How to Build Rural Innovation Ecosystems

by Arlen Meyers

How to Build Rural Innovation Ecosystems

The 2016 election revealed a dramatic gap between two Americas—one based in large, diverse, thriving metropolitan regions; the other found in more homogeneous small towns and rural areas struggling under the weight of economic stagnation and social decline. Amazon choosing NY and Washington to build headquarters is an example.

Economic development experts agree that regional economic development depends on creating ecosystems that support entrepreneurs and new value creation. However, the assets, culture and needs of one community differs substantially from the next, particularly those smaller sized or rural communities that face demographic, infrastructure, capital formation and housings challenges unlike those in major metropolitan areas.

Some experts point to 4 foundations of a thriving technology based innovation ecosystem, like Austin, Denver-Boulder and Silicon Valley:

  1. Well funded basic research at universities and government labs
  2. Local assets, like outdoor recreation, quality of life and amenities
  3. Leadership from the ground up
  4. Infrastructure

A recent review suggests some approaches to building mid-tier entrepreneurial ecosystems:

  1. Favor incumbents less. Policies and regulations that favor incumbents—existing, dominant companies—create barriers to entry by new firms and restrict competition.
  2.  Listen to entrepreneurs. Rather than develop policies abstractly intended to correct “market failures,” policymakers should engage local entrepreneurs in person to develop and implement practically focused policies intended to encourage dynamism, increase diversity, and stimulate “metabolic” activity such as idea exploration, product development, and increased rates of deal flow. •
  3. Map the ecosystem. Create an inventory or graph that indicates who the participants in the ecosystem are and how they are connected. More ambitiously, map roles and differentiate relationships by type, direction, and magnitude of interaction. Once validated by the entrepreneurs and community members, ecosystem maps can become valuable tools in developing strategies for engagement. •
  4. Think big, start small, move fast. This simple rule, which applies to entrepreneurial ventures, also holds true for strategies to enable local entrepreneurial ecosystems. To be effective, such strategies should seek domains for early success and rapidly iterate forward
  5. Avoid artificially segmenting your community or your strategies. Entrepreneurs and members of entrepreneurial communities are not potted plants: they are active participants in a range of activities, such as creating new compd from there to build well-grounded programs at scale.
  6. Prepare to capitalize on crises. Much like a rotting trunk of a fallen tree feeds the growth of new saplings, economic disruption creates entrepreneurial opportunities. Because experiencing disruptions is an inevitable part of economic and social life, those involved in enabling entrepreneurial ecosystems should anticipate them and prepare to make the most of the opportunities they create.

When it comes to creating digital health or clinical innovation ecosystems in rural or smaller regions, I would add using local assets that are more nimble to:

7. Create digital health human subject trial infrastructure

8. Take advantage of remote patient monitoring, sensing and patient reported outcomes measurement information systems to overcomes geographic boundaries and geographic barriers

9. Integrate as a spoke to larger sized innovation hubs using information and communications technologies

10. Create ways to simplify the process of testing and piloting digital health solutions in smaller sized hospitals. using them as experimental laboratories for larger hospital, mother ship integrated systems

11. Create Collaborative Open Innovation Networks

12. Expand education programs at community colleges and universities serving the community offering nano and online coursed and degrees. Rethink higher ed now that the differential between the costs and benefits of a bachelor’s degree is narrowing and many colleges are not meeting enrollment targets.

13. Create knowledge exchange programs with the closest innovation hub

14. Avoid the 6 dysfunctions of engaged communities

15. Mix the creative class with the technical class including interface industries like aerospace, energy, IT technologies, photonics, media and communications and outdoor recreation.

16. Define entrepreneurship as something other than creating a business

17. Create and empower patient entrepreneurs

18. Offer fellowships to physician entrepreneurs in residence

19. Win the war for talent, particularly for those working in the gig economy

20. Maximize information rheology i.e the flow of information

Here’s a short checklist to measure the health of your cluster:

1. The extensiveness of your internal and external networks and the flow and pressure of information through them.

2. Churn. How many companies are being created and then new ones procreated by the founders?

3. Value creation at the level of the patient, enterprise, regional economy and national competitiveness.

4. Educational program graduates and short and long term contributions.

5. The participants in the cluster and gaps that need to be filled.

6. The regulatory, IP and business environment that facilitiates or interferes with innovation.

7. The level of integration with decentralized, participatory , community based innovation networks

8. Seed stage funding levels and incentives

9. Risk tolerance and the pervasiveness of an entrepreneurial mindset.

10. Tolerance for failure.

Here is how Georgia is building statewide innovation centers and connecting them.

Another prescription to close the rural-urban divide has these active ingredients:

  • Boost the digital skills of left behind places. The workers, industries, and places that possess strong digital skills have enjoyed distinct economic rewards. To push back against this winner-take-all dynamic of today’s tech economy, every region’s workforce should be prepared to participate in the digital economy.
  • Ensure businesses in lagging regions have access to capital. The pullback in small business lending following the financial crisis has hit less densely populated parts of the country
  • particularly hard. Efforts to improve data on small business performance can help banks lower the transaction costs of extending small loans while innovations in financial technology can help create a secondary market for them and reduce risk. Boosting alternative, non-bank sources of capital, such as venture capital funding, can also help support regional economic growth.
  • Reduce gaps in broadband. Large gaps in broadband service and subscriptions have put businesses and workers in less densely populated areas at a huge disadvantage. Policy proposals should focus on connecting more people and encouraging greater subscription rates in places already endowed with broadband.
  • Identify “growth poles” that can support regional growth. While it may be inefficient to “save” every left-behind small city or rural community in the U.S., targeted federal policy aimed at strengthening 10 or so promising mid-sized centers of advanced industry activity would bring more growth to some communities adjacent to many more lagging towns and rural areas. Federal investment in these “
  • growth poles” will put more communities on a path toward self-sustaining economic growth.
  • Help Americans move to opportunity. The federal government should expand the availability of financial support for individuals who want to make
  • long-distance moves to places promising greater economic opportunity. At the same time, federal policy should encourage states and localities to relax zoning restrictions and construct new housing units to increase the supply of affordable housing. For those who wish to stay in their communities to live but not necessarily to work, state and local governments could provide a subsidy for workers commuting to adjacent communities.

Communities should strive to be part of the BIG FIX, moving sick care to health care. It will take rethinking community level education, sick care process re-engineering, community engagement and building entrepreneurial ecosystems.

If you find that there are opportunities for improvement, then try using some of the strategies to fill the gaps and reap the rewards, no matter where you live.

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Image credit: Tehran Times

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Arlen MyersArlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs at www.sopenet.org

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