Summer 2008
It’s a Small World After All: Regional Leaders Explore Lessons of the Past, Possibilities for the Future at First-Ever International Benchmarking Conference
In early June, business, economic development and policy leaders representing eight dynamic metropolitan areas from around the globe joined Seattle for The Innovative Region, the first-ever conference of the International Regions Benchmarking Consortium.
Participants in the conference, which was initiated through a partnership involving the Technology Alliance, Puget Sound Regional Council and Trade Development Alliance, were treated to a keynote conversation with William H. Gates, Sr., who shared his perspectives on the factors that contributed to the growth of greater Seattle into a globally recognized center of innovation. Regional representatives also considered how to combine lessons of the past with lessons for the future, with a presentation by Microsoft’s Brad Smith for inspiration.
Technology Alliance Executive Director Susannah Malarkey facilitated the conversation with Gates, beginning with a look back in time to pre-World War II Seattle. Then, The Boeing Company was “the be all, end all of economic activity” and yet, the kind of thinking that led regions to focus on building their economies around innovation was not ingrained as an economic development strategy. Following the United States’ entry into the war, Boeing significantly ramped up production to feed the military demand and, across the economy, jobs were plentiful. After the war ended, huge numbers of people returned home to a super-charged economy and entered higher education en masse.
It was at this point in our history that the university’s role as a driver of economic prosperity came to the fore. Gates noted that, today, we all recognize the impact of a well-educated workforce in a region’s ability to attract innovative businesses and grow its economy; the influx of university-educated workers following enactment of the G.I. Bill laid the foundation for a prosperous Puget Sound region.
In addition, that time period marked a massive injection of federal funding for university research, of which University of Washington was a key beneficiary. Among the actions which set the university, and this region, on the path to becoming a world-class research center was establishment of the medical school in 1946.
“Let me just state what seems to me a very simple and irrefutable fact,” said Gates. “The creation of the medical school at the University of Washington has everything to do with the current economic success for this city…had it not occurred, there’s no possibility we’d be here today, at this meeting, because this would be an entirely different city.”
Medical research, he observed, generated huge interest in health and opportunities to create new products and industries. The interest in health would later become even more central to the region’s identity, when Puget Sound emerged as a center of global health spurred on by the Bill & Melinda Gates Foundation and what Gates, the foundation’s co-chair, termed “a growing public will” in favor of equity of opportunity for people around the world.
The 1970’s marked another pivotal time in the region’s history, with two key events that foreshadowed the Puget Sound’s present-day economy. First, in 1970, the federal government’s decision to scrap the supersonic transport project prompted Boeing to cut its workforce by more than half, from 80,000 to 37,000 employees.
An example of the cyclical nature of Seattle’s economy, there was a faint silver lining in a situation which inspired a billboard requesting, “Will the last person leaving Seattle please turn out the lights?” Whether or not the downturn in Seattle’s aerospace fortunes could be considered serendipitous – Gates wryly observed that “it isn’t the kind of thing you plan for, in order to create economic development” – he nonetheless pointed to the creativity and sense of adventure among many engineers that left Boeing around that time and started new companies. Then and now, Gates credits the entrepreneurial spirit as a significant factor in Seattle’s success.
Nowhere is this more evident than in the story of Microsoft. In this case, serendipity played its part when company co-founders Bill Gates and Paul Allen decided to move their fledgling software company from Albuquerque, New Mexico to their hometown. Gates noted that while the principal consideration in their decision was family, there was another important factor: they knew that they would be able to hire people to do the work that they needed from University of Washington’s computer science department, proving, yet again, that higher education is a critical component of regional economic growth.
Today, Microsoft employs nearly 40,000 people in Washington State, the majority in the greater Seattle area. And the factors which led to Seattle’s good fortune and spawned a vibrant software community are no less relevant in 2008 than they were in 1979.
Microsoft’s Senior Vice President and General Counsel Brad Smith provided the present-day business perspective on the recipe for growing successful regions in an innovation economy – and embraced benchmarking as a valuable tool for both companies and regions. His and Microsoft’s enthusiasm for the regional benchmarking project stems from its potential to identify and spread good practices, laying the foundation for even bigger steps forward in the future.
“This is an exercise that, over the coming years, can make each individual city better,” Smith said.
From a corporate standpoint, benchmarking is an exercise in deciding what the goals are and to measure progress towards meeting those goals, enabling the company to analyze its investments, assess what is working (and what isn’t), and identify and disseminate best practices across departments. One of the most important decisions a company can make, according to Smith, is what it will measure; the big step forward for regional benchmarking will be to move from measuring similar things in similar ways, as we do today, to being able to measure identical things in identical ways.
The presence of an educated workforce, both home-grown and drawn from elsewhere, is essential for success as an innovative region. Smith was particularly impressed with the consortium members’ ability to attract talent, noting their high number of foreign-born residents. Attracting new talent and ideas is, he insisted, “the only way to keep innovating.” More important than co-founders Bill Gates’ and Paul Allen’s roots in Seattle, Smith argued, was Microsoft’s ability to grow by drawing employees to the region; at present, an estimated 13,000 of Microsoft’s Washington workforce are foreign-born, hailing from more than 130 different nations.
Having identified the ability to attract great people as priority number one, Smith shared his recipe for regional success, laying out the essential factors that companies such as Microsoft consider when choosing where to locate and grow their workforce.
First, a region must be able to offer a great education for their children. He noted that the Puget Sound region lags in this respect and needs to improve, but he also advised that those who already do it well can not afford to become complacent.
Add to that strong support for research and development. Investment in university research, Smith said, was “the single greatest economic development decision” made by the United States government. Especially critical has been its support for basic research: for example, 70% of computer science basic research is funded by the federal government. Research is not enough, however; it is also vital to have programs that are effective in moving the results of research out of the lab and into the marketplace.
The final two ingredients for regional success are quality of life and taxation. In the former, Smith includes transportation – specifically, accessibility of people’s workplaces to their homes measured in commute times. On tax policy, he acknowledged that tension exists: thoughtful cities, Smith observed, strike a balance between what they require companies to pay from revenues and smart investments in the first three ingredients to attract talented people to live and work in those regions.
Consortium members recalled Smith’s remarks during their discussion of next steps. They agreed at the close of the conference to take what they learned and move forward with data collection and analysis, as well as explore other ways to harness this new collaboration for the benefit of participating regions.
Conference co-chair V. Lane Rawlins, president emeritus of Washington State University, presaged the impact of the conference when he noted on the first morning, “We will be changed as a result of what we do here, with new relationships and renewed vision and energy. And, we’ll be humbled by the success of some of the great regions of the world.”
To read more about the consortium and view photos and materials from The Innovative Region conference, visit www.internationalregions.org.
Information, Imagination, Ingenuity: Thank You to Our Speakers, Sponsors and Friends for a Successful 2008 State of Technology Luncheon!
On May 9th, more than 800 business, research and policy leaders from around the state gathered in Seattle for the Technology Alliance’s largest annual event, the State of Technology Luncheon. This year’s action-packed program featured a keynote conversation between TA board member Ed Lazowska and Internet pioneer Vint Cerf, opening remarks by Governor Chris Gregoire, a sneak peek at key findings of our new economic impact study, and a celebration of Alliance of Angels’ 10-year commitment to advancing entrepreneurial excellence.
TA chair Marty Smith punctuated his presentation on Washington’s growing technology-based economy by calling on audience members to express their support for increasing high school graduation requirements to better prepare students to succeed in higher education and 21st century careers. As a result, the TA delivered more than 400 postcards to the State Board of Education that call for increasing the minimum course-taking requirement in math, a key priority for the TA and our partners in the College & Work Ready Agenda.
Incoming TA board chair Jeremy Jaech recognized Dan Rosen for his stellar leadership of AoA, which he helped build into one of the nation’s most active angel investor organizations, while The Coffee Equipment Company took home the honors as AoA’s 2008 Company of the Year. All of us at the TA are grateful to the participants in this year’s luncheon program and to our sponsors and friends for your steadfast support of our mission to advance education, research and entrepreneurship in Washington.
View the luncheon program online, courtesy of TV-W, here!
New TA Report Demonstrates Growing Importance of Technology-based Industries to the Washington State Economy
At the 2008 State of Technology Luncheon, the Technology Alliance provided the audience with a sneak peek at findings from our new study of the economic impact of Washington’s technology-based industries. The report, released in June, examines in depth the level of employment, labor income, sales and tax revenues generated by our state’s innovative companies and institutions, and assesses our concentration of technology employment compared to the rest of the nation.
This year, recognizing that businesses in all sectors increasingly rely on innovation to be competitive, we raised the bar on what qualifies an industry as technology-based. The result?
Washington’s technology sector is larger and more diverse than ever, and making increasingly vital contributions to our statewide economic prosperity.
Alliance of Angels Company of the Year Transforms the Cup of Coffee and Brews Entrepreneurial Success
The Coffee Equipment Company, founded in Seattle in 2004, married sophisticated product engineering with that quintessential daily ritual: the cup of coffee. Having achieved a nationwide market for its innovative Clover brewing system – and an attractive exit for investors – the Alliance of Angels’ 2008 Company of the Year is flying high.
New MBA Fellows to Share Their Talents and Learn the Secrets to Entrepreneurial Excellence
Alliance of Angels is pleased to welcome Jon Jacobson and Vandan Parikh, the University of Washington MBA candidates who will work side by side with AoA leadership, investors and entrepreneurs to support the growth of young, innovative companies in our state…and, in the process, advance their own growth as entrepreneurial leaders of the future.
The Technology Alliance’s Discovery Series: the Breakfast of Champions!
Champions of ground-breaking research and game-changing innovation, that is. Satisfy your craving for science and technology with our exciting breakfast series showcasing innovation superstars from Washington’s preeminent research institutions and companies.
New for the 2008-2009 season: in addition to individual membership, we are offering a new category called Network Membership, which entitles your company or organization to send any four people to each breakfast. With programs in Seattle and Spokane, there’s no excuse for missing the most important meal of the day!
Important Dates
- September 12
- Seattle Discovery Series: Yoky Matsuoka, MacArthur Fellow and Associate Professor, Computer Science & Engineering/Neurobotics Laboratory, University of Washington
- 7:30 – 9:00 am
- Seattle
- September 18
- Technology Alliance Board Retreat
- 8:45 am - 3:00 pm
- Bainbridge Island
- October 10
- Seattle Discovery Series: Colleen Delaney, Clinical Research Division, Fred Hutchinson Cancer Research Center
- 7:30 – 9:00 am
- Seattle
- October 17
- Spokane Discovery Series: Kevin Cable, Executive Vice President & Founder, Cascadia Capital
- 7:30 – 9:00 am
- Spokane
