In the September 19, 2007 Issue:

Copyright State Science & Technology Institute 2007. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected.

Subscription to the SSTI Weekly Digest is free. If you are reading a forwarded copy of this issue and would like to receive your own copy each week directly, please subscribe at http://www.ssti.org/Digest/digform.htm. Requests to unsubscribe also may be completed at http://www.ssti.org/Digest/digform_unsubscribe.htm.

Foundations Commit $100M for Detroit’s Next Economy
Ten foundations have joined forces to create an eight-year $100 million New Economy Initiative for southeastern Michigan, with a goal of transitioning the region’s economy toward more knowledge-intensive industries. Three foundations, Ford, Kellogg and Kresge – each created from the personal fortunes made by some of the founders from the state’s historic economic bases – have contributed $25 million toward the effort. Additional support ranging from $1.5 million to $10 million is being provided by seven other community foundations.
 
The Community Foundation of Southeast Michigan will provide organizational management for the effort, which, according to the Sept. 14 Detroit Free Press, will be chaired by Steve Hamp, brother-in-law and former chief of staff to Ford Motor Co. Chairman Bill Ford. A search is underway to hire an executive director for the effort.
 
The Detroit region is not the first Midwestern manufacturing center to see private foundations step up to help finance TBED efforts, although the $100 million commitment presents one of the largest one-time injections of funds. In 2004, Northeast Ohio foundations committed $22 million to coordinate regional investments (see the Feb. 27, 2004 issue of the Digest), while the Eli Lilly Endowment has made several significant grants to support Indiana’s economic transition toward a more knowledge-intensive economic structure. One donation from the Endowment created a $100 million pool of funds to support the attraction of research faculty and students to Indiana’s public and private higher education institutions (see the March 5, 2004 issue of the Digest).
 
The seven-page position description <http://www.cdvca.org/about/jobs/NEIDescription.pdf> circulated for the executive director position of the New Economy Initiative for Southeast Michigan outlines four objectives to help the region:

Projects within the funding scope of the initiative, according to the position description, run most of the gamut of a comprehensive TBED portfolio. Examples include university technology transfer and commercialization assistance, university-based research centers, capital networks, equity funds, workforce development and branding/marketing campaigns.
 
According to a Detroit News article, the New Economy Initiative is intended to complement the public and nonprofit TBED efforts already underway in southeastern Michigan.

return to the top of the page

Learn More about Transforming Regional Economies
SSTI’s 11th Annual Conference, to be held Oct. 18-19 in Baltimore, includes 19 intensive breakout sessions dedicated to strengthening efforts to support regional innovation systems, such as the New Economy Initiative of Southeast Michigan. Check out the complete program at www.ssticonference.org/Conf07/schedule.htm.

House Approves Patent Bill; High-Tech Groups Spar Over Reform
Earlier this month, the U.S. House of Representatives approved patent reform legislation that would represent the most significant reform of the U.S. patent system since the Bayh-Dole Act. The Patent Reform Act of 2007 (HR 1908) would move the U.S. to a first-to-file patent system rather than the first-to-invent system that has long made the U.S. an international outlier in intellectual property (IP) protection. A first-to-file system would help organize existing patents and simplify patent searches and challenges; however, this system also could lead to a rush to file new patents, placing those small businesses and individual inventors with fewer legal and financial resources at a significant disadvantage (see the June 6, 2006 issue of the Digest).

The bill has divided the tech community. For example, the Institute of Electrical and Electronic Engineers (IEEE) believes that the proposed changes would both stifle innovation and harm the ability of smaller firms to assert their intellectual property rights against large corporations. Other groups such as the Business Software Alliance believe that patent reform could help reduce frivolous suits and trivial patents.

The switch to a first-to-file system is one of several changes included in the House bill that has divided many within the TBED and high-tech communities. Other provisions raising controversy include:

Many information technology industry groups have championed the bill as a necessary update to a system in which patent trolls – patent owners who collect IP rights only to seek infringement damages – are able to stifle innovation. IT advocates believe the reforms would help reduce litigation costs and limit escalating out-of-court settlements. On the other hand, life science and pharmaceutical companies oppose the reforms because they would place patents, which often require massive investment in the life sciences, in permanent jeopardy of cancellation through post-grant reviews. The reforms also would severely limit the damages that could be sought against infringing manufacturers of highly-profitable generic drugs.

The White House has joined the life science community in opposing the changes related to the apportionment of damages, but supports many of the bill's other reforms. In a statement of administration policy, President Bush indicated his support for the expansion of U.S. Patent and Trademark Office authority and many of the reforms related to the application process, including the first-to-file system and third-party submissions of prior art. The statement, however, contained reservations about the limits on infringement damages, and the elimination of the requirement that patent-seekers must disclose the best application of the new technology.

Meanwhile, Senate Majority Leader Harry Reid has included the Senate version of the bill in his agenda for the next few weeks; though, due to continued industry disagreement, any reform may not occur this year.

Track the progress of Senate Bill 1145 at: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:s.01145:

return to the top of the page

Early Registration Ends Sept. 25 for SSTI's Annual Conference
Stretch your professional development dollar by taking advantage of the $100 discount offered for all registrations made on or before Sept. 25 to SSTI's annual conference! A quick, convenient and secure registration form is available at https://www.ssticonference.org/Conf07/registration.htm. Information on the conference is available at http://www.ssticonference.org.

Report Finds Michigan’s University Research Corridor an Asset to Economy
Public universities in most states compete with other state priorities for appropriations each year or two-year budget cycle. With the state’s fiscal year ending Sept. 30, no new budget passed by the legislature and a projected state revenue deficit of more than $1.5 billion for 2008, universities in Michigan may feel greater pressure to assert their importance to the state’s economy. The recent release of an independent analysis of the economic impact of the state’s three research universities, collectively known as the University Research Corridor (URC), may provide timely support for the argument to sustain or increase state investments in its higher education establishment.
 
Findings of the analysis indicate the URC is a major asset to the state’s economy, with contributions of $12.8 billion in 2006. The URC helped create 68,803 jobs in the state and produced 54 percent of the state’s science and engineering degrees, according to the analysis.
 
Released last week by Anderson Economic Group, the analysis is the first in a series of annual reports that measures the Research Corridor universities against six comparable university research cluster regions in California, Illinois, Massachusetts, North Carolina and Pennsylvania. Comparisons are measured within student enrollment, academic R&D spending and technology transfer.
 
The URC ranks first among the university clusters for total number of degrees, both undergraduate and graduate. In 2004, the URC had the third-highest R&D spending of the seven university clusters at $1.32 billion, topped only by two California clusters, according to the report. North Carolina surpassed URC’s spending in 2005 by $5 million. In terms of technology transfer, the URC ranks fourth in average annual number of invention disclosures and patents and sixth in number of licenses granted. It lags the North California and Massachusetts' clusters in invention disclosures, licensing revenue and patent grants and the Southern California cluster in every measure except licensing revenue.
 
Conducted over a four-month period, the assessment is intended to benchmark the contributions of the URC universities to the state’s economy. Additional findings include:

The full report, Michigan’s University Research Corridor, is available at: www.urcmich.org/economic/AEG_URC_FinalReport_Sept07.pdf

return to the top of the page

States' Evolving Roles in Equity Capital
Accessible sources of capital provide a critical ingredient for tech entrepreneurship and successful TBED. Public strategies to increase accessibility vary - as do their effectiveness and value in changing financial markets. Explore the experiences and wisdom gained through several approaches during this engaging panel discussion at SSTI's annual conference, Oct. 19. For more information on the conference, visit www.ssticonference.org.

Virginia Energy Plan Calls for Increased R&D, Consistent Funding
Virginia could capitalize on its strong energy R&D foundation of universities, federal laboratories and businesses through coordination among research activities and by creating a consistent funding stream for federal R&D funding and technology commercialization, finds a new state energy plan released last week.
 
Mandated by SB 262 from the 2006 General Assembly, the Virginia Energy Plan outlines specific goals and recommendations that set forth energy policy for the Commonwealth over the next 10 years. Under the plan, the state will reduce the rate of growth in energy use by 40 percent, reduce greenhouse gas emissions by 30 percent and seek to increase in-state energy production by 20 percent. The plan also calls for expanding consumer energy education and increased R&D within the areas of nuclear technologies, alternate transportation fuels, coastal energy production, and carbon capture and storage.

Economic development opportunities are found within the state’s institutes of higher education, federal laboratories and businesses. However, the challenge is coordinating the varied R&D activities in ways that increase their value to the Commonwealth, according to the report. Current university energy R&D strengths include coal use, fuel cells and alternative fuel development. Virginia also is home to three federal research laboratories, which collectively conduct research on the impact of aviation of the environment, efficiency of alternative vehicles, fuels and transportation systems, and energy efficiency of weapons and electric guns. Businesses, for their part, undertake a wide range of energy-related R&D, and significant strengths exist in the Areva NP/BWXT nuclear cluster around Lynchburg, at Northrop Gurmman Newport News, at private technology businesses, and in small businesses spun off from university R&D, the report states.
 
One idea for coordinating the varied R&D activities is to create an energy R&D roadmap that matches areas of core strength with the best value proposition for investment in energy R&D. In addition, a public-private governance structure, the Virginia Energy Research and Development Organization, should be established as a virtual organization to set priorities for public energy R&D funding. To that end, the report calls for consistent funding for energy R&D through a state fund as a subset of the Commonwealth Technology Research Fund. In addition, the plan calls for increased investments in energy R&D by $10 million per year, with half from state resources and half from private and federal investments. To capitalize on energy economic development-related opportunities, the report recommends the following actions:

The authors recognize that the plan requires substantial annual investments by the state, private industry and individuals. To foster long-term improvement in how Virginia and the nation can supply and use energy more efficiently, the authors recommend $5 million for energy R&D to be matched equally by private and federal sources. Renewable energy grant programs established in 2006 should be funded with $5 million per year to achieve significant growth in renewable energy supplies. Another $5 million per year is necessary to support energy business incentives, such as the Biofuels Incentive Grant Program, new technology production, and development of innovative energy sources and infrastructure, according to the report.
 
Virginia Gov. Timothy Kaine will review the recommendations in the coming months to set forth an action plan that addresses the state’s energy challenges. The full report is available at: http://www.governor.virginia.gov/TempContent/2007_VA_Energy_Plan-Full_Document.pdf

return to the top of the page

Aligning TBED & Conventional Economic Development
Can there be just one type of economic development approach adopted in a state or community? Probably not. But with long-time TBED themes such as innovation and technology commercialization cropping up in policy and budget discussions everywhere, this session will focus on ways TBED is being used to strengthen and complement traditional economic development efforts like business retention, expansion and recruitment. Attend the session at SSTI's annual conference in Baltimore, Oct. 18-19. More information is available at www.ssticonference.org.

Assessing Incubator Performance: NBIA Releases Toolkit to Aid Impact Measurement
As with every public policy or program to promote economic development, TBED initiatives can fall victim to critics’ concerns regarding the value of these approaches if performance measurement is not an integral component of your efforts. Fair assessment of impact, though, remains a thorny issue for many TBED strategies because of the early stage of investment (e.g. support for university research, entrepreneurship education or even seed capital).
 
Even when one does measure the impact of a specific program or policy, additional potentially legitimate concerns can be raised for how well your performance compares to similar efforts in other parts of the state or country. Or, the lack of any sense of a control group of companies or entrepreneurs who did not participate in the initiative to use to benchmark the difference made by the effort can lead to unwarranted criticism from skeptics.
 
This last criticism recently was levied against Washington's state network of incubators in a report issued by the state’s Joint Legislative Audit and Review Committee (JLARC) at the request of the Washington State Legislature. JLARC investigated incubators across the state including information about their location and number, Washington’s role in supporting and financing incubators, and the performance of the state’s incubators.
 
Incubators are a fundamental element of many local and regional TBED strategies. The Washington State experience provides an interesting case study of value cross TBED approaches and a useful tool to help prevent similar scenarios from occurring elsewhere.
 
In Washington’s case, the problems started with definitions: What is an incubator? The report cited previous work by the Washington Department of Community, Trade, and Economic Development (DCTED) to infer there were 53 current or potential sites proclaiming themselves as incubators in 2005. An alternate perspective estimated 24 incubators in the state, as the report’s authors interpreted information from the Washington Association of Small Business Incubators (WASBI), whose definitions for incubators are more complex than they are for those sites that may offer only office space.
 
The lack of common definitions across assessments makes measurement of their aggregate impact difficult and comparisons across regions futile. Judging the benefits of incubators, JLARC claimed they were not able to determine if any impact did exist. Additionally, the report states that due to a “lack of credible comparative analysis” of the performance of incubators in the existing literature, the central question of what would happen to firms without the presence of an incubator to assist them is left unanswered. While the report found several examples of literature reporting best practices, it concluded that research needs to be performed to examine if businesses would not have succeeded “but for the incubator."
 
The “but for the incubator" argument illustrates a significant challenge for most public TBED policies, because comparisons with control groups can be virtually impossible. In the case of business incubation, should the control group be all small businesses? Only those in similar technology sectors? Or only those with similar product development or service orientations? Geographic considerations for the control group also must enter into the equation. What about some indication of types of services/assistance received?
 
A 2003 National Benchmarking Analysis of Technology Business Incubator Performance and Practice, prepared for the soon-to-be-defunct Technology Administration within the U.S. Department of Commerce, explored the issue of comparing 79 incubators and identified several factors that have limited value for benchmarks because of the challenges presented by the types of issues identified above.
 
Dinah Adkins, President of the National Business Incubation Association (NBIA), recognizes the challenge for incubators, but admits, when looking to other economic development policies for models, she could not find this level of scrutiny satisfactorily addressed for other small business economic development investments or programs, either.
 
The success of business incubation, however, is clear to NBIA, whose past research in the 1997 report Business Incubation Works has found that 87 percent of all incubator graduate firms are still in business. The organization compares this value to U.S. Small Business Administration data, which state after four years only 44 percent of small businesses are still functioning. Exploring the effectiveness of incubators is an ongoing task, one that requires the continuous tracking of metrics and programs designed to assist new businesses. In the hope of increasing the number of incubators that are tracking pertinent data, last week the NBIA released a toolkit to assist in this endeavor.
 
In Measuring Your Business Incubator’s Economic Impact, NBIA Director of Publications Meredith Erlewine states that without tracking outcomes, incubators may be missing their opportunity to explain to the public and potential funders the importance of their programs. Additionally, a lack of following incubator companies may contribute to doubt about the industry’s effectiveness. If the majority of incubators tracked a handful of key metrics, she contends, the NBIA could demonstrate the industry-wide impact of incubators. This approach to measuring their impact may balance those looking for “but for the incubator” examples to demonstrate efficacy.
 
The toolkit references 10 basic metrics that incubation programs should track, which should be done annually for all clients and graduates for at least five years after a business leaves the program. These 10 measures include, among others, the number of people currently employed full and part-time, current monthly salaries and wages, debt and equity capital, gross revenues, and grant funds collected. In the future, NBIA will use these measures in industry-wide surveys. Also provided are steps for data collection, which recommend explaining to incubator clients their data will be used only in aggregate and that their participation in data collection is required on a regular basis, both before and after graduation. Additional topics within the document describe advanced metrics to use, tips to convince clients to provide data, two case studies, and recommendations on how to perform impact reporting and spinning results.
 
Measuring Your Business Incubator’s Economic Impact is packaged with surveys for incubator clients and graduates and includes a spreadsheet to assist with the collection of results. The toolkit is available as a PDF free-of-charge for NBIA members or for purchase by nonmembers at http://www.nbia.org/impact/index.php. Hard copies with a CD-ROM also are available for purchase.
 
Small Business Incubators: Review of State Policy, Funding, and Incubator Performance is available from the website of the Washington Joint Legislative Audit and Review Committee at:
http://www.leg.wa.gov/reports/07-10.pdf
 
National Benchmarking Analysis of Technology Business Incubator Performance and Practice is available at: http://www.technology.gov/reports/TechPolicy/NBIA/2003Report.pdf

return to the top of the page

Successful TBED Implementation in Small & Mid-Sized Communities
Not every community has all the economic development assets available to the nation’s largest cities, nor do they need them to be successful in TBED! At SSTI's annual conference Oct. 19, this session will explore the resourcefulness, innovation and creativity that has proven effective for several small and mid-sized communities across the country. There are insights and lessons here for all communities, regardless of size. Please visit www.ssticonference.org for all of your conference needs!

Southern Growth Seeks Nominations for 2008 Innovator Awards
Each year, Southern Growth Policies Board honors Southern initiatives that are improving the quality of life in the region through its Innovator Awards. The Awards are presented annually to one organization in each of Southern Growth’s member states ­ Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Virginia and West Virginia.

In 2008, the Awards will be chosen from initiatives that promote youth engagement and leadership in the region. Each nominated initiative must fulfill these and other criteria:

An independent evaluation panel will choose one innovator from each Southern Growth member state for an award. Southern Growth will present the awards at the opening session of its annual conference scheduled for June 1-3, 2008, in Little Rock, Ark.

The deadline for nominations is Oct. 22, 2007. To view the complete award criteria, submit a nomination or view past award winners, visit www.southern.org/innovators/innovators.shtml. 

return to the top of the page

SSTI Job Corner
Complete descriptions of these opportunities and others are available at http://www.ssti.org/posting.htm.

The Office of Extension, Engagement and Economic Development at North Carolina State University (NCSU) is seeking someone for the position of director of the NC Economic Development Partnership. This position will have primary responsibility for building alliances for economic development and connecting the unique strengths of NCSU to appropriate agencies and industry clusters. These alliances include a significant partnership the North Carolina Department of Commerce. An M.A.or M.S. degree in an appropriate discipline and three years of experience in economic development program delivery in extension, outreach or public service, or a combination of suitable educational background and professional certification in economic development are required.

Penn State's Office of Economic and Workforce Development seeks a motivated, self-directed individual with a proven track record for the role of senior new initiatives specialist. This position will assist with the expansion and diversification of the Pennsylvania Technical Assistance Program (PennTAP), which provides technology assistance to all types of businesses throughout the Commonwealth to improve their competitiveness and strengthen the state's economy. The position requires a master's degree or the equivalent, plus three years of work-related experience showing demonstrated strong, independent and entrepreneurial work attributes, among other requirements.

return to the top of the page

State Science & Technology Institute
5015 Pine Creek Drive
Westerville, OH  43081
(614) 901-1690

© 2007 State Science and Technology Institute. All rights reserved.