Google just hosted a series of super high-level talks and invited about 50 entrepreneurs, innovators, and scientists to the deluxe CordeValle resort in the mountains south of San Jose.

They were going through some pretty radical ideas. The kind of stuff that could change the world.

It was called Google's "Solve For X" conference, a series of talks where some of the smartest people in the world tried to tackle some of the world's biggest problems.

For universities worried about securing federal research money at a time of tightening budgets, the National Science Foundation has a simple message: Collaborate.

In the same week President Obama is unveiling his budget recommendations for the 2013 fiscal year, the NSF is sending a top official to U.S. campuses urging even greater attention to promoting interdisciplinary practices in research.

Singer Whitney Houston, who died at 48 following a career marred by drug use, at one time had such an incredible voice that she was chosen to sing at the biggest sporting events in the world.

She sang the National Anthem at Super Bowl XXV in 1991. It remains one of the best performances at the No. 1 television event in the world.

East Coast technology accelerator DreamIt Ventures has launched its second new program in as many months – the latest focusing on minority-led startups.

DreamIt Access will consist of five minority-led businesses in each DreamIt Ventures class from now on, starting with the summer class in New York City, said William Crowder of DreamIt Ventures. Applications for New York opened late last year and the early decision deadline is Feb. 22, followed by a final deadline of May 16.

The elements that make up a truly innovative company are many: a focused innovation strategy, a winning overall business strategy, deep customer insight, great talent, and the right set of capabilities to achieve successful execution. More important than any of the individual elements, however, is the role played by corporate culture — the organization’s self-sustaining patterns of behaving, feeling, thinking, and believing — in tying them all together. Yet according to the results of this year’s Global Innovation 1000 study, only about half of all companies say their corporate culture robustly supports their innovation strategy. Moreover, about the same proportion say their innovation strategy is inadequately aligned with their overall corporate strategy.

This disconnect, as the saying goes, is both a problem and an opportunity. Our data shows that companies with unsupportive cultures and poor strategic alignment significantly underperform their competitors. Moreover, most executives understand what’s at stake and what matters, even if their companies don’t always seem to get it right. Across the board, for example, respondents identified “superior product performance” and “superior product quality” as their top strategic goals. And they asserted that their two most important cultural attributes were “strong identification with the consumer/customer experience” and a “passion/pride in products.”

A PDF of the article is available here.

A state-subsidized investment program yielded huge returns for three out-of-state financial firms and their partners while netting just 202 new jobs for Wisconsin, at a cost of more than $247,000 per job, a Journal Sentinel analysis has found.

The investment firms, called CAPCOs, were far more successful at making money for their owners and partners than they were at launching start-ups and creating jobs. They paid millions to cover their owners' taxes on profits. They didn't share any of those investment profits with the state. And they didn't have to, because the program was poorly drafted and had minimal state oversight, the Journal Sentinel found.

Despite the program's poor performance, state elected officials have been lobbied to revive CAPCO investing on a much larger scale. The firms spent $250,000 last year lobbying in Madison - and a group of Assembly Republicans, with support from Speaker Jeff Fitzgerald (R-Horicon), has been reluctant to leave them out of a proposed state program to fund new companies.

Welcome to a special edition of Innovation DAILY! This is the first time we have ever dedicated an edition to one subject. In this issue, we celebrate the launch of an important new book on “innovation ecosystems” by dedicating an entire issue to the subject.

I have known and worked with Victor Hwang and Greg Horowitt for over a decade, and I consider them close friends and colleagues. Their new book—The Rainforest—is a powerful work that grapples with some of the most important issues of our day. Why do some regions thrive with innovation, while others do not? What levers can leaders pull to generate more technology-based economic growth? The answer, they propose, is that innovation ecosystems are like biological systems. Only by understanding human nature can we foster certain types of cultural behavior that unlock human potential. They call this model the “Rainforest.” To construct their argument, they draw from a wide range of disciplines, including neuroscience, psychology, sociology, design thinking, legal theory, anthropology, and even quantum physics. Most importantly, the book offers practical tools for people to foster the growth of Rainforests. Victor and Greg have offered us a preview of their book, which will be published officially on February 21.

In addition, we are featuring select articles from the Innovation DAILY archive that deal with the issue of “innovation ecosystems.” It is an exciting time to be engaged in this work, and the field is starting to blossom. With all the tools at our disposal, I believe our society has the ability to solve some of the deepest challenges of our time. Working together to solve these problems means being part of an innovation ecosystem, not doing it alone. I now realize that Innovation DAILY has been nurturing the growth of its own vibrant Rainforest for years.

Sincerely,
Rich Bendis

What makes places like Silicon Valley tick?

How can we replicate that magic in new places?

These are the critical questions that Victor W. Hwang and Greg Horowitt explore in their new book, The Rainforest: The Secret to Building the Next Silicon Valley. They reveal how the secrets of successful entrepreneurial economies are rooted in culture more than assets. The book takes you from the tech powerhouses in Palo Alto to the steppes of Kazakhstan. Along the way you’ll see how a radical new approach to sparking innovation is empowering people to change the world.

Click here for an excerpt from the book.

More about the book at http://www.therainforestbook.com

It's well understood that existing companies of all sizes constantly create – and destroy – jobs. Conventional wisdom, then, might suppose that annual net job gain is positive at these companies. This study, however, shows that this rarely is the case. In fact, net job growth occurs in the U.S. economy only through startup firms.

The study bases its findings on the Business Dynamics Statistics, a U.S. government dataset compiled by the U.S. Census Bureau. The BDS series tracks the annual number of new businesses (startups and new locations) from 1977 to 2005, and defines startups as firms younger than one year old.

The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs.

At some point, the “business cluster” emerged as a kind of silver bullet for economically-challenged municipalities.

Find a way to put companies together in a single geographic area and they will become each other’s customers, suppliers and collaborators. Innovation, prosperity and jobs will follow.

A new study from Europe’s Centre for Economic Policy Research throws a wrench into at least one part of that theory.

The analysis of 1,604 companies in the five largest Norwegian cities found that regional and national clusters are “irrelevant for innovation.” On the contrary, international cooperation or “global pipelines” were identified as the main drivers of innovation.

Startups happen in clusters. There are a lot of them in Silicon Valley and Boston, and few in Chicago or Miami. A country that wants startups will probably also have to reproduce whatever makes these clusters form.

I've claimed that the recipe is a great university near a town smart people like. If you set up those conditions within the US, startups will form as inevitably as water droplets condense on a cold piece of metal. But when I consider what it would take to reproduce Silicon Valley in another country, it's clear the US is a particularly humid environment. Startups condense more easily here.

It is by no means a lost cause to try to create a silicon valley in another country. There's room not merely to equal Silicon Valley, but to surpass it. But if you want to do that, you have to understand the advantages startups get from being in America.

How should the United States craft policies that effectively spur technological innovation? With increasing competitive challenges from other nations, particularly in technology and innovation-based sectors once thought to be largely immune from foreign competition, there is increasing interest in crafting policies to help spur innovation. But if innovation policies are to be effective, it’s critical that they be based on an accurate understanding of the U.S. innovation system—in particular, an understanding of where U.S. in- novations come from. This report does this by analyzing the sources of award-winning innovations over the past few decades. It finds that the sources of these innovations have changed in two key ways. First, large firms acting on their own account for a much smaller share of award-winning innovations, while innovations stemming from collab- orations with spin-offs from universities and federal laboratories make up a much larger share. Second, the number of innovations that are federally-funded has increased dramatically. These findings suggest that the U.S. innovation system has become much more collaborative in nature. Federal innovation policy needs to reflect this fact.

Download the PDF

Could you reproduce Silicon Valley elsewhere, or is there something unique about it?

It wouldn't be surprising if it were hard to reproduce in other countries, because you couldn't reproduce it in most of the US either. What does it take to make a silicon valley even here?

What it takes is the right people. If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley.

That's a striking departure from the past. Up till a couple decades ago, geography was destiny for cities. All great cities were located on waterways, because cities made money by trade, and water was the only economical way to ship.

Now you could make a great city anywhere, if you could get the right people to move there. So the question of how to make a silicon valley becomes: who are the right people, and how do you get them to move?

If you look at a list of US cities sorted by population, the number of successful startups per capita varies by orders of magnitude. Somehow it's as if most places were sprayed with startupicide.

I wondered about this for years. I could see the average town was like a roach motel for startup ambitions: smart, ambitious people went in, but no startups came out. But I was never able to figure out exactly what happened inside the motel—exactly what was killing all the potential startups.

A couple weeks ago I finally figured it out. I was framing the question wrong. The problem is not that most towns kill startups. It's that death is the default for startups, and most towns don't save them. Instead of thinking of most places as being sprayed with startupicide, it's more accurate to think of startups as all being poisoned, and a few places being sprayed with the antidote.

Startups in other places are just doing what startups naturally do: fail. The real question is, what's saving startups in places like Silicon Valley?

By the mid 1950’s the groundwork for a culture and environment of entrepreneurship were taking shape on the east and west coasts of the United States. Stanford and MIT were building on the technology breakthroughs of World War II and graduating a generation of engineers into a consumer and cold war economy that seemed limitless. Communication between scientists, engineers and corporations were relatively open, and ideas flowed freely. There was an emerging culture of cooperation and entrepreneurial spirit.

At Stanford, Dean of Engineering Fred Terman wanted companies outside of the university to take Stanford’s prototype microwave tubes and electronic intelligence systems and build production volumes for the military. While existing companies took some of the business, often it was a graduate student or professor who started a new company. The motivation in the mid 1950’s for these new startups was a crisis – we were in the midst of the cold war and the United States military and intelligence agencies were rearming as fast as they could.

We’re all in this together – The Chips are Down

In 1962 Walker’s Wagon Wheel Bar/Restaurant in Mountain View became the lunch hangout for employees at Fairchild Semiconductor. When the first spinouts began to leave Fairchild, they discovered that fabricating semiconductors reliably was a black art. At times you’d have the recipe and turn out chips, and the next week something would go wrong, and your fab couldn’t make anything that would work. Engineers in the very small world of silicon and semiconductors would meet at the Wagon Wheel and swap technical problems and solutions with co-workers and competitors.

We’re all in this together – A Computer in every Home

In 1975 a local set of hobbyists with the then crazy idea of a computer in every home formed the Homebrew Computer Club and met in Menlo Park at the Peninsula School then later at the Stanford AI Lab. The goal of the club was: “Give to help others.” Each meeting would begin with people sharing information, getting advice and discussing the latest innovation (one of which was the first computer from Apple.) The club became the center of the emerging personal computer industry.

Lots of attention, research and many-a blog post are devoted to the question, "How do you build a successful startup?" Indeed, this is one of a number of questions (and answers) we are pursuing at the Kauffman Foundation, where I work.

Just as important, and likely a fundamental component of the answer to the above, is the question "How do you develop an entrepreneurial community?" Rigorous network analyses and research are being performed to provide insight in this area, but sometimes a cup of joe and some experience help too.

A few weeks ago the Kauffman Foundation sponsored Big Omaha, a popular annual conference on innovation and entrepreneurship. I hosted a breakfast bright and early one morning for a number of the speakers from around the country along with local entrepreneurs and business leaders to have an informal discussion on entrepreneurial community building.

I’ve lived in Boulder for 15 years after living in Boston for a dozen. While I’ve spent a lot of time in Silicon Valley — both as an angel and venture capital investor — I’ve never lived there. While the firm I’m a partner in — Foundry Group — invests all over the United States, I regularly hear statements like, “The only place to start a tech company is in Silicon Valley.”

When David Cohen (CEO of TechStars) and I co-founded TechStars in Boulder, Colo., in 2006, we had two goals in mind. The first was to energize the early stage software/Internet entrepreneurial community in Boulder. The second was to get new first-time entrepreneurs involved more deeply in the Boulder entrepreneurial community. Four years later, we feel like we really understand how entrepreneurial communities grow and evolve.

First is the recognition that Silicon Valley is a special place. It’s futile to try to be the next Silicon Valley. Instead, recognize that Silicon Valley has strengths and weaknesses. Learn from the strengths and incorporate the ones that fit with your community while trying to avoid the weaknesses. Leverage the natural resources of your community and be the best, unique entrepreneurial community that you can be. Basically, play to your strengths.

In my last entry, I cited value as one of those words in business that stands out among the rest in the minds and hearts of owners, entrepreneurs and managers. In our increasingly competitive and integrated global economy, innovation is another word that carries significant weight and meaning - but not just for the for-profit element of our society.

Policy makers, academic and research institutions, industry and trade associations, and think tanks -- across Canada and around the world -- are also investing considerable time and resources to better understand, develop, employ, or manage innovation in order to facilitate competitive advantage, productivity growth, and/or economic expansion either for themselves or their respective communities.

LIKE so many other young people in Cairo, Yasmine el-Mehairy saw no future in Egypt. What she saw was a dead end.

Then came Tahrir Square.

Six months after an uprising led by people like her ousted Hosni Mubarak and overturned the established order of the Arab world, Ms. Mehairy has joined the ranks of Egypt’s newest business class: the entrepreneurs of the revolution. Instead of leaving Egypt as she had planned, she is staying to nurture a start-up called SuperMama, an Arabic-language Web site for women that has 10 local employees.

“The revolution really made my generation believe in ourselves,” Ms. Mehairy, 30, says. If Egyptians can topple Mubarak, she wonders, what else might they accomplish?