Forging Innovation

Catalyzing economic development in Pittsburgh through collaborative discussion and emergent thought.

Monday, October 10, 2005

Economic Development - A Social Approach

Welcome. My name is Hooman Radfar. I am a Pittburgh native and founder of Clearspring Technologies, a Carnegie Mellon University spin-out that is creating the fundamental technologies to power the next generation of the web.

While I am not working to improve the web, I am out trying to make our city a better place. One thing that I have discovered during my adventures in economic development is that there are a lot of good people working hard to improve the region. In fact, it was these good people that inspired me to launch this project with my friends Ed Engler and David Jaffe.


Many of the efforts to improve our city are extremely fragmented. There are a number of positive initiatives, but no initiative has the resources necessary to single-handedly jump-start a self-sustaining pattern of economic growth. The only way that we can move forward as a city is by moving forward together. Imagine the possibilities if all the people that care about Pittsburgh worked in concert, leveraging a shared set of principles to achieve
the singular goal of promoting a forward-thinking culture and environment conducive to recombinative innovation.

The goal of this project is simple--connect people with ideas. I will try to update this site as regularly as possible with news, editorials, and other information. I encourage each of you to create your own blogs, post comments, and get your respective ideas on the table. If you send me the link to your site, or another relevant site, I will try to link back in a timely fashion. Economic development should not be left to board room discussions and closed meetings. This is a public issue. Accordingly, the public should contibute to policy-formation efforts. By leveraging our collective intelligence using this social medium, perhaps we can move towards the vision of southwestern PA as a nationally-recognized corridor for innovation.


Please let me know if you have any suggestions. This is a living project. I am not sure exactly where it will go, but that is half the fun!

8 Comments:

  • At 3:00 PM, Blogger Askinstoo said…

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  • At 6:14 AM, Blogger Ed Engler said…

    Hooman - thanks for putting this together. As you said, it is key for the community to collaborate in order for us to be able to move forward. I hope this blog will help in that regard. I hope many others will share their ideas and work together to craft an agenda around the entire region that will help us compete effectively against other regions for the talent and capital we need to make the most of the innovative ideas that are already here and create more innovation.

    Ed

     
  • At 12:31 PM, Blogger david jaffe said…

    It's impossible to discuss economic development in the context of entrepreneurship without having some understanding of principles underlying technological innovation and social networking. As more Pittsburghers come to understand these principles, the more they will see their indispensability to regional economic development policy and the more they will hold the regional leadership (elected and otherwise) accountable for developing policies designed to accelerate the rate of innovation and new venture formation.

    All of this pre-supposes that people understand why technology, entrepreneurship and innovation are essential in achieving the goals of economic development policy (income generation and wealth creation). Let's not assume that. Let's answer the question. For decades, the leading scholars on innovation - Joseph Schumpeter, Peter Drucker, Michael Porter, Clayton Christensen to name a few - have observed that a significant portion of innovation in our economy comes not from "big industry" but from university-based research, corporate spinoffs and new market entrants.

    Why aren't large companies particularly innovative? Because they have achieved their scale by exploiting technologies ex post. By the time they reach the stage where they can afford to invest the billions it takes to become producers at scale, their best innovation is behind them - its simple microeconomics. The goal at this stage of the corporate life cycle is operational efficiencies, mass production and risk minimization. So as organizations grow they become more risk averse, not less and therefore less likely to innovate ex ante.

    Let's be clear, though. There are plenty of examples of large companies making marginal or incremental innovations. In fact, they're good at this. New version of last year's Land Rover, Internet Explorer 6.0, etc. But the really disruptive innovations are what we're talking about here because they are where the economic growth is greatest. This is where entrepreneurship becomes essential because the competitive assymetries just mentioned mean that large companies can't.

    So that's why any dialogue about regional economic transformation has to be primarily about accelerating the rate of disruptive innovation through new venture creation and technology transfer rather than about discussing policies focused on change within or around dominant corporations.

    This is the discussion the region needs to be having and these are the reasons why.

     
  • At 12:31 PM, Blogger david jaffe said…

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  • At 8:20 AM, Anonymous Anonymous said…

    I am glad to see that people are starting to speak out about these issues. Looking forward to reading!

     
  • At 5:17 PM, Blogger HELP said…

    HELP is happy to support one of our founding members in this endeavor as it aligns perfectly with our goals of improving the entrepreneurial environment in Pittsburgh

     
  • At 5:53 AM, Blogger Ed Engler said…

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  • At 6:19 AM, Blogger Ed Engler said…

    At the recent PVCA meeting, Dr. Robert Lowe presented some excellent data regarding Pennsylvania's comparitive situation in regard to public policy and how it affects business development. He mentioned that PA is at or near the top in a wide range of key activities such as inventions, patents, licenses, research grants, numbers of startups and amount of state money spent in this area.

    Still, we lag in productivity, startup retention and successful wealth creation. It was clear from that presentation that our public policy, while certainly in need of improvement, is not the key barrier to success that we face.

    From all that I've seen, the key question to ask is "Why can't we retain our startups?" A secondary question that is often raised is "Why can't we retain great talent?" I believe the answer to the second question is that we don't offer enough opportunity in the form of compelling jobs for the talent that comes here. The Universities and various companies have always been successful at attracting great talent to Pittsburgh. We all know Pittsburgh has a lot to offer in terms of quality of life. The challenge I've seen is that once these talented individuals complete their first job assignement, they have difficulty finding the next one. Often they end up leaving the region to find that next great opportunity. We simply have a shortage of opportunity to retain those individuals. Similarly, our ability to retain the enormous flow of talent that comes through our universities is very limited because of lack of opportunity.

    Why can't we retain the startups that represent the opporunity that everyone here seems to want so badly?

    Do you agree that this is the key question?

    The answer, it seems, is the lack of private risk capital willing to fund innovative startups after public funds are exhausted. Clearly we do have a community of active angel investors who fund a handful of companies. Clearly we do have some VCs that also fund a handful of companies. We need more investors, though. The most likely moment for a startup to leave town is when an outside investor puts money in and insists that the company move to one coast or another. What we need is a critical mass of private investors that can anchor companies here, perhaps even while attracting capital from outside the region to help fund local startups.

    Do you agree that this is the crux of the problem?

     

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