Economic Development News & Insight


Does government really know anything about innovation?

/ January 12, 2015

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Does government really know anything about innovation?

On January 22, the Intelligent Community Forum will name its Top7 Intelligent Communities of the Year, shrinking the list of the Smart21 down to the finalists for Intelligent Community of the Year, a title currently held by Toronto,, Canada. We will be honoring local and regional, rural and urban governments that have – among other things – boosted the innovation rate of their economies.  That makes this a good time to ask a fundamental question.

What in the world does government know about innovation?  Many critics have said that governments generally have a poor track record of picking winners, picking the real innovators out there who will grow and contribute to a community.

However it turns out that government’s do know quite a lot. That little thing called the Internet was a government invention.  But the most important thing successful governments know is a bit of wisdom first expressed in ancient Rome.  Nosce te ipsum, the Romans said: “know thyself.”

There has been a lot of research done lately about incubators, government innovation offices and efforts to turn local economies into innovation ecosystems.  An institute at the University of Michigan studied 100 American incubators.  The most successful were nonprofits that drew in part on public support, which on average made up 40% of total funding.  “It takes a diverse income stream to become self-sustaining,” noted one of the report’s authors, “and government funding is one component.”

A study by the Ewing Marion Kauffman Foundation looked into the startup ecosystem of St. Louis, Missouri, USA.   What it found was that the most important factors contributing to success were connecting entrepreneurs to each other and connecting them to support organizations capable of constantly adjusting to evolving needs. The U.S.-based Kauffman Foundation is the world’s largest institution devoted to entrepreneurship and back in 2010, Tim Kane, a Kauffman senior fellow, analyzed how jobs and economic growth are created. His conclusion? “Startups aren’t everything when it comes to job growth. They’re the only thing.” Kane’s research shows gross job creation at startups averaged more than three million jobs per year during 1992-2005, four times higher than older companies. One percent of the high-growth new firms create 40% of all new jobs. Government support for start-ups, the new generation of innovators makes sense.

A study from the IBM Center for The Business of Government set out seven principles for making government innovation offices work.  Four of seven were about ensuring clear and effective communication among public and private-sector players.  Three were about putting real leaders in place, giving them adequate resources and making them responsible for outcomes. Only one of the seven was about prescribing an innovation process, with lots of charts and diagrams showing how businesses move from idea to profitability.

Do you see a pattern here?  Intelligent Communities win at the innovation race when they bring together innovators and focus on connecting them to each other and the institutional and government players who can help them.  They make reasonable and consistent commitments of money, and put in place experienced and qualified leaders accountable for results.  Like smart investors, they bet on people and ideas, judge progress against milestones, and decide whether or not to invest more in the future.

What they do not do is try to drive the car from the back seat.  Intelligent Communities win at innovation when they respect just how little they really understand it.  It is just as true today as it was in ancient Rome: knowing yourself is where wisdom begins.

Some of the world’s leading thinkers and doers in the global Intelligent Community movement will gather in Toronto June 9-11 this year for the annual Intelligent Community Summit. For the first time in a decade the Summit is being held outside of New York.  The successor to Toronto will be announced and innovation will be a leading topic of discussion. The Summit will also mark the 20th Anniversary of the world’s first Smart City event, which took place in Toronto in 1995 under the name, SMART’95. The co-founders of the Intelligent Community Forum produced that historic event, which launched what is now a global movement.  Hope to see you at the Summit!

One response to “Does government really know anything about innovation?”

  1. […] “On January 22, the Intelligent Community Forum will name its Top7 Intelligent Communities of the Year, shrinking the list of the Smart21 down to the finalists for Intelligent Community of the Year, a title currently held by Toronto,, Canada.”  […]