Innovation Hubs-Making them work requires experts

Innovation hubs (IH) are where the USA—the largest and most innovative economy—has generated its most relevant innovation since the end of World War II; currently its top three innovation hubs are Cambridge-MA, Silicon Valley-CA, and Austin-Tx.  The value of the companies that the MIT, which is in Cambridge-MA, has sparked is equivalent to the eight largest economy in the world. Google—funded by Stanford alumni—and Apple are just two of the main companies Silicon Valley have close to 1.6 US trillion in Market Capitalization.  Dell, Samsung, and others play analogous roles in Austin-Texas.  In Cambridge-MA, the top three companies in each of the top ten worldwide industries have their R&D centers.  For example, Pfizer, Novartis, Johnson & Johnson, and Philips, top players in the pharmaceutical and biomedical industry, have major R&D within 1 and 5 blocks radius from MIT.  Schlumberger, which is the largest oil field services company, opened in 2004 its largest research center one block from MIT; soon after Shell and Saudi Aramco also opened their R&D centers in Kendal Sq.  examples of other companies attracted to these IHs are many.

Cambridge Massachusetts Innovation Hub

There have been efforts in several countries to create and support IHs; examples include: Ihla do Fundao in Rio de Janeiro; the area around King Abdullah University (KAUST) in Saudi Arabia; in several Emirates; and the areas around Tsukuba and Sendai in Japan.  Some of these efforts have included giving tax incentives to attract the multinational companies, and hiring overseas.  The companies that come to the IHs in the USA do it on their own; their incentive is to generate innovation by being active players in the IH.  About 70% of all the students in Ph.D. engineering and science programs in the top ten USA universities come from outside the USA; the diversity of ideas and perspectives is one if not the main contributor of innovation and creation of innovation.  As in the renaissance in the 1400’s, this diversity is the fuel of these IHs.

There are the two main factors that help successful IHs: 1) they have the efficient supporting external organizations (EXO) ecosystem, and 2) they have experts that teach and help the corporations to develop the expertise necessary to take the most advantage of the IH, when the experts are not inside the companies, they hire expert consultants.  The EXO is the ecosystem in which companies operate and is composed primarily of multinational companies, incubators, start-ups, universities, consortiums, and the venture capital community. 

Incubators provide workspaces, co-working opportunities, and access to equipment that may be integral to many startups.  Successful innovation hubs stimulate the creation and growth of start-ups because of the innovation they can generate for all the multinationals in the IH and vice versa.

Establishing relationships with engineering and technical programs at local universities, allows corporations to capitalize on new talent, new technology, and groom the next generation of executives.  Since the technology that collaborations between corporations and universities generate reaches only feasibility (Technology Readiness Level 2 TRL2), it is very important for corporations to have a working methodology to take that technology to the final product (TRL 7).

Consortiums work within an IH to help universities and companies to collaborate, generate value for each, and help fulfill their mission through R&D programs that focus on technologies that are relevant for several companies.  Consortiums also allow sharing of the cost and risk among several companies that are interested in technologies that are still in early stages of development.  Venture capital (VC) fuels most of the start-ups in the innovation hubs, increases visibility of the region as an innovation hub, and provides new technologies with key financial support to grow and mature.  The fuel of venture capital comes in the form of capital, physical structures, access, and expertise, all critical to a successful startup.  The other ingredient of the secret sauce that makes it work  are the experts that help corporations in the art of finding common interests between the corporations’ R&D, business development (BD), and VPs, and the academic focus of professors and their students.  The funding is not the key to establish the successful collaborations between academia and corporations in the IHs; funding is only a tool.  

Author: Julio C. Guerrero Ph.D.

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