people began to listen to his message about the complexities of scale in policy decisions. Much of Ted’s work implicitly involves issues of scale: How do we create policies that are appropriate to the scale of the relevant phenomena? What innovations in thinking will be helpful here? EDUCATION AND INNOVATION What Kind of Education Should We Offer to Encourage Innovation?

Ted has been using his prize to remind people that it is not just prizes that are important: Education is important. Ted acknowledges that science education is important. Young Mainers need to learn science, technology, engineering, and math in the classroom, but we fail if we think that subject matter alone is important. A part of education should be helping our youth to learn to take risks, as risk taking is part of what leads to innovation. For innovation to occur, it is important to look at current problems, analyze accepted solutions, and then think in alternative ways. Students need to have experiences that will help with this, in part by grappling with varied scenarios that demand reflective consideration. They need to train not for what exists now but for what might exist in the future, which as Ted points out is hard but important. We look around 84

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and see that many jobs have disappeared; it will take innovation to bring these jobs back or to create alternative jobs. We need to encourage innovators. What Kinds of Experiences Should People Have?

According to Ted, hands-on science experience is important. Even at an early age, he was an experimenter. As a child, he had a flock of pigeons, which he studied closely, keeping detailed records and making changes based on what the records helped him to see. This was just one of many experiences that taught him about the importance of science and systematic approaches to the study of the natural world that enable patterns to emerge and changes to be seen. His focus on record keeping showed him the great value of records for moving beyond the immediate. Ted posits that we not only need to keep our own records, but we need to look for past records and study and learn from them. As a consequence, Ted has gone back to look at the often neglected historical records on the fisheries that various people—fishermen, naturalists and the like—have kept over the years. He believes that it is important to ask what we can learn about the fisheries from past records kept by people in different roles, at different locations, and from different times. What can we learn about fluctuations of the fisheries over time and place? What will we miss if we fail to consider the historical records? Ultimately, we need to ensure that systematic habits of inquiry are encouraged. From his childhood, Ted’s habits of natural curiosity were rewarded. Children have such habits, and it is important to avoid suppressing them. Specifically, we need to encourage these habits so that they link science with innovation. Teachers Make a Difference Ted speaks of professors who made a difference when he was in college by encouraging him to think outside the box with regard to science. He notes that this did not happen only in the courses that one might expect. He was much affected by the creative approaches of his history and chemistry professors whose penetrating questions challenged and reshaped his understanding. Through their teaching strategies, they exposed him to the subtlety of ideas and to ways of approaching a problem without viewing current knowledge as static or final. The teachers presented enough information that students developed a depth of understanding of a problem, but the ideas were presented in such a way that students were encouraged to critique the accepted view

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ENCOURAGING INNOVATION

and bring multiple perspectives to bear on solving the problem. Ted came away from these experiences understanding that as teachers and as learners we need to become immersed in the current understanding yet not be closed to seeing beyond that understanding. Otherwise we miss opportunities for innovation, or we innovate in ways that don’t fit the context. If training is to lead to innovation, it has to expose people to unexpected ideas, analogies, and perspectives, and do so in ways that are both different and yet not too different. The big questions are, How do we achieve this balance between innovation and tradition? and How we can best nurture it throughout the educational process? ULTIMATELY WHAT DO PRIZES ACHIEVE?

ed argues that if the MacArthur award was intended to change his work, it did not have that effect. If he had been younger when he received the award, Ted says, it might have led to changes. But that does not mean the award was unimportant. Before the award he was not reaching a broad audience with his message about the dangers to the fisheries and the steps that need to be taken. His points were not having the intended impact. The MacArthur award enabled him to reach more people and have them treat his message with greater gravity. The interview with Ted Ames raises a final, overarching question about prizes: What, in effect, is the underlying “theory of action” for why we expected prizes to increase innovation? The assumption could be that the visibility of awards for innovation will bring more problem solvers into the fold and increase efforts aimed at innovation. Or perhaps, it is believed that the prizes help new people moving into a field to see what is valued and to seek new ways to approach problems. Or the assumption may be that the awards rapidly increase the dissemination and implementation of innovative ideas, or that awards, once given, will free winners to be more innovative. Perhaps prizes function in all of these ways; Ted would certainly agree with that statement. Careful reflection on these functions might help us to highlight the innovative practices of the awardees. It might also point to educational practices that are likely to have the biggest payoff in increasing innovation. Prizes are likely to remain an important tool in the innovation toolkit, but how they achieve their impact and should be used remain open questions. -

Ted Ames is a founding board member of Penobscot East Resource Center. He fished commercially for 28 years and was vice-chair of Maine Department of Marine Resources Hatchery Technology Committee, executive director of the Maine Gillnetters Association, and director of Alden-Ames Lab. He has authored several peer-reviewed articles on historical fisheries ecology, fishermen’s ecological knowledge, and related subjects. Ames was named as a MacArthur Fellow in 2005.

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Volume 23, Number 1

MAINE POLICY REVIEW

BUILDING PROSPERITY IN RURAL MAINE

Building Prosperity in Rural Maine by Sheila Jans

urelle Collin was a farmer who lived his whole life in the small community of Lille in the St. John Valley of northern Maine. His insightful words “On a tous les talents du monde dans chaque village” (every village has all the talents of the world), reminds us that we have essentially everything we need—that we can build wealth from within using the inherent assets of our communities. These important concepts form the foundation for cultural and creative economic development efforts taking place in the St. John Valley today. The St. John Valley is at the northernmost tip of Maine bordering the Canadian provinces of New Brunswick and Québec. Commonly called “the Valley,” the region is home to approximately 14,000 people, mostly of French heritage. The Valley is renowned for its distinct culture and beautiful landscape; however, like other rural areas in the United States, it faces serious challenges, such as a decline of traditional industries, outmigration, aging population, and lack of diverse entrepreneurialism. It also experiences restrictive commercial growth as a result of being situated on an international border. These are very real challenges that affect prosperity in the St. John Valley. The quest is to find and apply insightful and creative solutions to tackle them. Project Cultivate, a multiphase creative economic development initiative, tries to respond to this call to action. The project is about cultivating creative thinkers, supporting great ideas, and helping build a prosperous region, with a more diverse and sustainable economy, through culture and place.1 Emerging from over a decade of cultural development in the region, Project Cultivate was informed by efforts such as ethnographic studies by the National Park Service, an international assessment by the QuebecLabrador Foundation, and initiatives such as the Voici the Valley Cultureway. Specifically, it grew directly from the St. John Valley Creative Economy Project, a twoyear research initiative led by the Margaret Chase Smith Policy Center.2 Research revealed many useful things, such as the region’s tendancy for self-sabotage, territorialism, and a

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limiting view of its place in the world. It also revealed the Valley’s deeply rooted history in an entrepreneurial and creative spirit, innumerable possibilities for diverse products and services, and that a strong sense of identity and connection to family and community are powerful factors that contribute to better places to live. It is not an easy task to solve some of the region’s entrenched problems and to fully capitalize on its opportunities. Lack of leadership and infrastructure are age-old obstructions, along with a long list of other issues. Keeping this in mind, the goals of Project Cultivate are only a beginning that focus on four areas: (a) leadership and collaboration, (b) entrepreneurial support, (c) investment in creative assets, and (d) cultivating a creative mindset. The aim is to identify and support leadership; build entrepreneurial networks and ways to collaborate effectively; offer targeted training and incubation; and provide an educational series for youth that focuses on creativity, entrepreneurialism, quality, and design. Other components include a microloan and grant delivery system as a catalyst for innovative and creative products and services, as well as programs that tap into the wisdom of our communities through apprenticeships, internships, and mentorships. Creativity implies a vision for what is possible— something that we all possess. While there are many definitions of the term creative economy, Project Cultivate takes an inclusive approach, embracing the ingenuity of the people who live in the Valley and the variety of what the region offers. Specifically, however, the fundamental basis of its goals emanates from arts, cultural, and place-based assets and how these indigenous factors, which are routinely overlooked and marginalized, could be better leveraged as driving forces for more diverse and sustainable economic growth. As with many development projects, Project Cultivate has not escaped funding challenges. Advancing it has been intermittent, but fortunately, aspects of its components appear in other efforts, such as a Aroostook County’s tourism strategy, Maine’s first cultural byway in the St. John Valley, and initial phases

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BUILDING PROSPERITY IN RURAL MAINE

of an international economic development initiatve. It is hoped that components of Project Cultivate will also serve as a model for development for other rural areas. Rural communities throughout Maine deserve thoughtful investment and strategic development. It is worth the effort to seek alternative approaches, span boundaries, and build an environment that fosters creativity, innovation, and daring. ENDNOTES 1. Culture can be defined as who we are, shaping what we create and how we make our societies. Culture “may now be said to be the whole complex of distinctive spiritual, material, intellectual and emotional features that characterize a society or social group.” This quote is from page 1 of the following source: UNESCO. 1982. UNESCO Mexico City Declaration on Cultural Policies, World Conference on Cultural Policies, Mexico City, 26 July–6 August. http://portal.unesco.org/culture/en /files/12762/11295421661mexico_en.pdf/mexico_en.pdf

Sheila Jans is a cultural development consultant and founder of CultureWorth. Her work focuses on strengthening communities and the economy through culture and place. She works with and advises the public and private sector on cultural and economic development initiatives. She served on the New England Task Force for Culture and the Economy and the Governor’s Creative Economy Council.

Photo Credit: Daniel Picard.

2. The 2010 report The St. John Valley Creative Economy Project, Strengthening our Communities and Economy Through Culture and Place is available online at mcspolicycenter.umaine.edu.

View of the St. John River, the international border, taken from Edmundston, New Brunswick, toward Frenchville, Maine, illustrating the international setting of this region and the rural river valley landscape. View current & previous issues of MPR at: digitalcommons.library.umaine.edu/mpr/

Volume 23, Number 1

MAINE POLICY REVIEW

FINDING UNTAPPED OPPORTUNITIES IN FORESTS

Finding Untapped Opportunities in Forests by Linda Silka

ne of the themes recurring throughout this issue of Maine Policy Review is that Maine is a place of enormous natural assets. These assets, of course, include forests, with Maine being the most heavily forested state in the nation. The need for innovation around forestry and forest products is becoming ever greater. Maine’s past uses for wood, such as papermaking, which provided a seemingly endless stream of well-paying jobs, no longer hold. New uses need to be discovered. Ideally, these uses will be designed to solve multiple problems: they will create new jobs and industries; they will not destroy the environment; and they will move Maine away from its high dependence on fossil fuels. Research and development will be crucial to the success of these efforts. Consider the example of University of Maine’s Forest Bioproducts Research Institute (FBRI). FBRI emerged from a National Science Foundation–funded Experimental Program to Stimulate Competitive Research (EPSCoR) project to get more value from Maine’s forest resources. Early results included the partnership with Old Town Fuel and Fiber and the Department of Energy that resulted in the transformation of a closed paper mill to biofuels production, with the co-location of the FBRI’s Technology Research Center at the mill site in Old Town. FBRI is bringing together researchers and industry leaders to analyze the challenges of finding new uses for forest bioproducts. This problem solving is built on the recognition that too little is currently being used from the wood: much is left on the forest floor that could be put to societal use, for example, by using it to create biofuels for jets, cars, and other vehicles. But all of this requires innovations in science. As Dr. Hemant Pendse, FBRI’s founding director, notes, By working together with many partners…we are saving jobs, building new businesses, and training future scientists. We can make a major impact on the nation through our work on converting forest biomass into fuels, chemicals, and advanced materials in a sustainable manner.1

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Successful innovations in forest products depend on bringing together many kinds of expertise. Chemists are studying the chemistry of extracting biofuels. Forest scientists are looking at forest ecology. Economists are organizing life-cycle analyses that involve evaluating a product’s economic and environmental impacts. Social scientists are involved in looking at the how various constituencies view new uses of forest lands. And all of this involves working with partners who know the industry: “FBRI is working on the development of wood based biorefineries where many products (pulp, paper, fuels, nanocellulose, wood-plastics composites, and other industrial chemicals and products) are created at one location. Pulp and paper mills are ideal locations where energy sources, wood delivery systems, and industrial expertise are already available to support and grow a more diverse bio-economy.”2 In an interview on FBRI’s website, Dick Arnold, CEO of Old Town Fuel and Fiber, says, We initially started collaborating with the University of Maine based on its patented extraction process. This partnership allowed us to build upon the research and development done at UMaine and scale it up to a commercial level inside the mill. We continue to develop technology with UMaine. Because of this partnership, in addition to our development of the wood extraction technology, we are developing jobs. We grew our process development group by 15 people over the last five years; we’ve expanded our analytical capabilities, developed another technology on our own, and put in a fairly sophisticated pilot plan to extend our work on developing wood derived sugars that can be converted to everything from fuels to biochemicals—and even jet fuel.

Innovations are needed at every step in the creation of new products: in forestry practices, in extracting and refining bioproducts, in industry practices, and in market development. The effort is to do all of these together, not independently, so that the impact will be

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FINDING UNTAPPED OPPORTUNITIES IN FORESTS

significant and will serve as a model of integrated approaches to innovation. FBRI is by no means alone in leadership in Maine’s forestry and forest products arena. Scott Landis, a resident of South Berwick, Maine, with a woodworking background, created the nonprofits Greenwood and Madera Verde, which recently won Yale University School of Forestry’s first-ever Innovation Prize. These organizations provide woodworking training to Peruvians and Hondurans who live near rain forests that are in danger of being logged off and destroyed. The training enables craftspeople to create products that will bring income and sustain forests. It includes market development and linking the artisans with companies that will purchase their wood products. One example is tying the Honduran and Peruvian craftspeople to guitar manufacturers (for more information, see http:// www.greenwoodglobal.org). As Landis notes, this approach goes to the very heart of how to ensure that forests are sustained because it gives the people a financial incentive to do so. In an interview in the Portland Press Herald (March 27, 2014), Landis argues that “if the forest is managed wisely and carefully, and if that’s paired with quality production and innovative marketing and sales, it can be done sustainably.” Landis notes that his approach reflects the fact that those who live closest to the forests can be the strongest advocates for their sustainability if their advocacy doesn’t come at the cost of a livelihood. By thinking about the problem in innovative ways, it becomes possible to come up with a creative solution. Landis also highlights the need to continue the innovation and not to assume that the same strategy can be used everywhere: “Part of our basic message is there isn’t one formula, there’s no silver bullet. We’ve done it differently in Peru than in Honduras, and if we go into a new community we do it differently too.” And he ends the interview by noting the importance of relationships:

themselves, to help them use more of the tree that’s harvested, for instance. So we try to find different markets and products and also to expand to use a wider variety of tree species, including species that currently don’t have markets. -

ACKNOWLEDGMENTS Thanks to Hemant Pendse, director of the University of Maine Forest Bioproducts Research Institute, for his contribution to, and helpful feedback on, this article. ENDNOTES 1. Pendse, Hemant. 2014. “Message from the Director.” Forest Bioproducts Research Institute website. https:// forestbioproducts.umaine.edu/multimedia/message -from-the-director/ [Accessed April 10] 2. Forest Bioproducts Research Institute. 2014. “About FBRI: Frequently Asked Questions.” https:// forestbioproducts.umaine.edu/about-fbri/frequently -asked-questions-faq/ [Accessed April 10]

It’s really about relationships. When we won the Yale prize, we described what we do as a ‘green broker network’…. But we did want people to think about how that relationship could be different and positive. We act as a broker and trainer for our clients in the communities, as well as the companies on the other end that are buying the products. We plan to expand not just geographically but into the communities

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Volume 23, Number 1

MAINE POLICY REVIEW

FARMING AND INNOVATION

Farming’s Future Depends on Continued Innovation by John Piotti

fter decades of decline, farming in Maine is growing and poised to blossom. From 2002 to 2012, the number of farms in Maine grew by 13.5 percent; from just 2007 to 2012, the value of Maine’s agricultural production increased by 24 percent. Maine could become the food basket of New England, given its abundant land, plentiful water, handy access to good markets, and great farmers—including many beginning farmers who want to farm here. But those fundamentals alone are not enough for agriculture in Maine to thrive. It has been innovation that has enabled farming here to grow over the last decade, and it will be innovation that determines if farming in Maine will realize its full promise. Many people equate innovation with technology— and without a doubt, computers and other forms of high-tech have helped advance farming here. But much of what has positioned farming for the future is clearly low-tech (or even no-tech), though still highly creative. And some of what has worked in Maine has involved going back to old ways of growing and marketing food— albeit with a new twist that is also truly innovative. It’s hard to summarize what’s happened to farming in Maine in the past 15 years, because the full story is multifaceted and nuanced. But one part of that story is that Maine has seen rapid growth in smaller diversified farms that raise products for sale locally. Farmers have developed entirely new ways of selling, often operating outside established food-distribution channels. The new delivery systems include on-farm stores, direct sales to restaurants, and the CSA model (community-supported agriculture, where consumers pay preseason to receive a share of the farm’s bounty). Maine farmers have also developed many new products—both valued-added products made from farm inputs (such as jams, pies, breads, teas, cured meats, and wines) and a wide range of associated products that come from the farm (including compost, methanegenerated electricity, corn mazes, day camps, and farm vacations). Maine led the nation in marketing milk that

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is free of bovine growth hormones. And today, Maine is on the cutting edge of artisan cheese, with over 70 cheese-makers (second only to New York). Maine boasts Johnny’s Selected Seeds and Fedco Seeds, two companies known internationally for their research-driven product innovation. Another set of key innovations involves how farmers grow products. As a leader in the organic movement, Maine can claim credit for refining organic production techniques and training farmers. (MOFGA’s apprenticeship program has had an impact well beyond Maine.) Meanwhile, many Maine farmers have adopted the fourseason farming techniques pioneered by Maine’s own Eliot Coleman, which allow for 11-month vegetable production in unheated hoop houses. Innovation can even come in the form of public policy. In 2004, the legislature enacted a highly creative and complex policy initiative that bolstered Maine’s dairy farms during a period when dairies everywhere were struggling. As evidence of the policy’s success, Vermont from 2004 to 2011 lost more than half its dairy farms while Maine lost only 19 percent.1 Yes, Maine agriculture has seen a lot of innovation. But it’s nothing compared to the period of exploration and experimentation that we are now entering. Even though farming in Maine has been growing overall, the growth has not been uniform. Dairy farms have been in decline, and many other farms that sell their products as commodities to processors (such as potato farms) have been stagnant. Growth has been primarily among smaller farms selling direct. Yet the future does not lie with just these smaller farms. Commodity production remains the majority of Maine’s farm output and is essential to maintaining infrastructure on which smaller farms depend. The future of farming in Maine will likely involve a diverse array of farms operating at various scales. The only way Maine will be in a position to feed itself, let alone help feed New England, is if some smaller farms scale-up. To put it another way, CSAs have been a

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FARMING AND INNOVATION

wonderful innovation that has allowed farming to grow—and I have no doubt that CSAs (and other forms of direct marketing) will continue to grow in number and impact—but the majority of Maine consumers are never going to get their food from CSAs (or farmers markets or farm stands). Rather, they will get their food from supermarkets and institutions (schools, workplace cafeterias, nursing homes). The goal is to get more Maine food into these mainstream channels and to do so in ways that work for both farmers and consumers. To this end, many farmers who have been successful selling direct are now seeing the need to sell wholesale as well—a transition that will require a new set of innovations. Many intend to participate in new ventures that pool product from multiple farms. These so-called food hubs, some of which include processing, re-create some of the community-scale infrastructure that once existed throughout Maine, back when small canneries, creameries, and slaughter houses were common. In a sense, every distributor or processor operating within the global food system could be viewed as a food hub. But as the term is generally used, it refers to operations that are specifically designed in service to local farms and that create new options for consumers. A long-established example is Crown O’ Maine Organic Cooperative, which is the state’s primary organic distributor. An innovator on many levels, two years ago Crown O’ Maine launched a new venture, Northern Girl, which is now processing Maine vegetables for institutions and stores from a facility in Aroostook County. In Skowhegan, the Somerset Grist Mill provides infrastructure that farmers need if they are to grow more grain in Maine. In Unity, Maine Farmland Trust is partnering with two dozen small vegetable farms to create an aggregation and storage facility (to open in late 2014) that will enable these farms to reach markets together that they could never enter on their own. The examples go on and on—in Belfast, Topsham, Eastport, Wales, South Portland and elsewhere. A growing number of entrepreneurs and entrepreneurial organizations are creating new infrastructure to support a robust local food economy. But the current wave of innovation goes beyond infrastructure, to innovative forms of investment that also create new opportunities for farming. First, there are the investment funds for local food businesses available through Slow Money Maine. This enthusiastic network,

which meets every other month in Augusta, has infused over $8 million of patient capital into this sector. Second, there are the innovative ways that farmland is being made affordable for incoming farmers—which is critical, given that the ownership of one-third of Maine’s farmland will be in transition this decade. Maine Farmland Trust has pioneered multiple programs that both protect vulnerable farmland and get new farmers on the land. I’ll mention one we call “Buy/ Protect/Sell.” Through this initiative, which is supported by both foundations and private investors, the Trust has enabled 37 new farmers to buy farms at affordable prices. Each property will remain farmland forever—and when it sells again, it will pass hands at its farm value (as opposed to its development value). Maine farms could once again feed our state. But just because this could happen, doesn’t mean that it will happen. The future of farming in Maine hinges on what we do now. We are in a period of experimentation and innovation—which is exactly where we need to be. ENDNOTES 1. For further reading, see “Milk—Pure, but not so Simple” at http://www.mainefarmlandtrust.org/milk-pure-but-not -so-simple/

John Piotti is president and CEO of Maine Farmland Trust. He has been at the forefront of agricultural issues in Maine for 20 years, including service in the Maine Legislature, where he chaired the Agriculture Committee. Nationally, he has been chair of the Northeast Sustainable Agriculture Working Group and a director of the National Campaign for Sustainable Agriculture. In 2013, Maine Magazine named him one of the 50 people who have done the most for Maine.

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Volume 23, Number 1

MAINE POLICY REVIEW

IMPROVING MAINE’S CULTURE OF INNOVATION

Improving Maine’s Culture of Innovation by Jean Maginnis

he Maine Center for Creativity has long held the belief that a healthier, higher-performing economy will occur when imagination, creativity, and innovation are embraced by leaders and policymakers. This means that these three skills need nurturing if Maine is to move from the oldest and one of the poorer states in the country to a thriving, growing place. It also calls for an integrated, specific plan developed by key leaders from the fields of education, business, and government. Improved education in the arts and sciences along with investments in workforce training for adults would establish the importance of innovation in Maine’s economy. Not only do we need to invest in STEM (science, technology, engineering and math) training, but to include all of our talented citizens, we also need to include investment in the arts. This more integrated approach to education and training creates STEAM, an acronym that when read and understood clearly shows us a meaning that creates a more powerful movement. Maine’s past economy relied on natural resources, the present relies on services, but the future economy will depend on the ability to innovate in each of our chosen fields of expertise. In addition, present and future job creation relies on the intention to collaborate as well as compete for finite resources. Too often, novel ideas are met with skepticism and sometimes hostility, instead of enthusiasm and engagement. Yet, there is a growing population of leaders of for-profit, nonprofit, arts and business organizations who see the necessity of collaboration and connection. In a state of only 1.3 million people, where less than half the population is part of the workforce and pays income taxes, innovation is one of the few ways to add value to work. In the present, embracing innovation will provide a more solid foundation for Maine’s future economy. History and numerous research studies show that deeply connected organizations have more power to innovate and grow. If Maine were to be seen as a large organization, its leaders would follow the experts’ advice and work on health, connection, and performance to increase the state’s capacity for change.

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And since innovation and change are intimately related, the plan would have a better chance at succeeding. Currently, a group of 14 collaborators who represent a cross-section of people and organizations is working together to create the in-person and digital network called the Maine Network of Innovation and Creativity. Through regular meetings, specific goals and objectives, and a clear intention to collaborate, this unique group is working to increase the rate of innovation in the state of Maine. The role of innovation has been valued, and in fact, the phrase Yankee ingenuity often implies an inventive, hard-working trait. However, the rate of innovation must increase so that Maine is able to provide the kinds of jobs that younger and highly talented people want. The Maine Network of Innovation and Creativity (MaineNIAC) aims to gather and promote Maine stories of innovation and creativity. This capacity to honor stories of innovation and creativity, while also promoting them both locally and nationally, will encourage a culture of innovation—a culture where a new idea is honored instead of ridiculed, promoted instead of dismissed, and supported financially instead of ignored until others with more resources bring it to fruition. This database of stories, which includes both business and arts disciplines, will create an archive where people working on their next idea can learn about the people and companies who bring innovation to life. This will provide inspiration as well as practical skills to a broad base of our population. In time it will also attract talented people from across the country and around the world who value creativity and innovation. The second important function of MaineNIAC is collaboration. Therefore, the 14 collaborators have honed a method called “request for collaboration” or #RFC. The request for collaboration is a way to bring people and organizations together across the state to complete innovative work. It is a way to ask others for help and to identify the right set of skills and talent. The success of our work often lies in the talent of our skilled workers, and in Maine skilled workers often live in remote areas. The more ways we can find to bring the

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IMPROVING MAINE’S CULTURE OF INNOVATION

work and the skilled workers together, the more our state will see innovation take hold. While a digital platform is an important part of the Maine Network of Innovation and Creativity, the in-person component of this network is equally important. Relationships between people as well as a clear method for collaboration have proven to bring success to various projects. Therefore, the network’s attention to conducting well-designed meetings across the state along with bringing the people together to form additional relationships is the cornerstone of progress for the network. MaineNIAC will be built in an open-source platform so that it will iterate and remain fluid as the people and projects contribute to its functions. By placing an emphasis on ideas and projects in progress, Maine citizens will have a resource at their fingertips that expresses the creative process both literally and figuratively and confirms the cyclical and constant nature of innovation. If we were to map assets across the state, we would likely find not only find natural resources, but also key people and projects in both the creative fields and business who have innovated in their fields of interest. By making connections to a diverse group of stakeholders more dense, and collaborating with the talents and resources currently in place, Maine’s culture of innovation may just pick up STEAM. -

Jean Maginnis is founder and executive director of the Maine Center for Creativity. She has spent the past seven years advocating for the support and stimulation of Maine’s creative industries by working collaboratively with business leaders and the arts community. Her prior experience includes developing brand strategies for financial services; working for WGBH, Boston’s public television and radio stations, and development and membership work for the Portland Museum of Art and the Children’s Museum of Maine. She and her Board of Directors developed and launched the Creative-Place making project called Art All Around®.

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Volume 23, Number 1

MAINE POLICY REVIEW

COMMENTARY: WHAT INNOVATION MEANS TO ME

C O M M E N T A R Y

What Innovation Means to Me by Kerem Durdag

t is my humble belief that innovation, or rather the act of innovating, is the life-blood of the economic development ecosystem. It the life-blood of any economic development ecosystem, but perhaps much more urgently so in Maine, where the population is far more geographically dispersed and the cultural encumbrances to the past are far deeper, resulting in significant challenges adapting to a changed world. For Maine, with all due humility I submit, it is the only answer. What is the act of innovating? Put aside definitions, books, the media, and talking heads. I urge you to listen to your inner self. Is there a push from within for you to create, to express, to bring to the external world your internal stories? Is there a desire to tangibly work with your hands to give birth to a real and functional thing that satisfies a need? Is there a forward-leaningness to bring to bear what your mind says should exist, and does it have value that is accepted by the world at large? If so, then you are innovating. If you are doing it with a group of people who have not only agreed to join you on this arduous, Herculean, and absolutely emotionally and financially draining adventure, but who also believe in you, then you are part of the innovation economy. And in that doing, you are doing something very real to move the Maine economy into the twentyfirst century. What the twenty-first century demands of us is our collective ability to not be chained to incrementalism, but to vault ourselves to solving important and far-reaching challenges. There is a dynamic

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reason for this: the concurrent pace of human and economic development together with the increase of global socioeconomic differentiation is creating scalable opportunities. And therein lies the leverage for us in Maine. Whether it is exporting dairy cows to Turkey, enabling a more efficient delivery of medicine to the entire pet veterinary market, or manufacturing antibodies for the national R&D infrastructure, these activities that are being engaged in Maine propel us from what was to what is being. And at the end of the day, the act of innovating is an extension of your being, your soul. For me, to innovate is to breathe. There is a certain elemental rhythm to it, a connectivity to what makes us human, a certain velocity of intent, and a manifest purity of the goodness in all of us. There is egalitarianism to it, wherein all of us are equal in the capability to voice what is important to us. Otherwise why do it? In this act of innovation we will fail, we will strain, we will tire, and we will encounter the darkness that accompanies all of us. But in doing so, we get to the light, and that light is the light of contributing to the movement of our lives from point A to point B, of teaching our children that in the doing of something is the doing of their lives, and that the love and support of our spouses, our mentors, our peers, our friends is one of the defining pillars of our lives. The defining pillars of our livesâ&#x20AC;ŚI say lives and not professional careers because innovation is not compartmentalized. It affects everything. Everything. It does so not only because it is incredibly important, but because it is born from something that

is not related to money or status. It is born from a redemption-seeking, willing-tosacrifice soul. From what is true and right. From what is light. At the center-line of that road that you and I are on is the quest for meaning. We all want to matter, to each other, to ourselves, to what comes next after us. A little ephemeral reach towards immortality. Grabbing possibility from the impossibility. This is what innovation is. So innovate. For our lives. For yourselves. For all our sakes. -

Kerem Durdag is CEO Biovation II, LLC, a company that specializes in advanced biopolymer nonwoven materials and end-product manufacturing. He is a member of the Maine Angels investment community and member of the board of several private companies, board member of the Maine Center for Entrepreneurial Development, and chair of the Advisory Board for the College of Science, Health and Technology at the University of Southern Maine.

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