New research identifies where the culture of innovation is most firmly rooted.
Colin Angle's robots have been asked to perform jobs in some pretty intense places, from war zones in the Middle East to the surface of Mars to the unexplored corners of Egypt's Great Pyramid. But there's one place, above all others, that the co-founder of iRobot identifies as having been a key proving ground for his robotics company, which saw revenue of about $185 million last year.
That place is Massachusetts.
The advantages enjoyed by a business located along the vaunted Route 128 corridor near Boston include proximity to the nation's top universities, a technologically savvy work force, and a cadre of bankers, lawyers, and accountants who understand the specific issues faced by highly innovative companies like iRobot. "What Boston does," says Angle, "is it creates an expectation that founding your own business is possible. The type of mentors I encountered here were numerous and profound."
Geography is indeed crucial when it comes to fostering innovative companies, according to a new report by the Information Technology and Innovation Foundation, a nonpartisan think tank in Washington, D.C. The study, earlier iterations of which were conducted in 2002 and 1999, assesses the 50 states in 26 different areas related to innovation. Massachusetts tops the list, West Virginia ranks last, and, in between, there are surprises.
Researchers gave data related to "knowledge jobs," including the level of education of the state labor pool, the most weight. Next in importance was the economic dynamics of a state, such as the number of start-ups and of fast-growing companies. Third, the state's capacity for innovation, expressed through R&D spending, venture capital investments, and patent filings. Finally, the state's digital infrastructure and its access to global markets were factored in.
Policymakers would do well to pay attention to the things that make a state hospitable to innovative ventures, says Robert Atkinson, president of the Information Technology and Innovation Foundation and the co-author of the report. Why? Because innovative companies have an outsized economic impact. Atkinson cites the long-term viability and high productivity levels associated with high-tech companies. Plus, the average high-tech job pays almost double the average annual salary for the United States. Innovation can help shape a region's economy in subtler ways, too, such as when technology makes life easier. "You're getting innovative technology and business plans," says Atkinson, "and you're getting something that's changing society, obviously for the better."
The Tech Establishment and the Rising Stars
Fueled by the pharmaceutical industry, New Jersey lands at No. 2. The other top states on the index represent the usual high-tech suspects--Maryland, Washington, and California.
The report also identifies two major hubs of innovation out west: Colorado ranks ninth and Utah 12th. Colorado benefits from a large number of start-ups and from an educated work force.
Utah's economy is tied to the Web: It ranks third in terms of the percentage of people online and the total number of domain names registered per company in the state. Utah is also third in the category of job churn--that is, the number of start-ups plus the number of business failures. Though it sounds counterintuitive, many economists believe that numerous bankruptcies actually make for healthy economies. Failures are painful, but workers and capital can seek out worthier ventures.
How a State Can Gain Ground
Maine is not one of the standouts on the list. Its economy is still largely dependent on 18th-century industries like paper and timber, which shed jobs year after year. Yet even here, there are stirrings of economic vitality. Per capita income is catching up with the national average. More intriguing, Maine surged 11 spots in the category of patents issued per 1,000 workers.
How has Maine bolstered its innovation quotient? Angus King, governor of the state from 1995 to 2003, provided state R&D grants to private companies and established a state-funded nonprofit group to invest in technology companies. And he provided a laptop to every seventh- and eighth-grader. The idea was questioned at the time, but today the program serves as a model for other states. King thinks the lesson here is that lots of little ideas--from both the private and public sectors--can, in concert, have a big impact. "There's a misconception about economic development, that it's all about recruiting firms to come to your state," says King. "The reality is that most new jobs come from within, from indigenous businesses succeeding. I would much rather have ten 100-person companies in my state than one 1,000-person company."