A recent event brought back to mind a blog I posted in January 2017 on the innovation economy. A news agency reporting on a candidate running for governor referenced that blog post. The candidate‘s platform is the innovation economy. It seems to be gaining traction this political season. There is a drive for economic rebirth of urban areas or to reestablish the growth engine for states. This has turned eyes on the innovation economy.
Some term it the “creative economy.” Gary Hamel calls it the “new economy.” I refer to it as the “innovation economy.” But what exactly is it? The ability of people to create, innovate, and develop ideas, products, and services that generate value. The value people place above the bill of materials is the innovation value. Done well that value elicits a margin premium, the growth engine of an innovation economy.
Turning the Downturn Around
Like the steel industry, which tanked in the 70s, a number of states in the U.S. have been facing economic downturn. Their economies relied on industries that have slowed, shrunk or halted. Politicians are seeking economic growth engines to re-energize their state and local economies. Places like Detroit are establishing programs, activities, and systems to attract creative people to relocate. They are seeking creative minds who will jump start the innovation economy with their ideas, products, and services.
There are success stories – Boulder, CO; Portland, OR; Austin, TX and Boston’s Route 128. These places built an innovation economy that flourishes, creating jobs and economic growth. But it’s not a quick fix. Establishing a thriving innovation economy takes long-term commitment.
Humble Beginnings to World Stage
From its beginning in a garage in Palo Alto, CA, HP became the match that started the flame. Silicon Valley became a thriving innovation economy. This sparked highly creative, rapid growth and expansion in the tech industry. Today, I can’t go anywhere without seeing the effects of that, even in name. University of Illinois Urbana-Champaign has become known as the “Silicon Prairie.”
The innovation economy is changing the world. Disruptions have spread across a variety of industries. Crowd sharing technologies have allowed unexpected disruption. Airbnb, the largest provider of overnight accommodation, does not own a hotel. Uber, the largest provider of passenger transport, does not own a fleet of vehicles. Brick and mortar retailers are closing as online retailers take over. The impact of the innovation economy is undeniable. Don’t think any job is above that impact. One company uses chatbots and artificial agents to process and negotiate traffic tickets in court. X-rays are sent overseas for diagnostics. Like it or not, the innovation economy is here to stay. Don’t let your sphere of influence sink. Get started building an innovation economy where you are.
Building the Innovation Economy in Your Sphere
So, what’s a politician or anyone who cares about their livelihood, their business, the place they call home to do? Start by asking the questions:
- What are the rules by which an industry operates?
- What would totally disrupt that industry?
- What would happen if it turned on its head and completely changed?
- What is that impact? What is its unintended consequence? Or its intended consequences?
Perhaps this has already happened in your area and you are left to deal with the unintended consequences. Possibly an industry has dissolved and joblessness is an issue. Then you need to counter that by building a new, innovation economy.
Whether you foresee what may happen or are dealing with the aftermath, ask:
- What can I do to encourage a creative or innovation economy within my local area?
A good place to begin building the innovation economy is the education system. Shift the teaching model. Move toward emphasis on STEAM: Science, Technology, Engineering, Arts, Math. Students need to be prepared to compete in a new economy. Students need to know how to use technologies that have not yet been invented to solve problems that don’t exist today. To do this, educators must develop their students’ critical thinking skills. They must help students find and exercise their creativity. The classroom should be the incubator for teamwork, collaboration, leadership, and ideation.
Another segment of the population affected by disruption is the aging population. This is something communities and politicians should be aware of. When industries decline, older workers face a dilemma: be jobless, retrain, or retire. Left unaddressed, such concerns will put strain on the economy in areas such as social services. Make the investment now. Develop programs to prepare people for the innovation economy. The innovation economy can also bring amazing means to enrich the lives of the aging. Be attuned to the resources on the horizon that can make life better for the citizens in your community.
What’s Stopping You?
Massachusetts is experiencing phenomenal growth through its innovation economy. It is a leader in economic output from the innovation sector. This takes years to cultivate. Having impact in the innovation economy comes from having prepared workers. This means education that prepares students to work in the innovation economy. In addition, it requires developing the means to attract creative talent.
The biggest barrier to an innovation economy is lack of ideas. That goes hand in hand with creativity. Creativity has been stifled in our education system. Yet, today the number one skill CEOs are looking for is creativity. Nurture creativity. And with that comes ideas. Allow those ideas to develop and translate into innovations. Innovation is ideas made real.
The innovation economy impacts us all. It is for us all. Anyone can take advantage of the innovation economy. Anyone can make their ideas real, make their innovations count, and contribute to economic growth.
I’d love to get your feedback on this show. Post your comments at Killer Innovations or wherever you get this podcast.