Editor’s note: Noah Pickus is the Director of the Institute for Emerging Issues. Located on Centennial Campus at NC State University, the Institute is chaired by former Governor James B. Hunt, Jr. and charts new directions in science, technology and public policy.At the 2003 Emerging Issues Forum on “Jump-Starting Innovation” speakers from rival states and from Ireland and Wales marveled at the range of North Carolina’s technology-based economic development initiatives.

But these speakers also observed that North Carolina lacks three key elements to succeed in today’s economy: a coherent strategy, a focal point for direction, and a method of evaluation.

The Forum provided clear messages about how to overcome these obstacles and how, in tough fiscal times, industry, universities, and government can revitalize the state’s fortunes.

Involvement of CEOs

Forum speakers emphasized that North Carolina must do more to value its entrepreneurs. At the same time, CEOs Richard Holcomb and Matthew Szulik stressed that successful entrepreneurs must do more to value North Carolina. Too many of our industry leaders, they said, are missing in action when it comes to setting strategic priorities for the state. Yet their voices are indispensable to any effort to revitalize our economy.

In Georgia, for instance, industry heads pressed government and university leaders to establish a CEO-led partnership that leverages university assets to support the regional economy. To date, the partnership has generated 80 start-up companies that employ 2,000 Georgians and have attracted over $500 million in private investment; in addition, 50 established Georgia companies have benefited directly from the partnership’s concentration on technology transfer.

Although the Triangle ranks highly in academic research and development funding, it lags in the commercialization of those ideas into companies and jobs that stay in North Carolina. To stay ahead of the curve, North Carolina’s universities need to bolster collaboration among their technology transfer offices and economic development agencies. They also need to encourage those offices and agencies to more proactively help companies throughout the commercialization process.

A comprehensive strategy

North Carolina also needs a state-wide strategy for identifying the different niches that universities and community colleges can fill, especially in the east and the west, and a plan to establish private research institutions in those regions that can partner in the commercialization process. Other tools proposed by Forum speakers include targeting university funding to areas related to key sectors of the local economy and linking increased funding to higher education to real commercial results.

At the Forum, San Diego and Pittsburgh provided examples of especially proactive university strategies. In both regions, the universities took the lead in fostering cross-disciplinary and cross-professional networks that nurture entrepreneurs from their initial ideas to finished products. Carnegie Mellon and the University of Pittsburgh actually formed a joint economic development agency to streamline procedures and expand resources. This agency’s Vice President, Don Smith, suggested that a similar collaboration among NC State, UNC Chapel Hill and Duke could increase the benefits to the region and the universities.

New economy opportunities

Another key challenge facing states is how to transform their traditional economic development efforts to meet the demands of the new economy. At the Forum, three-term Governor of Michigan John Engler described how long-term strategic investments in biotechnology, education and alternative energy combined with a series of tax cuts to firms in targeted industries strengthened the technology base of the entire state. Engler also streamlined the state’s economic development efforts by partially privatizing them, in the process creating a government as nimble and flexible as the businesses it served.

As the Michigan example illustrates, state governments need not pin their hopes solely on offering generous incentives for companies to relocate. In North Carolina, Forum speakers made clear, legislators and executive agencies can become a catalyst for opportunities by evaluating and inducing collaboration among the many individual initiatives across the state. To be successful, this process must be sustained rather than episodic; it must be autonomous from any particular administration and provide elected leaders with an ongoing assessment of whether their investments are working and how they relate to one another.

At the Forum, successful CEO’s especially urged state leaders to examine whether North Carolina’s capital gains tax hinders entrepreneurs from creating home-grown companies. Dave Rizzo, CEO of MCNC, specifically suggested that North Carolina exempt investors for the first 5 years of capital gains taxes if they launch a North Carolina company based on locally developed intellectual property.

These proposals, like many of the other strategies for jump-starting innovation that were advanced at the Forum, are controversial. More than anything, what North Carolina needs now is a robust public debate that assesses these strategies and compares them to our current efforts and to those of other states. Only through this process can North Carolina develop the strategic vision and leadership to ensure the state’s success in this new century.

Institute for Emerging Issues: www.ncsu.edu/iei/eifpage.htm