National Post (National Edition)
Innovation in Real Places : Choices to make
Akey to understanding innovation-based growth is to understand that innovation is not invention, nor is it only high-tech and the creation of new technology and gadgets. Innovation is the whole progression of taking new ideas and devising new or improved products and services.
It comes in all stages of the production of goods and services, from the first vision, design, development, production, sale, and usage to the after-sale. Contrary to common belief, and the proponents of the Silicon Valley and venture capital models, the true impact of innovation is not in the inventions of new technologies or even in their introduction to the market. The true impact of innovation is the continuous stream of implementation of large and small innovations, making those inventions more useful in more sectors of the economy, more reliable, and significantly cheaper, while constantly innovating in their sale, marketing, and after-sale services.
Once we realize this, we become aware of the large number of available options with which to reach prosperity, as well as the futility (and perhaps the stupidity, if we care about inequality) of only trying to become a Silicon-Hyphen. The smart community lets others try to become Silicon Valley North, Silicon Vale, Silicon Hill, Silicon Isle, or Silicon Shade, and instead focuses on developing its own model of innovation-based growth. This is especially true with the current model of VC-tofinancial-exits reaching the end of its steam as a growth model, and with the impact of globally fragmented production of considerably limiting the local positive spillovers of stage 1 innovation. As the divergent fortunes of communities under COVID- 19 attest to, it is time we start to appreciate the widely distributed growth and the greater resiliency that focusing on stages 4 to 2 innovation grants. Thus, as you think about your own region, think carefully about whether its current capacities and capabilities, and at least as importantly its potential capacities and capabilities, would allow it to excel as stage 4 (production and assembly), stage 3 (second-generation product and component innovation), or stage 2 (design, prototype development, and production engineering), instead of becoming another locale that failed to become Silicon Valley, or one that cursed the day it succeeded.
However, we now live in the world of fake news and misconceptions, and too many people and organizations make too much money by selling myths about innovation. We are going to find that the purveyors of these myths — the religious believers of techno-fetishism — have a feeble understanding of the big picture of global production and innovation. For example, they have not noticed — or will not tell you — that there is a significant obstacle to creating the next
VC hub in Oklahoma or Ohio or Bouches-du-Rhone in France or Emilia- Romagna in Italy: namely, the overwhelming power of the real hubs, which siphon up vast amounts of talent and money.
The misconception-mongers also seem unaware of the research showing that promoting VC-backed hightech startups can end up widening the gulf between rich and poor, and that a region can therefore waste a lot of time, money, and energy trying to improve its economic health by shopping for high-calorie, low-protein, and low-fiber start-ups. Those start-ups might indeed make their founders and funders rich, but they will not supply the wider employment and growth benefits that the regions seek. In today's world of globally fragmented production and dominating high-tech clusters, not all boats are raised when hightech start-ups succeed.
What does this means for regions seeking innovation-based growth? It means that there is a choice to be made: which innovation stage to specialize in.
At the beginning of this chapter, I asked you to keep in mind the region that you know and love the best. Now that we have looked at each of the stages, where does your region fit? What kind of innovation-based growth currently predominates there? If you could have your choice, which stage should the region focus on?
This is not a simple choice. As you might imagine, it is determined in part by considerations about which stage would be most advantageous — what would be the return on a second-generation-innovation focus, for example? The choice is also shaped by what is practicable, given a region's strengths, resources, and challenges. For instance, what financial resources could the region draw on, or create, to support innovative businesses?
But there is a deeper consideration that should be addressed first: What kind of society does the region want to have — and, therefore, what kind of jobs does it hope to create? Most communities never ask themselves this question, and as a result end up choosing one of two deeply flawed development paths.