Supporting strengthening the knowledge economy The Next

Supporting & strengthening the knowledge economy The Next Generation Economy 2009 Legislative Policy Conference Minneapolis, Minnesota January 14, 2009 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

The economic context: Minnesota’s industry clusters Industries thrive when clustered…. …as a geographic concentration of interdependent companies and institutions that have sufficient scale to generate external economies. Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Minnesota has many leading — and growing — clusters Including: - Medical devices - Alternative energy - Wood products/forestry - Recreation and related products - Creative enterprises - Printing - Health care Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Effects of Globalization on Minnesota’s Clusters 1. On organization of clusters 2. On competitive advantage 3. On workforce & education 4. On importance of place 5. On environment Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

1. Increasing globalization AND localization Diminishing importance of proximity to supply chains, information, expertise, research, and markets. Retaining importance of of proximity to skills, startups, schools, know how, talent, and schmoozing. Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

2. Shifting competitive advantage 60 s-70 s Making Things Cheaper 80 s-90 s Making Things Better Helping people and places innovate, collaborate, and prosper. 2000 s Making Better Things www. rtsinc. org

“When people talked about innovation in the ‘ 90 s they invariably meant technology. When people speak about innovation today, it is more likely to they mean design. Consumers, who are choking on choice, look at design as the new differentiator” Business Week , 7 -4 -05 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

3. Changing workforce — both supply and demand • Emerging industries need: - more creative employees - entrepreneurs - amenities to entice and keep talent - educational institutions to prepare the workforce & entrepreneurs - workplace learning opportunities Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Benefiting from a more diverse workforce: Languages in Minnesota’s schools Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Immigrant-founded venture-backed U. S. public companies, 2005 Industry Hi-tech manufacturing % of immigrantfounded firms 42% Information technology 24% Life sciences 21% Helping people and places innovate, collaborate, and prosper. ©RTS, Inc. 2007

4. Place matters more than ever before • Provides an experience, brings tourists • Establishes an identity/brand • Attracts & retains talent Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

5. The environment: “a series of great opportunities disguised as insoluable problems” Minnesota’s Green Jobs, 2008 -2020 Subcluster Jobs, 2008 Projected, 2020 Renewable energy 9, 477 16, 000 Green products 9, 541 11, 500 Green services 22, 441 27, 000 Environmental conservation 11, 367 11, 700 52, 826 66, 200 Total Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Firsts in Minnesota. . . "We'll also fund additional research in cutting edge methods of producing ethanol…. Not just from corn, but from wood chips and stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years. " “Farmers plan to build the first U. S. biomass ethanol plant in Luverne. ”

Where can Minnesota invest to prosper in the global economy? 1. In supporting sustainable clusters 2. In higher education, particularly its community colleges 3. In innovation, including user-driven 4. In its arts & artisan-based enterprises 5. In amenities and distinctive places 6. In extending global connections Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

1. Supporting sustainable clusters • Minnesota has a number of distinctive clusters in its cities and rural areas. • Minnesota already has more officials and experts in cluster analysis (HIPA cluster workshops). • Minnesota’s workforce development in sector (and cluster) oriented. Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Minnesota cluster analyses Humphrey Institute, 2007 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Clusters in 21 st Century • Greater importance of talent & knowledge • Emphasis on design- and placebased assets • Changing definition, structure, functions of clusters • Valuing triple bottom line (economic, equity, environmental) outcomes 18 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

It’s difficult to find emerging clusters with conventional data No NAICS Holistic health Arts & culture Alternative energy Artisanal food Green building Log homes Motorsports Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Government roles • Support civic infrastructure • Fill market gaps in specialized services • Build more intentional connections to educational institutions • Encourage a balance among economic, social, & environmental outcomes Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

2 The workforce imperative in a knowledge economy • • The mid-skilled work force is least portable/importable factor. Labor is important and underappreciated source of innovation. Competencies in existing clusters can be used to develop new and competitive clusters Postsecondary institutions are critical cluster partners. 21 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

North Carolina’s Community College Cluster Hub Strategy • Bio. Network (5 colleges) $ 9. 5 m • Hosiery Technology Center $400, 000/yr (Catawba Valley CC) • Textile Training Center (PCC) $400, 000/yr • Marine Training Center (Carteret CC) • Aerospace (Haywood CC) $1. 5 m • Advanced Materials (Wilkes CC) $1. 5 m • Digital Interactive Entertainment and Simulation Technology (Wake tech) • Motor Sports (3 colleges) $500, 000 22 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

3. Invest in all forms of innovation • R&D to maintain competitive positions of clusters and develop new strengths • Product and environmental design that appeals to special tastes • Incremental improvements that come often come from workforce Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

“It dawns on consumers that your product— be it jeans, socks, or a high-end gas range— is a meaningful symbol of their personal aesthetics, their inner selves” “We all know that no one in their right mind would ever pay $300 for socks. But having a right mind is so yesterday. ” Fast Company Magazine, Sept 2007 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Design that appeals to differentiated consumer base Artisan breads Barista coffees Microbrewed beers Fashion jeans Novelty shoes Swatches Green homes Architectural art Handmade goods Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

4. Support artisan firms compete small, grow large • Recapture the artisan economy • Recognize lifestyle and sector-style entrepreneurs • Grow by aggregation rather than acquisition Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Creative economies in 5 states NC Bigger than biotech or IT, earns about $3. 2 b; median income and population grew with proportion of arts and design workers. AR 3 rd largest cluster in state; 57% of manufacturers say design important to success WY 9% of firms, 6% of employment, $21. 5 M in earnings CO 122, 000 in cluster, bigger than ag, defense, in top 10 states in architects, designers, writers 5% of employment, 11% of self-employed MT Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Self-employment in selected sectors Sector Percent self-employed Multimedia artists and animators 53 Architects 22 Commercial & industrial designers 31 Photographers Graphic designers 60 32 Craft artists 90 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

5. Invest in amenities and brand Intrinsic identity Distinguishing spaces Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

Place-based responses in Western NC • Handcrafted architectural elements • Craft and Garden Trails • Small Production Facilities • Revival of NC Furniture and Textile Industry • Reusing space and energy

Portland’s Green Label Green Building Cluster Compared to other metro areas • Highest number of LEED -bike 7 x as much certified buildings in US -more hybrids per capita • Direct wages estimated -drive 16% fewer miles/capita $350 -960 M in 2006 -buy local campaigns • 821 LEED accredited -hi consumption organic foods professionals • 125 projects underway • High growth rate • Local demand exports • Large % of supplies local 31 Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

6. Invest in global connections • • Joint participation in trade shows Study tours Collaborative R&D International student exchanges and international internships • Regional and cluster partnerships Helping people and places innovate, collaborate, and prosper. www. rtsinc. org

“Imagination is more important than knowledge. ” Albert Einstein Regional Technology Strategies Carrboro, North Carolina Stuart Rosenfeld 919 933 -6699 rosenfeld@rtsinc. org Helping people and places innovate, collaborate, and prosper. www. rtsinc. org