“I do not accept second place for the United States of America,” President Obama said last week in his State of the Union address. Speaking of investments that countries like China, Germany, and India are making in their innovative economies, the president was clear: “These nations, they’re not standing still. These nations aren’t playing for second place. They’re putting more emphasis on math and science. They’re rebuilding their infrastructure. They’re making serious investments in clean energy because they want those jobs.”

Fortunately, the budget request for fiscal year 2011 that the Obama administration released on Monday includes foundational investments that will help the United States remain the leader among innovative nations. Congressional leaders should support the president’s vision by adopting these investments in their budget later this year.

The new book Innovation, Intellectual Property, and Economic Growth, by
Christine Greenhalgh & Mark Rogers, looks interesting:

What drives innovation? How does it contribute to the growth of firms, industries, and economies? And do intellectual property rights help or hurt innovation and growth? Uniquely combining microeconomics, macroeconomics, and theory with empirical analysis drawn from the United States and Europe, this book introduces graduate students and advanced undergraduates to the complex process of innovation. By addressing all the major dimensions of innovation in a single text, Christine Greenhalgh and Mark Rogers are able to show how outcomes at the microlevel feed through to the macro-outcomes that in turn determine personal incomes and job opportunities.

From a quick skim of ch. 1 (available here), it appears to adopt a mainstream approach--finding out whether there is market failure or a public goods problem (see Hans-Hermann Hoppe's "Fallacies of the Public Goods Theory and the
Production of Security," in The Economics and Ethics of Private Property for criticism of the concept of "public goods"), and then asking whether we can fix it with some kind of state invervention. The same old "the market is not perfect, so let's let the thugs with guns have more power" song and dance.

There is no shortage of technological development aimed at cleantech solutions. At academic institutions, nonprofit R&D facilities, and private and government-funded laboratories, researchers, scientists and engineers are working on innovations for alternative energy, batteries, biofuels, smart-grid and other energy-efficiency solutions, just to name a few.

The challenge for cleantech investors is identifying those inventions that can successfully address specific pain in the energy and environmental marketplaces and also offer strong potential for the market adoption that leads to successful commercialization.

Such scientific development is taking place at the U.S. Department of Energy (DOE) National Laboratories, where tens of thousands of scientists and engineers perform cutting-edge research in world-class facilities. In March 2009, the DOE announced $1.2 billion in new science funding under the American Recovery and Reinvestment Act for major construction, laboratory infrastructure, and research efforts sponsored across the nation by the DOE Office of Science, which manages 10 National Labs and funds research at another seven. (The Wall Street Journal reported on Nov. 25 that the total science office budget is now $4.76 billion.)

KEF IS A FELLOW NATIONAL ASSOCIATION OF SEED AND VENTURE CAPITAL (NASVF)  BOARD MEMBER AND GETS IT.

RICH BENDIS

Investing in innovation is a critical component of long-term economic prosperity, and the president’s FY2011 budget request includes two notable provisions that will support regional science and technology clusters.

The administration is asking for $75 million “to support the creation of regional innovation clusters that leverage regions’ competitive strengths to boost job creation and economic growth,” a goal Jonathan Sallet, Ed Paisley, and Justin Masterman championed in the Science Progress report, “The Geography of Innovation.” Part of the key to this approach is that is allows policymakers to pay close attention to regional strengths. As the report authors explain: “Geographic regions that are bound together by a network of shared advantages create virtuous cycles of innovation that succeed by emphasizing the key strengths of the local businesses, universities and other research and development institutions, and non-profit organizations.”

The Silicon Valley Association of Startup Entrepreneurs (aka SVASE) has set up a new seed funding program for Silicon Valley entrepreneurs in conjunction with newly established early-stage investment firm Cambridge West Ventures.

On the East Coast, meanwhile, things are in motion too, with the introduction of a new seed startup fund dubbed IA Venture Strategies that was founded by New York angel investor Roger Ehrenberg.

SVASE and Cambridge West Ventures are looking to connect with startups and entrepreneurs in Silicon Valley, and have developed a program apt for very early-stage companies. Selected startups are eligible for up to $50,000 in venture capital in return for an unspecified ‘modest stake’ and deferred legal costs up to $15,000 from certain law firms from the region.

The Rochester of the 1830s got rich off the Erie Canal and flour production. So it was again after the Civil War and through much of the 20th century, with industries such as men's clothing and manufacturers including Eastman Kodak and Bausch + Lomb, and later Xerox, creating fortunes for investors and careers for legions of workers.

The 21st century — marked so far by downsizings at the Big Three and even the dynamiting of unused buildings at Kodak — has been less rosy. Health care and education are growing, and employers such as the University of Rochester and Paychex Inc. are expanding. But the region is barely holding its own as old-line manufacturing and its well-paying jobs decline.

Where do we go from here?

"If this region is going to grow, it's going to be through startup companies," said James Senall, president of High Tech Rochester, a nonprofit economic development organization that runs a pair of business incubators. "Our community has got to get behind forming and growing new companies."

Even if your region could retain all of its graduates, that would still put your hometown at an economic disadvantage. Consultants travelling around the country telling towns, cities and even states how to keep natives closer to home are offering bad advice. Renaissance Chicago is a good example of the talent attraction imperative:

Chicago’s turnaround following the 1980s was remarkable in that a fundamental restructuring supported it. Specifically, though the metropolitan area shed much of its manufacturing base, its work force shifted increasingly into professional and business services. In response, many Chicagoans crafted a new image of their metropolitan region: Instead of being a “hog butcher for the world” and the regional locus for manufacturing and transportation, Chicago (at least in the mind of its citizens) was moving into a new role as a global city, one whose economic connections were being forged with other world business capitals. Chicago was seen as a city casting off its roots for something better.

OTTAWA — Canada gets a D in innovation, according to a report card issued Tuesday, ranking the country 14th among 17 industrialized nations for its ability to turn knowledge into money-making products and services.

In a report from the Conference Board of Canada, this country ranked ahead only of Australia, Italy and Norway for innovation.

Switzerland, Ireland and the United States topped the list.

"The biggest challenge that we're facing is to turn some of the great ideas that we have into products that we can sell on the global market," Gilles Rheaume, the Conference Board's vice-president of public policy, said in an interview. "While we're doing some great research and development at the university level — and it's an important factor — it's not sufficient."

Of the 12 indicators used to compile these rankings, Canada was given a D in nine categories, two Cs and one B. Its highest grade was given for the number of scientific articles published relative to the population. Canada was eighth in that category.

(KANSAS CITY, Mo.), Feb. 2, 2010 – Despite promising economic growth numbers in the last quarter of 2009, economics bloggers have a grim outlook, according to a new Ewing Marion Kauffman Foundation survey released today. Just last Friday, the U.S. Bureau of Economic Analysis released its advance report of a 5.7 percent growth rate (annualized) of gross domestic product during the fourth quarter of 2009. But even before the fourth-quarter estimate was published, 48 percent of economics bloggers said in the mid-January survey that the economy was "worse than official government statistics show." Most respondents rate the overall condition of the economy as "mixed," and 33 percent say it is still "facing recession" or "weak and recessing."

In the inaugural Kauffman Economic Outlook: A Quarterly Survey of Top Economics Bloggers, the Kauffman Foundation sent invitations to more than 200 top economics bloggers, most of whom were on the Palgrave's econolog.net December 2009 rankings. The Foundation will be surveying the bloggers about their views of the economy, entrepreneurship and innovation every quarter to provide a new gauge for the nation's fiscal health.

Glenn Llopis says that instead of focusing solely on profit, business leaders should insist their companies and employees have a positive social impact

Last month, an eclectic group of entrepreneurs, academics, and nonprofit executives gathered at Chapman University's Argyros School of Business and Economics to explore the intersection of innovation and humanity. Entrepreneur and former agricultural business executive Glenn Llopis, 43, of Irvine, Calif., organized the first summit as an outgrowth of a think tank he founded last year, the Center for Innovation and Humanity. Llopis, the author of Earning Serendipity, told Smart Answers columnist Karen E. Klein that he believes companies should promote social change through ethical innovation. Edited excerpts of their conversation follow.

Where do innovation and humanity come together for entrepreneurs and small business owners?

Every small business owner has a dream and feels they can create the impossible. I'm hoping to help them integrate a social priority or identity into everything they do.

One of the most misunderstood terms in the business world is disruptive technology. Too many companies—and the marketers in charge of bringing these companies' innovations to market—assume that "disruptive" connotes a highly-sophisticated, high-end product with cutting-edge technology that will appeal to early adopters. Actually, Harvard's Clayton Christensen argued the opposite in his groundbreaking book on business innovation, The Innovator's Dilemma. As Christensen pointed out again and again, "disruptive technologies were exactly those that did not appeal to entrenched market leaders because they tended to under-perform existing technologies and served a less-profitable consumer demographic." (Source: Dominic Basulto)

Taking Christensen's insight on disruptive innovation (summarized so well by Basulto) as the starting point, we could just as easily extend that thought to say that those innovations that are simpler, cheaper and offer value to the less profitable—those successful at the Bottom of the Pyramid (BoP), in other words—are the ones which contain seeds of disruption in markets outside of their intended audience.

Steve Nash is not only one of the NBA’s best shooters, passers and playmakers. He’s also its most active entrepreneur. “I realized the more I did, the more good I could do,” he says. Here’s a breakdown of Nash's wide-ranging portfolio, from a film production company to a marketing start-up to one of the league’s most respected foundations.

In a recent AP-GFK poll, 72% of Americans said they’re optimistic about what 2010 will bring for the country. That’s a dramatic difference from their same poll answer where almost 75% of them thought 2009 was a bad year for the country.

Despite the recent earthquake tragedy in Haiti (and who knows what else the year will bring), I’ve noticed that people are generally much more hopeful this year. I know I am!

Here are some resolutions you can make, to have a great business and a great life in 2010:

1. I will first schedule for the year all activities that support my health and family (including workouts, doctor appointments, vacations, family events). Why? Because without these, I won’t be able to be productive in my business.

SINGAPORE - If you are a private sector setup with an innovative product or solution that needs access to public sector intellectual property or infrastructure for test-bedding, you could find it easier to gain this access in Singapore's new economic landscape.

There could also be customised platforms to integrate capabilities of research institutions, private and public sector agencies, such as consortia between companies in the same sector to develop a common agenda for research.

These are some examples of how innovation and commercialisation of R&D can be strengthened to reap greater economic benefits, said the high-level Economic Strategies Committee (ESC).

It has outlined a three-pronged strategy which includes growing R&D expenditure to 3.5 per cent of growth domestic product (GDP) by 2015, focusing on commercialisation of R&D and giving emphasis to design-driven innovation.

In the early 1970s, if you happened to be hiking in the woods around Marin County, you might have witnessed a rather strange sight: on the paths traditionally trod by horses or backpackers, an increasing number of outdoor enthusiasts were careening down the hills on bicycles. At the time, what we know as mountain biking was unheard of – bicycles were ridden exclusively on properly paved roads and sidewalks. The modern distinction between “road bike” and “mountain bike” quite simply did not exist. Why would it if no one wanted to pedal up and down rock-strewn dirt paths?

But, sure enough, some people did think this breakneck activity was a good idea. Unfortunately, their bicycles were incapable of handling the tumultuous rides on which the daredevils took them. So, with remarkable ingenuity, the bikers began modifying their bikes – tougher rubber for the wheels, motorcycle-style braking mechanisms – and soon enough, they started selling these “clunkers” to less mechanically inclined experimenters. Today, the mountain bike market in the U.S. is worth nearly $4 billion.[i]

The experience of mountain biking is not unique – in the past twenty years, researchers have documented a wide range of industries that experience what MIT Professor Eric von Hippel calls “user innovation.” These range from semiconductors to software to windsurfing. The proliferation of inexpensive digital communication and prototyping methods is only adding to the amount of user innovation. According to von Hippel, this form of innovation is an important source of novel product concepts and, in turn, economic growth, but do the insights of user innovation theory apply to the experience of poor farmers in the developing world?

Innovation in the U.S. frequently fails to reward inventors. So-called patent trolls are evening the score

Utter the term "patent troll" in tech circles and you're likely to elicit a visceral reaction. Said trolls are companies that acquire patents and seek payment from companies they claim are infringing on those patents. They're viewed by many as blights on the tech landscape, looking to make money from patents that shouldn't have been granted in the first place, thereby forcing companies to spend billions of dollars in legal fees and slowing innovation. Even the more polite equivalent—nonpracticing entity (NPE)—suggests a company that fails to produce something of lasting value.

Both phrases are [Karl] Rovian in their ability to use emotional appeal to distract from the underlying issues, specifically the reasons why nonpracticing entities exist and may be vital to providing access to innovation.

To understand the role played by NPEs, consider a key challenge facing many of the biggest tech companies. Their products are increasingly complex, incorporating many different features and functions. For example, a smartphone serves not only as a phone, but also as an e-mail device, a minicomputer, a camera, a TV, an MP3 player, a Web browser, and more.

I [TOM WALKER] recently enjoyed an opinion piece in The New York Times by Thomas L. Friedman, author and Pulitzer prize winner. Friedman, who has written extensively on the economy, says that what our country needs is "not more stimulus but more stimulation.”

His challenge to Washington — and it’s a great challenge for all of us — is to make 2010 the year of "Start-Up America” by leveraging the experience of our nation’s leading innovators to turbo-charge entrepreneurship across the U.S. and create jobs with an innovation movement.

At i2E, innovation is the bedrock of everything we do. Last week, we had interesting meetings in Washington, D.C., with the Small Business Administration’s Investment Office and the Office of Innovation and Entrepreneurship, a new initiative within the Commerce Department geared to move ideas, research and inventions into new companies.

Both departments seemed highly motivated to make an even greater impact on innovation and entrepreneurship in America. They’re interested in what states are doing and were intrigued by the programs and initiatives in Oklahoma.

With the announcement of Roger Ehrenberg’s new fund – IA Capital Partners – NYC now has another top-tier seed fund. I’ve had the pleasure of investing with Roger a number of times. He’s not only a great investor but also a huge help to the companies he invests in. It’s great that he’s going to be even more active and I hope to work with him a lot more in the future.

The NYC tech scene is exploding. There are tons of interesting startups. I’m an investor in a bunch and started one (Hunch) so won’t even try to enumerate them as any list will be extremely biased (other people have tried). I will say that one interesting thing happening is the types of startups are diversifying beyond media (HuffPo, Gawker) to more “California-style” startups (Foursquare, Boxee, Hunch).

In terms of investors, NYC now has a number of seed investors / micro-VCs: IA Capital Partners, Betaworks, and Founder Collective (FC – which I am part of – has made 7 seed investments in NYC since we started last year). The god of seed investing, Ron Conway, who I quote up top, has recently decided to become extremely active in NYC. One of the nice things about having small funds is we don’t need to invest millions of dollar per round so we all frequently invest together.

With the rapid development of clean-energy technologies, what will our lives look like in the next 20 years? Are we going to be plugging in our cars soon? Will we have a smart meter in our home that tells us our washing machine is leaking?

These questions were posed at the end of a panel on clean energy at last week’s Private Equity Analyst Outlook conference. The panelists – a venture capital investor, a private equity investor and an energy lawyer – each gave their answers, as transcribed below. (For more coverage of this panel, check out this story in VentureWire about how strategic investors will be a major driver of clean-technology investment.)

Tucker Twitmyer, managing director, venture firm EnerTech Capital
From an end-consumers perspective, we think it looks remarkably the way it does today. People are just not interested in managing their daily energy consumption. They want to turn to switch on, wonder how the miracle happens, and enjoy all the benefits of cheap and available energy. And that actually informs a lot of what we do in our investing. In the end, the utilities win. They are regulated monopolies for some very fundamental reasons. And what you will see is – we think, not so much in-home displays – but the ability of central management and control through the electrical wires to reach down and observe and see those new solar arrays – we think hybrid cars more than pure electric – to see all those various things at the edge of this massive network and be able to integrate their vision and their decision making around these millions and billions of devices, as opposed to today where really the only thing they’re integrating is the large central power plant. So the changes will occur back to the core on the infrastructure side much more so than down to the consumer. But we’re all going to love our flat screen TVs and everything else in 20 years.

Collaboration used to be”hype”. Nowadays it’s social media and the iPad/ Kindle e-readers. The speed of innovation is increasing. It’s getting harder and harder to divide these topics. In my eyes they are interconnected, and will become even more woven together. How will this change us?

We have moved from a closed in collaboration (software for use only within the organization, document sharing and workflow) towards a more open and including form of collaboration, where Twitter now seems to be in the forefront of the development. The best forms of collaborative activities are those who appear from nowhere, that aren’t planned, in short are anarchistic in their form. That doesn’t mean that they are purposeless, it means that the collaborative need develops from an individual (or small group) that has a motif for finding answers and solutions quickly. The most effective way to get there is to search for other people that might have the answer,a part of an answer or/ and a benefit from participating with you to solve a topic. Because of the relational interaction, collaboration starts to develop. The blending of collaboration and community (social media) happened in the process, because it’s the most effective way to get to the goal.