1. 1. Evolving the Regional Innovation Cluster Paradigmfor an Innovation Driven EconomyScott DempwolfAcademic 3: The Evolution of Cluster: from the Competitive Advantageof Nations to the Cluster Initiatives Greenbook 2.012 November 2014
2. 2. Network Models of RegionalInnovation Clusters and theirInfluence on Economic GrowthEvolving the Regional Innovation Cluster Paradigmfor an Innovation Driven Economy17th TCI Global ConferenceMonterrey MexicoNovember 12, 2014C. Scott Dempwolf, PhDAssistant Research Professor& DirectorUMD Morgan State JointCenter for Economic Development
3. 3. Regional Innovation Clusters (RIC)A geographically-bounded, active network of similar, synergistic or complementaryorganizations in a sector or industry that leverages the regions unique competitivestrengths to create jobs and broaden prosperity. (EDA, 2011)This research Validates current clustertheory and policies Exposes their limitation Offers useful extensionsWe have an opportunity to takeRegional Innovation Clusters tothe next level to respond toinnovation-driven growthLimits of Cluster Analysis1. Active networks are not geographicallybounded2. presence of networks is assumed butnot measured3. NAICS-based clusters not sensitive toemergence4. based on employment data; does notconnect economic growth to innovation5. Backward-looking
4. 4. Innovation Driven Growtha simple stylized modelInventionBasic ResearchProductionDevelopmentProduct ImprovementResearch ParksIncubatorsProduction EmploymentBusiness AttractionBusiness ExpansionBusiness RetentionInnovationbasedProductionTBEDResponseyears
5. 5. Innovation Driven Growthhow do we measure it now?InventionBasic ResearchProductionDevelopmentProduct ImprovementResearch ParksIncubatorsProduction EmploymentFirst Employment Data AvailableClusters defined by establishedIndustries, not emerging technologiesBusiness AttractionBusiness ExpansionBusiness Retention~ 5 years +/-InnovationbasedProductionRegionalClusterAnalysisyearsBottom LineIndustry clusters -by whatever name- reflectthe state of innovation about five years ago
6. 6. Innovation Driven Growthgaining early actionable intelligenceInventionBasic ResearchProductionDevelopmentProduct ImprovementProduction EmploymentFirst Employment Data AvailableThis approach can shortenthe lag between real-timeinnovation and actionableeconomic developmentintelligence by several yearswhile also revealing richtalent pools, emergingtechnology trends, andspecific E.D. targetsClusters defined by establishedIndustries, not emerging technologiesResearch ParksPatentsSBIR AwardsNIH AwardsNSF AwardsNASA Awards~ 5 years +/-InnovationbasedProductionA NewApproachAvailable Data SetsInnovationNetwork Analysisyears~ 4 years +/-State Investment DataIncubatorsBusiness AttractionBusiness ExpansionBusiness Retention
7. 7. Networks & Network ModelsGeorgia Innovation Network 2008 2010Locations of selected actorsNetworks made up of nodes (vertices)and links (ties, edges)Nodes are actors, agents or objectsPeople, Organizations, Agencies,Documents, Places *Links are the relationships thatconnect the nodesRegional innovation clusters aregeographically concentrated but alsohave important ties to distant actors
8. 8. Analyzing Regional Innovation NetworksExtract relationships from patent andresearch grant data - about 7M recordsUse social network analysis (SNA) toanalyze and visualize network structureTheoretical grounding in sociologyand science of complexityBehavior of the core network guidesbehavior of whole networkClustering based on intensity ofrelationshipsThis reveals emerging technologies - whatpeople and firms are working on andspecialized talent poolsBattelle Innovation Network 2005 2010Created with NodeXL
9. 9. 1. Innovation is more global and moreinterconnected than previouslythought2. Network structure influencesmanufacturing employment growthwithin about 3 years of patentapplication (more for med &pharma)3. Economic development strategiesthat enhance innovation networksmay be a cost-effective alternativeto current capital intensivestrategies.4. Innovation networks are (or could be)drivers of economic development intier 2 manufacturing regions.PA Innovation ClustersWestinghouseWestinghouse cluster, Pittsburgh PA Dissertation ConclusionsNetwork graphics created with NodeXLAllegheny CountyWestmoreland CountyCore2nd tier3rd tier
10. 10. Regional Innovation Clustersare Complex, Emergent SystemsNetworks are Ideal for Modeling Complex Systems: involve many interconnected or interacting parts exhibit emergence - behaviors that cannot be understood orpredicted by looking at the components of the system alone Emergence is characteristicof self-organizing networks The behavior of the wholenetwork is driven by thebehavior of the core Thus we can focus on thecore and filter out the noisePennsylvania Innovation Networks 1990 - 2007 in the periphery
11. 11. Applications1. Illinois Battery Cluster (2014) Identifying emerging opportunities Combining cluster and network analysis to develop targeted strategies2. Great Lakes Patent network (2011) Finding current opportunity for growth in large active clusters Identifying talent pools3. Georgia Tech Research Network (2013) Visualizing & managing the research portfolio Identifying University collaborations4. Maryland Innovation Network (2011) Biotech & Pharma differentiating comingled clusters Zooming in to look at Baltimores Clusters5. Startups, Venture Capital & Accelerators (2014) The CrunchBase network for Maryland The CrunchBase network for Illinois6. New Jersey Solar PV Research & Manufacturing network (2012) Visualizing the university industry gap Developing a targeted strategy
12. 12. Illinois Battery ClusterThe Illinois Battery Clusterillustrates how network analysiscan augment industry clusteranalysis by identifying emergingtechnologies and opportunitiesfor innovation led growth.Using network and clusteranalysis together economicdevelopers can rapidly developdetailed strategies, identifyingthe specific firms, institutionsand agencies involved and howthey need to connect to achieveeconomic growth.
13. 13. Illinois Battery ClusterCluster Analysis Battery manufacturing splitbetween two clusters Communications (335912: 1est; empl N/A for 2012) Lighting (335911: 11 est; emplN/A for 2012) NAICS 33591 Battery manufacturing2013 (BLS) 2013 Location Quotient = .34 18 establishments 565 employeesCommunications ClusterCommunications Equipment Components sub-clusterLighting ClusterStorage Batteries sub-clusterConclusion: Limited opportunity
14. 14. Illinois Battery Cluster
15. 15. Illinois Battery Cluster
16. 16. Illinois Battery ClusterNetwork Analysis 2012 - $120M JCESR created at Argonne 5-5-5 goal significant industry growth ~2017 Network identifies specific firms + real &potential research ties in specifictechnologiesConclusion: The combination of limitedproduction capacity (from cluster analysis),strong research capacity & research investmentsuggest specific economic developmentstrategies to capture future job growth. Build industry partnerships around existingfirms & supply chains to facilitate growth Target specific firms for attraction to growcluster rapidly
17. 17. Great Lakes Regional Innovation &Manufacturing Clusters (core)
18. 18. Great Lakes Innovation Clusters Impacton Planning Practice
19. 19. Potential University ApplicationsWell suited for integrating andmanaging research acrossmultiple institutions via opennetworks rather than institutionalstructureVisualizing a Research PortfolioOffers both a big picture anddetails of technologycommercialization areas andopportunities Georgia Tech Innovation Network 2008 - 2010 (2 steps)Created with NodeXL
20. 20. Maryland Innovation Clusters 2008 - 2010This analysis showed that theclustering algorithm is sensitiveenough to distinguish betweenpharma and biotech.Maryland Innovation Network 2008 2010Created with NodeXLBaltimore Innovation Network 2008 2010Created with NodeXL
21. 21. CrunchBase startup networks 2005-2014Illinois Startup NetworkAlthough similar in size the Illinoisnetwork exhibits more robuststructureLittle discernable structure; clusteringappears weakMaryland Startup NetworkSome structure and beginnings ofclusters apparent
22. 22. MarylandStartup Network (CrunchBase 2005 - 2014)When clustered, spatial agglomeration is the main organizing factor bothlocally and for distant capital sources; DBED & TEDCO featureprominently, followed by a few investment firms.
23. 23. MarylandStartup Network (CrunchBase 2005 - 2014)Removing New York, Boston and San Francisco nodes diminishesspatial influence as an organizing influence, allowing technology clustersto emerge. (between-cluster ties hidden in this graph)
24. 24. IllinoisStartup Network (CrunchBase 2005 - 2014)Spatial agglomeration is an important factor in Chicago and North Shoreclusters; Excelerate Labs & HealthBox are prominent acceleratorslocally; Strong portfolio organization in remaining clusters
25. 25. New Jersey Solar PV Cluster 2008 - 2010Fruchterman-Reingold layoutIn NodeXLThis analysis revealed significantgaps between solar PV research& development and solar PVcomponent manufacturing.Grid layout in NodeXLProduction CoreResearchCore
26. 26. Next StepsAcademic Research Publications Presentations at SSTI, TCI Global Complete County-level application St. MarysCounty, MD CEDS Seek NSF SciSIP funding for additional networkresearch; validation & calibration of theeconomic model Pending proposal with NIST to evaluate theirimpact on innovation and commercialization(alternative metrics to patent counts) Collaboration with UMD HCIL on improvementsto visualizations and NodeXL softwareCommercialization Launch startup company (fall 2014) Engage ten pilot communities / regions over thenext two years Mix of different sizes, scales, level of organization,density Focus primarily on manufacturing regions Some with cluster strategies, some without Pilot studies may include A network report (limited version of IllinoisRoadmap) Traditional cluster analysis using the Harvard toolfor regions that dont have it An interactive network model On-site training & Technical Assistance Evaluation of performance across all pilotregions