Creating Innovation Communities

How the public sector can play its part in helping businesses lead
August 15, 2017 AT 11:00 AM
UMass Lowell created an innovation center a few years ago, which has already attracted over 45 businesses to the small city. UMass Lowell
Broadly Partnered

Harvard University Professor Michael E. Porter wrote in the Harvard Business Journal, “Businesspeople, entrepreneurs, and investors must lead the economic revival; and community activists, social service providers, and government bureaucrats must support them.”

Many economic development organizations focus on attracting businesses to the area with incentive programs and marketing advantages like access to needed skills in the workforce and additional resources -- whether it be space, goods, services or capital needed to grow.

But oftentimes, large economic projects require significant investments like tax breaks in real estate and equipment, job training grants and major infrastructure improvements funded by public dollars.

If we measure the success of these economic development initiatives in terms of job creation, an increase in the tax base or incomes, or capital investments, the results are mixed. In some cases, the jobs don’t materialize or companies move to another city or country after the incentives are up. There are also not a lot of single companies looking for large shuttered plants that dot the country.

This leads us to Professor Porter’s point about letting businesses lead. How exactly can the public sector help businesses lead? In more and more cities, business incubators and innovation centers are becoming a central part of that plan.

The Cambridge Innovation Center (CIC) has been around since 1999. It was started by Tim Rowe, who along with his wife, quit their jobs to create startups. After their first startup failed a year later, they had an idea to start sharing space with former classmates from MIT, which eventually led to a profitable shared workspace. CIC soon got the attention of cities around the world and are now in 6 cities. Following are some lessons from CIC and other innovation centers across the country:

Partner with universities. Universities are a breeding ground for entrepreneurs. CIC’s success is in part due to nearby MIT and Harvard, which have no shortage of graduates looking to start their own business. But even smaller universities are effective partners. The University of Massachusetts in Lowell created an innovation center a few years ago. So far it has attracted over 45 businesses -- no small feat for a small city. In fact, the university is now looking to create another innovation center in Haverhill, a small city about a half hour away from the main campus.

Think about “core facilities.” Universities have a series of shared infrastructure, equipment, labs and resources collectively known as core facilities. This could range from simple 3D printers to mass spectrometry machines. Cities should also think about what core facilities would be added value to the business environment. San Diego has the third-largest biotech scene in the world behind the Bay Area and Boston. The city knows that its vitality and growth could be threatened without good long-term planning. With space at a premium, the city has to ensure there are laboratories available that biotech companies need. And as the industry grows, the city must also ensure good public transportation and affordable housing.

Support innovation communities. Successful innovation centers do not happen in a bubble. There needs to be a healthy ecosystem which includes connections to venture capital and other sources of startup funding, a critical mass of entrepreneurs in a collaborative work environment, and consistent and effective networking in the form of meetup groups or more formal events. Cities can help by showing support and making sure businesses understand the need and importance of civic life. They can help promote engagement and encourage businesses to contribute to the larger community. The incubator American Underground in Durham, N.C., understands this well. It offers mentoring programs that focus on bridging the gap that exists between the high-tech economy and the one that it is replacing.