A new report released yesterday ranks Iceland as the world’s innovation hotspot, stealing the crown from the USA.

The annual report released yesterday by INSEAD and the Confederation of Indian Industry sees the US fall from top to 11th and Iceland rise from last year’s 20th place up to first. All five Nordic nations feature in the top ten.

According to Soumitra Dutta, an INSEAD professor of business and technology, who oversaw the survey, the rankings show that size matters – although in this case the smaller the better, Business Week reports.

PEORIA — The author of "Small Town Sexy" told a Peoria audience Wednesday that it's time for small towns to believe in the afterglow.

Kim Huston, an economic developer in Bardstown, Ky., a community of 11,000 people, was one of the speakers at the 21st annual Rural Community Economic Development Conference at the Holiday Inn City Centre. The event concludes Thursday morning.

Huston said it was important for small towns to be more attractive to youth. "We have to engage the next generation," she said.

If a town's population has large numbers of people 65 and over, "Your town's in trouble," said Huston.

But Huston has a two-word reaction to young people who grow up in a small town and want to leave. "Let them," she said.

One frustration I hear from a lot of small business bloggers is that they feel like no one’s reading. They see the big subscription numbers of pros like Darren Rowse or Brian Clark and they’re discouraged that their numbers are just nearly breaking into the hundreds. And then they stop blogging completely. Because, if only 100 or so people are reading your blog, what’s the point?

The point is the 100 people!

As a local business, you don’t need to become the biggest, most well-read blog on the Internet. You just need to connect with your audience and the people on the Web who could become customers. If you’re a local hardware shop in Detroit, Michigan and you’re able to connect with100 people who live in your area – that’s a pretty significant number. There are lots of benefits to being a ‘small-time’ small business blogger. Here are a few more.

More Intimate

Yeah, so you’re probably never going to have the readership that Darren Rowse has at Problogger, but a smaller audience allows you to really get to know the people who are in your community. You get a better understanding of what your customers want, who they are and you can form real relationships with them in a way that bigger bloggers have a difficult time doing. You can reach out to the person who comments regularly on their blog and get to know them on a more personal level. You may even be able to tie the online person with the real-life customer so that you’re better able to target them. Playing to a packed stadium may feel great, but it’s those coffee shop environments that introduce you to your real fans.

For most entrepreneurs, a beta stage or beta product is a crucial way to flesh out new ideas, and find out what works and what doesn’t for their business. And it’s no different for a new endeavor meant to create community and dialog between entrepreneurs and investors in the Boston area.

That endeavor would be The Venture Café, a planned Kendall Square restaurant centered on fostering innovation and connecting members of the startup community with each other and potential investors. The restaurant is in its planning stages, and is supported by Cambridge Innovation Center founder and CEO Tim Rowe, a host of leading area investors and entrepreneurs, and (in the interest of full disclosure) members of the Xconomy team.

The café’s beta phase will start this Thursday and run for 12 weeks. The New England Venture Capital Association is sponsoring office-hour sessions at the Cambridge Innovation Center for entrepreneurs seeking advice and perspective from investors. Flybridge Capital Partners, Charles River Ventures, Bain Capital Ventures, and Polaris Venture Partners are some of the firms that will be sending representatives. Highland Capital Partners ran a preview version of these hours last week, the day the Cambridge Innovation Center officially broke ground on its expanded space.

“It’s a good way to engage with the community, not through the traditional method of networking and one-on-one introductions,” says Nancy Saucier, executive director of the New England Venture Capital Association. “We need to support the innovation ecosystem in a much more open fashion.”

Beyond the headlines declaring a growing transatlantic divide, Europe and the United Sates still share the deepest and broadest economic partnership in the world and need to forge an innovation action plan rather than dwell on inconclusive debates, said US Ambassador to the EU William Kennard yesterday (4 March) in Brussels.

Speaking in front of US business representatives gathered at the American Chamber of Commerce to the EU's Transatlantic Conference, Kennard spelled out two policy priorities for the coming months, echoing US President Barack Obama’s recent State of the Union address.

"I have a great sense of urgency to get things done and to have some concrete deliverables and outcome […]. No issue is more important than getting our economy moving and creating jobs," he said, adding that the fundamental ingredients for success are vision and execution.

Boosting bilateral trade, creating jobs and restoring sustained growth is at the core of the US strategic agenda in Europe.

One of the very best pieces of advice for anyone just starting out is, “Life is too short for regrets.” The reason: regret tends to attach itself to the things we don’t do and later wish we had, rather than to the things we do then wish we hadn’t. This really boils down to one big life lesson: have a crack.

When Amazon founder Jeff Bezos had pretty much decided to leave his lucrative job at a Wall Street firm to launch a website selling books online, his boss urged him to consider what he was risking. As Bezos describes in this superb interview excerpt, all he had to do was picture himself as an eighty-year-old man and the decision became extremely easy.

Essential viewing for all entrepreneurs and adventure seekers.

IBM has found a new source of revenue: using its mathematicians' formulas in business services.

Five years ago, Brenda Dietrich started to investigate how IBM's 40,000 salespeople could learn to rely a little more on math than on their gut instincts. In particular, Dietrich, who heads the company's 200-person worldwide team of math researchers, was asked to see if math could help managers do a better job of setting sales quotas. She assigned three mathematicians at IBM's Thomas J. Watson Research Center in Yorktown Heights, NY, to work on new techniques for predicting how much business the company could get from a given customer.

The mathematicians collected several years' worth of data about every sale IBM made around the world. They compared the results with the sales quotas set at the beginning of the year, most of which were developed by district sales managers who negotiated them with sales teams on the basis of past experience. To spot opportunities the sales teams didn't recognize, the researchers collected external data on IT spending patterns by industry and combined that information with the internal sales data. Then they used a technique called high-quantile modeling--which tries to predict, say, the 90th percentile of a distribution rather than the mean--to estimate potential spending by each customer and calculate how much of that demand IBM could fulfill.

BANGALORE, INDIA: Twenty young Indian innovators, all under the age of 35, from a wide range of fields, including biotechnology, materials, computer hardware, energy, transportation and the Internet, are being honored by Technology Review India, the Indian edition of the international technology magazine Technology Review.

On March 8-9, during EmTech India Conference 2010 in Bangalore, Technology Review India will unveil its first ever TR35 India list, which recognizes the game-changing achievements of young Indian inventors, the magazine said in a press release today.

“The prestigious TR35 list acknowledges the outstanding innovators whose superb technical work holds great promise to shape the next decades,” says Narayanan Suresh, group editor of Technology Review India.

The 2010 class of India TR35 winners have all demonstrated either development of new technology or the creative application of existing technologies to solve problems from the shores of India.

From among the Top 20 Indian innovators, Technology Review India has handpicked three Indians – Kranthi Kiran Vistakula, Rikin B. Gandhi and Dhananjaya Dendukuri - for special honors.

Despite the dire economy and lack of available capital (or maybe because of it), Tech Coast Angels (TCA), the largest angel investment network in the U.S., completed seven rounds of new investment deals and 17 follow-on deals in 2009, raising $4.7 million through direct Tech Coast Angels investment and an additional $57 million through other sources of venture capital and angel capital for the network's entrepreneurial companies. According to Richard Sudek, TCA chairman, "We want entrepreneurs to know that there is still a vibrant investment environment in Southern California. We take our responsibility to foster and develop new enterprises very seriously."

While the total investment money available in 2009 declined from the previous year and fewer new deals were completed, 2009 actually saw an increase in the number of follow-on investments. Sudek said, "Clearly our members feel deeply committed to our invested companies and believe in their growth. We not only continue to raise money for them, we also provide day-to-day operating assistance and mentoring that company executives tell us often make the biggest difference in their success."

A number of the invested companies in 2009 were in the high technology arena, a TCA focus, however many other markets were represented. Young companies in entertainment, industrial applications, retail, communications, healthcare, biotechnology and even home improvement received investment dollars.

The Harper government delivered its budget today and the bottom line is that the government will not raise taxes or cut major transfers to persons and other levels of government.

While the much of the emphasis of the 2010 budget is on controlling the debt, there are some new funds available including a new $40 million innovation commercialization program for small and medium-sized businesses.

In total, the government has committed $19 billion toward new stimulus measures in 2010 and 2011.

There were a number of items in the budget that will affect small businesses. Here is a quick look at what small businesses can expect from the Canadian 2010 federal budget.

The origins of Facebook have been in dispute since the very week a 19-year-old Mark Zuckerberg launched the site as a Harvard sophomore on February 4, 2004. 

Then called "thefacebook.com," the site was an instant hit.  Now, six years later, the site has become one of the biggest web sites in the world, visited by 400 million people a month.

The controversy surrounding Facebook began quickly.  A week after he launched the site in 2004, Mark was accused by three Harvard seniors of having stolen the idea from them.

This allegation soon bloomed into a full-fledged lawsuit, as a competing company founded by the Harvard seniors sued Mark and Facebook for theft and fraud, starting a legal odyssey that continues to this day.

One the interesting differences for startups on the east coast compared to the west coast is how much more compact the east coast is.  For Silicon Valley, the nearest major metro cities are 400 to 800 miles away, which makes the San Francisco area much more secluded. Boston, New York, Washington D.C. and Baltimore are all within a short drive of each other, which makes the sharing of resources, talent pools and events much easier that on the west coast. Philadelphia, conveniently located between Washington D.C. and New York, is home to DreamIt Ventures, which is now accepting applications for its 2010 summer accelerator class.

Until March 22, entrepreneurs with an idea and a team can apply to receive up to $30,000 in capital as well as office space, mentoring from successful entrepreneurs and exposure to investors. The accepted groups will benefit from both the guidance of DreamIt's newest partner, Kerry Rupp, formerly of Classmates.com, Jobster, and LexisNexis, as well as the firm's partnership with StartL, a startup accelerator focused on education services.

Everybody seems to agree that innovation is a good idea. Nearly everyone also agrees that innovation is the best path to growth, profit and market dominance. Anyone who would dispute those statements has only to look at Apple’s success over the past decade—all based on innovation. Relative newcomers to the U.S. (all from Korea) like Samsung, LG and Hyundai have also relied heavily on innovation for market and brand growth. Sony lived on innovation for years.

So, if innovation’s such a good thing, a good idea, the secret of success, then why isn’t everyone doing it? Could it be that there are hidden obstacles? Are there inhibitors to innovation that dampen enthusiasm and chill the spirits of the most innovative people in any organization? You bet there are! I will cover just three of the biggest and most common ones.

The Conference Board of Canada has recently come out with a report card on Canada’s innovation capacity. Out of 17 countries, Canada placed a disappointing 14th and received a “D” grade on its capacity to innovate.   For many of us in the Ontario Commercialization Network, this failing grade is not in our DNA and we need to contemplate appropriate remedial actions.

Innovation is the ability to turn knowledge into new technologically, advanced goods and services. The Conference Board of Canada measured data that outlined the stage of knowledge production, the transformation of knowledge, and market share of knowledge-based industries. Canada’s low relative ranking means that, as a proportion of its overall economic activity, we do not rely on innovation as much as other countries do.  Although Canada is well supplied with educational institutions that produce well-respected science, we do not take the steps to ensure the science can be successfully commercialized into a global competitive advantage.

Canada has been slow to adopt leading-edge technologies and this shows itself in our relatively low productivity level. As other countries develop and adopt more innovation-related business models, their companies are gaining in productivity more rapidly than Canadian companies.

Cisco has announced its second Cisco iPrize Competition. At stake is a $250,000 Grand Prize that will be awarded after eight selected finalists have the opportunity to present their innovation idea to Cisco's selection commitee using Cisco Telepresence.

The first Cisco iPrize was awarded to an idea focused on reducing the energy consumption in the electrical grid. This idea is currently undergoing development in Cisco. But the winners are back at it again and have entered an idea in Cisco iPrize v2.0.

I had the opportunity to do a video interview with Sharon Wong, Director of Business Development in Cisco's Emerging Technology Group about the competition:

Interview with Sharon Wong about Cisco iPrize from Braden Kelley on Vimeo.

Venture capitalism is not what it used to be. The bountiful returns of the dotcom years are long gone and venture capital (VC) firms are now struggling to exit their investments via initial public offerings (IPOs) or mergers and acquisitions (M&A). Also, a new regulatory landscape is threatening to hinder rather than help the industry, and the companies VCs invest in require watertight strategies for major growth. VC experts highlighted these issues and others during a recent panel discussion sponsored by Wharton Entrepreneurial Programs and titled, "Business Exits in the Current Economic Environment."

Appropriately, the event was held at Wharton's campus in San Francisco -- on the doorstep of Silicon Valley, which generates about half of all VC investments worldwide and where venture-backed companies earn about $3 trillion in annual revenues and employ 12 million people, noted the panel's moderator, Wharton management professor Raphael (Raffi) Amit.

But regardless of where their investments are based today, no VC firm has been immune to the global downturn. The number of IPOs by venture-backed companies in the U.S. plummeted from 260 in 2000 to 13 in 2009, and VC-backed M&A transactions dropped from 462 deals worth $99 billion (in disclosed values) in 1999 to 260 worth $12 billion in 2009. Investors, meanwhile, have reduced their commitment to the industry, from $41 billion in 2007 to $15 billion in 2009 in the U.S., according to Amit, who was joined by Larry Sonsini, chairman of Wilson Sonsini Goodrich & Rosati (WSG&R), a law firm in Palo Alto; Ted Schlein, managing partner of Silicon Valley VC firm Kleiner Perkins Caufield & Byers (KPCB) and former chair of Virginia-based National Venture Capital Association; and Frank Quattrone, co-founder and CEO of Qatalyst Partners, a technology-focused investment bank in San Francisco.

I used to own a market research firm, and we’d do just about anything for a buck. You need focus groups? No problem. You need a conjoint study? We’re your guys. Mall intercepts? Let me get out my clipboard.

I found by offering such a broad set of services, we never really got good at any one thing. We had consultants doing certain types of projects only once or twice a year, so they lacked experience and got intellectually rusty. We needed all sorts of people to offer such a broad set of services, making the business neither scalable nor sellable. Eventually we decided to change models and offer one set of research papers to all of our clients on a subscription basis.

The subscription business started off well enough, but along the way, someone asked us if we still did focus groups. It was like a recovering addict being offered a fix. We jumped at the opportunity to do the project. The problem was that people noticed the crack in our resolve and burrowed a large hole in our claim of being specialists. Clients realized we weren’t totally committed to the subscription model and started asking for customization to our reports and one-off side projects. My employees noticed we had strayed from our offering and started accepting other projects — much like a child seeing his parents say one thing and do another.

A conference being put on by the new Advanced Research Projects Agency for Energy (ARPA-E) this week is packed with companies exhibiting intriguing approaches to clean energy. I'll be looking into some of them in more detail in upcoming stories, but here's a few that caught my eye.

Transonic Combustion, based in Camarillo, CA, has developed a gasoline fuel injection system that can improve the efficiency of gasoline engines by 50 to 75 percent, beating the fuel economy of hybrid vehicles. A test vehicle the size and weight of a Toyota Prius (but without hybrid propulsion) showed 64 miles per gallon for highway driving. The company says the system can work with existing engines, and costs about as much as existing high-end fuel injection.

American Superconductor, of Devens, MA, is developing massive 10 megawatt wind turbines that are only possible with the use of extremely lightweight superconducting generators. (Today's turbines typically generate around 2 to 3 megawatts.)

The top one thousand UK companies invested more than £26 billion on developing new products, services and improving productivity in 2008 according to the 19th annual R&D scoreboard, which surveys the 1,000 UK and top 1,000 global corporate investors in R&D.

Spending by the UK companies listed increased by 9.2 per cent in 2008 compared with 2007. The increase was largely by companies in the pharmaceuticals and biotechnology, aerospace and defence, software and computer services and banking sectors.

Eighty one percent of UK R&D was conducted by just one hundred of the 1,000 UK companies surveyed, and is dominated by the pharmaceuticals and biotechnology sector.

Globally, the 1,000 top spenders R&D invested £396 billion in 2008, an increase of 7 per cent on the previous year. There are 46 UK companies in this group and they increased their R&D spend at a rate of 11.1 per cent.

Eighty per cent of investment in R&D by the global 1,000 companies occurs in five countries, the US, Japan, Germany, France and the UK.

The leading social networking site in China, renren.com, started out as a blatant Facebook clone - but it now has tens of millions of users. Despite obvious similarities to Facebook, there is one significant difference from the U.S. in how Renren and other Chinese SNS are used. The bread and butter of these sites is social games using virtual items. Indeed, Farmville originated in China!

In this first post of a series, we outline the most popular social network sites in China. In follow-up posts, we'll look at Twitter clones, online video, and censorship. This series is based on a discussion I had with Kaiser Kuo, a Beijing-based expert on China's Internet.

Kaiser Kuo is a Chinese-American who lives in Beijing. He currently works for one of China's leading online video services, Youku.com, as a consultant on International Business. Previously he was Group Director, Digital Strategy at Ogilvy & Mather China.