Economies and businesses change and evolve over time. Those that fail to innovate often struggle to achieve sustainability and growth.
In 1955, the largest 500 U.S. companies by revenue were listed in the inaugural Fortune 500. Today, less than 12 percent of the companies included in the original list remains. The remaining 88 percent of those original companies have gone out of business, been acquired or merged, or have fallen off the list.
Just like any business that fails to innovate, states face the same challenge: innovate or get left behind.
“Innovation is crucial in creating economic prosperity and long-term growth not just in Utah, but in places across…America,” said Lieutenant Governor Spencer J. Cox at the 2018 SSTI Annual Conference, the country’s largest technology-based economic conference.
“Now, you can call this the new economy, the post-industrial economy, or a myriad of other things, but the important takeaway is that science and technology are at the forefront of economic expansion. Not just here in Utah, or even America, but across the globe. And if we’re not innovating, we’re not playing in this space and our rural communities especially will struggle to make a living.”
It is paramount that states continually innovate and find new ways to utilize technology-based economic development strategy and policy to grow the economy.
As Utah works over the coming months to evaluate new ways to promote innovative policies to drive economic growth in our deep-technology sectors, like aerospace and cleantech, it is also crucial the state assesses how it measures innovation.
A recent article published by the World Economic Forum highlighted that innovation needs to extend beyond policy and new products; how innovation is measured must also be updated and relevant.
Traditional measures of innovation such as R&D investment and patents are limited in their ability to assess innovation, writes David Gann, vice president at Imperial College and Mark Dodgson, professor of Innovation Studies at the University of Queensland. While these traditional forms of measurement work for large firms and in advanced manufacturing, they do not always account for the innovation that occurs in services, business models, and entrepreneurial start-ups.
Many of the new digital technologies in the deep sciences are intangible investments that are difficult to measure their potential economic impact, the World Economic Forum noted. For example, small-scale ways of manipulating matter employing additive manufacturing are being developed by Nielson Scientific LCC with the support of the Utah Science Technology and Research Initiative (USTAR). This innovation and many other science-based products complicate traditional methods of marking the economic and industrial impact of technology investments compared to traditional activities, such as investing in real estate investments.
Gann and Dodgson stress that for successful innovation policy to be developed, government, including state governments like Utah, must seek out innovative ways of assessing quantitative and qualitative indicators to measure the impact of technology-based economic development and innovation programs like USTAR.
“Government innovation policies have to be based upon, and directed towards improving, the performance and practices of the new industrial era,” write Gann and Dodgson. “The way innovation occurs is changing – and so the indicators that measure it must respond to this new reality.
Over the next several months, through the legislative directives established earlier this year by SB212, USTAR will collaborate with the executive leadership in the Governor’s Office, the Utah Legislature, the Governor’s Office of Economic Development and other stakeholders to develop new, innovative approaches, programs and measurements to promote growth in the state’s innovation economy.
The creation and testing of new models to promote economic growth will work to ensure that Utah, like the 12 percent of companies who remained on the Fortune 500 list over the past 65 years, continues to be a leader that adapts to the changing economies of the world.