2. Regional Innovation Imperatives for Global Success The North Alabama Region: A Globally Competitive Community May 23, 2005 Randall Kempner

3. 2 © © May 2005 www.compete.org The Council on Competitiveness  Founded in 1986 by John Young  Non-profit, non-partisan  170+ members  CEOs, University Presidents, Labor Leaders  Set public policy action agenda to drive:  U.S. productivity growth  High living standards  Success in global markets “Our agenda is at the nexus of necessity and opportunity—and we all have an obligation to serve the nation.” –Duane Ackerman, CEO, BellSouth Corporation, Chairman, Council on Competitiveness

4. 3 © © May 2005 www.compete.org The (New) Path to ProsperityProsperityProsperity InnovationInnovation Competitiveness (Productivity) The most important sources of prosperity are created not inherited Productivity does not depend on what industries a region competes in, but on how it competes

5. 4 © © May 2005 www.compete.org What is Innovation? Innovation is more than just a new idea…  Idea Generation (Invention); Idea Development; Idea Commercialization  Improves on the existing way of doing things  Generates value for society  Can come from anyone and anywhere  Can be a product, process, service, strategy, etc. 21st Century Innovation  Fast  Collaborative/ Open  Multidisciplinary  Demand-driven  Global What Is Innovation?

6. 5 © © May 2005 www.compete.org The Pace of Innovation – and Knowledge Diffusion is Quickening 02550100125150 Automobile 75 Years 20 50 100 Telephone Electricity Radio Television VCR PC Cellular Internet % Penetration

7. 6 © © May 2005 www.compete.org Program Cte. PR/Media Political Liaison Events Mgmt. Tech. Support 21 st Century Innovation Innovation Finance Public Sector Innovation Advisory Cte. 40 innovation leaders from industry, labor, academia, govt. Innovation Markets Innovation Frontiers Innovation Skills W O R K I N G G R O U P S Innovation Environment & Infrastructure Council on Competitiveness National Innovation Initiative Principals Committee 19 distinguished senior leaders from industry and academia

8. 7 © © May 2005 www.compete.org While America still leads the world in many areas, we found a range of challenges Talented scientists and engineers Flexible workforce Active entrepreneurial culture Vibrant capital markets Strong intellectual property protection Growing economy Sustained, high productivity Performance and reputation as global innovation leader Strength Decreasing relative quantity and quality Health and retirement benefits and Brain Drain Regional access to early stage capital Short-term focus Effectiveness of Patent and Trademark Office Triple Deficit — Trade, Federal Budget and Personal Savings Measuring and capturing contribution of “innovation” We are not alone Weakness

9. 8 © © May 2005 www.compete.org The Global Innovation Economy Emerging Regional Development Imperatives Focus on Building Talent, Not Attracting New Companies Protect Quality of Life, Vigilantly Get Connected: Partnerships and Networks are Required Focus on Incorporating Technology, Not Technology Industries Attracting Talent is Easy, Developing it is Hard (But Worth It) Cultivate a Dynamic, Tolerant Culture Randall’s Regional Rules

10. 9 © © May 2005 www.compete.org Thank You! Randall Kempner Vice President 1500 K Street NW, Suite 850 Washington, DC 20005 Email: rkempner@compete.orgrkempner@compete.org Website: www.compete.orgwww.compete.org

11. 10 © © May 2005 www.compete.org The NII recommendations are based on three platforms TALENT INVESTMENT INFRASTRUCTURE Build the Base of Scientists and Engineers Catalyze the Next Generation of American Innovators Empower Workers to Succeed in the Global Economy Revitalize Frontier and Multidisciplinary Research Energize the Entrepreneurial Economy Reinforce Risk-Taking and Long-Term Investment Create a 21 st Century Intellectual Property Regime Strengthen America’s Manufacturing Capacity Build 21 st Century Innovation Infrastructures – the health care test bed

12. 11 © © May 2005 www.compete.org The Principals Committee leads the NII

13. 12 © © May 2005 www.compete.org The innovation ecosystem concept shifts the debate Federal R&D Spending Offshoring Entrepreneurship Workforce Training K-12 Education Higher Education Technology Transfer Business- University Collaborations S&E Workforce Regional Economic Development Accounting Rules Intellectual Property Manufacturin g Healthcare INNOVATION POLICY Most Policy Makers See Discrete Issues With Narrow Constituencies We See a Single Innovation Policy with a Broad Constituency

14. 13 © © May 2005 www.compete.org Europe and Asia now each produce more PhDs in natural science and engineering than the US Source: National Science Foundation, Science and Engineering Indicators 2004 Annual natural science and engineering doctoral degrees in the United States, Europe, and Asia

15. 14 © © May 2005 www.compete.org The US, though still leading producer of manufactured products, is losing share, quickly Source: IMF, World Bank, Various Country Statistical Agencies, MAPI Manufacturing Production by Region of the World Index: 2000=100 Japan United States Western Europe Central Europe Asia, excl Japan Latin America