The Building Blocks of Innovation: Part 2 of Our Q&A with David Egner of the New Economy Initiative

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single entity trying to cherry-pick the best ideas and connect them to capital. We are looking at that issue. Do we need to replicate something like BioEnterprise, which has done so well in Cleveland? That is not picking a sector as much as picking a crucial institution and making sure that it’s one of the building blocks. You do have Next Energy doing work, and we are working with them to do an analysis of what the potential is. We are not going to make a sector bet on alternative energy, but we will look at what are the needs for an institution to make the central connections inside the ecosystem.

X: I guess that because I mainly cover Boston, which has such a strong network of innovators and financial backers, I don’t even have a good picture of what you’re talking about when you mention these “connecting institutions.”

DE: It’s a hard concept to grasp from outside when you’re used to seeing it work from the inside. In the Detroit region right now, there is not a group acting as an intermediary between venture capital and the life sciences, for example. In the Boston corridor, the venture capital firms play that role. They are ready and robust and looking for opportunities. In Southeast Michigan, because we have not nurtured the connections, the venture capital community is not paying attention to what is coming out of the institutions here. So the market has not naturally filled in that gap. In manufacturing, you have a number of associations that have done work, but the challenge is that they are going one industry at a time. In my opinion, it can be the philanthropic community’s job to seed the marketplace with these key building block components. Once the market is in place, these institutions should be self-supporting.

BioEnterprise in Cleveland has positioned themselves as an intermediary and it’s launched 80 companies in the life sciences that are all on track to being second- or third-tier enterprises. You’ve got the potential for that here with Next Energy. In the areas of homeland security and defense, you have tremendous manufacturing need, but there is currently not an intermediary working with manufacturers or the Department of Defense to make those marriages. Wouldn’t you think that the most active center of cross-border commerce in North America should be a center of the homeland security industry?

But our political structures for economic development have not caught up with this notion. It’s still “Let’s talk about attracting big employers,” and the reality is those days are over. Once in a blue moon, you may get a big employer to move in. But Detroit is still behaving as if these were the expansion years, when the auto industry would open a plant employing 20,000 people and it would barely make the front page. These days it’s going to be 1,000 plants with 20 people each. The entire system is built around watching this huge bonfire burn, and the reality is that the world is now supporting, instead, thousands of brush fires.

X: Speaking of the auto industry—in many of my talks with Detroit-area entrepreneurs it seems that there’s almost an aversion to talking about cars and auto technology. Yet if the United States is going to have an indigenous auto industry, doesn’t it make sense that it would be focused around Detroit? Why isn’t there more discussion about how to make Detroit the world’s leading center for transportation innovation?

DE: I think what happened is that we’ve been so consumed by that industry for so long that if you are from here, you now err on the side of talking about everything else but automobiles. Part of this is the notion of changing our culture to one that’s more innovative, and it seems like when we talk about autos we are talking about our past. But the reality is that the auto industry is also a huge part of our future. This is not your father’s Oldsmobile—this is a leaner, meaner, more nimble auto industry. And hopefully a green one.

I think the technology centers that are here, particularly those inside Ford and GM, are well on their way to pushing those innovations. They have the manufacturing capacity in place, and the supplier network has the ability to produce virtually anything. So yeah, I think we are well on our way to being able to do that. But we haven’t got it right yet. For example, the suppliers have not fully figured out how to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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