1. Regional Innovation Capacity: Where Does It Come From? Stockholm March 2015 Mary L. Walshok, Ph.D. University of California San Diego 1

2. Context Why are some regions more efficient and successful at adapting to changes in technology and global imperatives? Communities differ in the extent to which they can absorb and act upon new forces that affect their economic future. Absorptive capacity is an outcome of the interplay between a region’s industrial legacies, socio-cultural dynamics and its physical, financial, and intellectual assets. Traditional measures of impact do not sufficiently account for the role these factors play in innovation outcomes. 2

3. Comparing Regional Innovation Systems (NSF) Comparison of innovation cluster development efforts in three R&D rich regions – Philadelphia, St. Louis, and San Diego A focus on social organizations that enable knowledge flows, pre-transactional trust building, and break down hierarchical barriers. Importance of boundary-spanning organizations, innovation focused intermediaries to such knowledge flows: – S&T focused; – Cross-functional participation (scientists, entrepreneurs, investors, IP attorneys, etc.); – Multiple forms of interaction and support 3

4. What We Learned About Regional Context Regions on a 100,000 per capita basis are more different than we originally assumed 2005-2010San DiegoPhiladelphiaSt. Louis Tech Start Ups10.7 – 21.39.4 – 13.85.1 – 8.8 R&D$386,476,676$189,106,754$202,087,242 Patent Applications 180 yr/avg65 yr/avg37 yr/avg Venture Capital$1-2 billion annually $500 million annually $100 million or less annually 4

5. Factors Shaping Regional Innovation Industrial Legacies and Geographic Landscape: How past industries and natural assets (topography, climate, natural resources, and land use policies) impact behaviors and economic opportunities. Embedded Social and Cultural Dynamics: The spirit and character of a community shaped by migration patterns, early industries, historical traditions, and practices of the region. Material, Capital and Talent Assets: The hard infrastructure, financial resources, and education and training levels of the regional population. 5

6. Industrial Legacies/Geography Rochester, NY – Erie Canal & the growth of major commercial enterprises St. Louis, MO – Gateway to the West: Mississippi River, agriculture, bulk commodities, and large industry San Diego, CA – Geographically isolated, arid climate, tourism and the military with the Dawn of the Pacific Century Warsaw, IN – Agriculture and early “medical” pioneers (Revra DePuy) 6

7. Social & Cultural Dynamics Characteristics and values of early settlers – Skills, religion, work ethic, social position Economic effects on behavior – small/large enterprises => collective vs managed – growth strategies => scale vs diversification and innovation – sources of civic leadership => captains of industry vs small business leaders Entrepreneurial attitudes and behavior patterns – Perceptions and assessment of risk; enabling social networks; supportive business culture Open vs closed community – Knowledge flows and information sharing – Familiarity and mutual trust across the system – Permeable social boundaries and inclusive of “outsiders” Absorptive capacity – Ability to recognize and act on new realities across multiple constituencies 7

8. What We Learned About Comparative Social Dynamics Intermediary groups compared on a 100,000 per capita basis vary by region: All had a similar mix of scientists, entrepreneurs, business service provider participation San DiegoPhiladelphiaSt. Louis Population3 million5.7 million2.8 million Total Number465626 Events per year341114 Participants23238091634 Volunteers791819 Earned vs. Govt Philanthropy 78%68%54% 8

9. Regional Comparisons of Innovation Intermediaries Organizations supporting innovation – Initially identified 365 possible organizations; Filtered to 128 after applying our criteria – 89 responded to initial survey (69%) 31 in Philadelphia, 21 in St. Louis, and 37 in San Diego – 57 responded to follow-up survey 20 in Philadelphia, 12 in St. Louis, and 26 in San Diego – Conducted 126 interviews 48 in Philadelphia, 51 in St. Louis, and 27 in San Diego 9

10. Qualitative Findings Nature of the industry/technology sector matters vis-à-vis knowledge needed, role of networks – Can strongly influence what kinds of resources, information and interactions are most helpful – Examples: defense sector, life sciences, IT, software 10

11. Qualitative Findings How intermediary groups are funded, organized, and staffed can affect the nature of the innovation outcomes as well as the sustainability of the organization – Ben Franklin Technology Partners – CONNECT – BioSTL 11

12. Qualitative Findings Intermediary/Networking Groups Operate Differently – Who participates in events and activities matters – Purpose and desired outcomes of participants vary. Some people are looking to access good S&T, others seeking capital providers, others want experienced mentors and entrepreneurs, others want access to savvy service providers – Groups also vary in the extent to which they emphasize promoting/servicing a sector vs assisting individual entrepreneurs and business start ups 12

13. Qualitative Findings The benefits of intermediaries to entrepreneurs are often indirect – Exposure to new ideas, role models, social networks – Want to become part of a community – The role of social norms – Indirect benefits may be as important as direct benefits (access to capital, service providers, talent, customers, etc.) 13

14. Qualitative Findings Not all mentors are created equal – Motivations for mentoring. Are they there for the right reasons? – Relevant domain knowledge and experience important – Have they led or worked in a technology startup or raised capital before? – Ability to leverage specific networks and resources at different stages of business development 14

15. Creating a Culture of Innovation I.Four Questions to Regularly Ask About Regional Context Do our industrial legacies enable or inhibit our journey towards new, more innovative economic outcomes? What impact does the culture and the priorities of our research universities and institutes have on achieving innovation outcomes? What is the character of our business culture and our management capabilities? Are they poised to be enablers or do their practices slow down the innovation dynamics needed? How inclusive is our a civic culture? Can it rapidly integrate young people and newcomers or are we more inclined to rely on established practices and leadership? 15

16. Creating a Culture of Innovation II. Three Questions to Regularly Ask About Intermediary Organizations & Activities Is our organization, leadership and financing structure maximizing the knowledge flows, trust building and shared investment needed for high risk ventures? Are we clear about what we are trying to accomplish, who we are trying to help and, are our activities aligned with the goals we are trying to meet and the needs of the people we are trying to help? Have we identified metrics of success and are we regularly gathering data so we are able to make mid-course corrections based on regularly assessing our outcomes? 16

17. Thank you Mary L. Walshok, Ph.D. mwalshok@ucsd.edu 858-534-3411 17