Regional economic development is a buzzword these days in discussions about our faltering economy. Even more popular is the concept of an innovation economy that somehow U.S. universities will fuel with their brainpower and innovative technology. Both of these critical but slippery goals — regional economic development and an innovation economy — are usually presented in a fuzzy way without solid data or convincing strategies on how we will get from here to there. The consulting firm McKinsey, famed for its creative approach to looking at problems, partnered with the World Economic Forum, crunching large amounts of economic data to find out exactly what essential ingredients are needed to grow and sustain regional innovation hubs. The result is an “Innovation Heat Map” that places cities and countries on a bubble chart that predicts their innovation-based economic future, sort of an “innovation health index.” Working with 700 variables including business environments, government regulation, and the number of patent applications, McKinsey found patterns in the data that may help us better understand why some regions fail and some succeed in developing innovation-based economies.
The article is here and includes a picture of the innovation heat map.
McKinsey’s analysis indicates that innovation hubs develop along three primary paths:
- Heroic bets: this is when the government leads the way by focusing on a specific industry sector and providing substantial support in the form of subsidies, tax breaks and direct investments.
- Irresistible deals: regions that have a significant local advantage (e.g. cheap labor) are able to attract established companies. To be successful, the location builds on this base to move up the value chain from manufacturing or services to design and innovation.
- Knowledge oases: this is where university towns come into play. These locations have a critical mass of local, specialized talent who are able to translate scientific breakthroughs into commercial successes.
Not surprisingly, their analysis shows that while the critical drivers of innovation vary from sector to sector, the single common factor in play across all industries is the availability of talented people. So that’s not a surprise but still leaves us with a lot of unanswered questions.
I think universities are put under too much pressure to prove their economic value to their regions. Maybe a data-driven analysis could help state funding bodies set more realistic expectations of what university technology can and can’t do for the local economy. A data-driven model would also enable people to play with variables to see the effect of proposed changes. I wonder whether McKinsey would let universities take a look at the inner workings of their innovation heat map model…
Melba Kurman writes and speaks about innovative tech transfer from university research labs to the commercial marketplace. Melba is the president of Triple Helix Innovation, a consulting firm dedicated to improving innovation partnerships between companies and universities.