Metromode's Jon Zemke continues his conversation with Rick Weddle, president and CEO of North Carolina's Research Triangle Park (RTP).
metromode: One of the debates here is whether we should invest in things we already know how to do well, such as automotive or manufacturing technology. Others say we need to get away from that and diversify more by going toward renewable energy or other high-tech sectors. Should we try to go in both directions or focus more towards one?
Weddle: The best model there is look at Silicon Valley. What is the industry in Silicon Valley and what was it three decades ago? It has morphed. It is not about a specific thing. It started out with hardware. Then it was software. Then it was the Internet. Now it's buying. Now it's convergence. It's a platform that takes whatever is the appropriate technology and converts it into economic activity.
mm: So, how does Michigan embrace a new model for its economic development? It took RTP a couple of decades to build up to a point of critical mass. Is that a normal time line?
Weddle: I think it’s a normal time line for 1955, 56, 57,... 1960. But not for today. That still means it's probably one decade as opposed to two. The critical mass in some of the Asian and European parks is moving much more quickly. Those parks that come on later reach critical mass a little quicker because business moves quicker today. You have to remember in the 1950s and early 1960s we were all moving around at a different clock speed. Big companies weren't much quicker. Projects took a long time to plan and structure. The whole base of that has changed now in the 1980s and the 1990s.
They [RTP] are way ahead on clean technology and sustainable systems. But clean technology requires both public policy and industry technology. Unless you can move both agendas forward it won't go anywhere. We're struggling with that because we don't have the public policy framework. California has the public policy framework to mandate clean systems.
If you look at what makes the difference in Silicon Valley, it's a very organic system. It's about the investment bankers, the venture capitalists, the attorneys, the accountants, the managers; the people who know. Someone could come down from outer space and deliver a new piece of technology in the Silicon Valley tomorrow that didn't exist in humanity today and those guys would be commercializing it within three years. It doesn't matter what. They don't really care what the technology is. It's about, "Hey, can we make a business with it?"
Their business infrastructure is focused less on the technology and more on the capability. What is transferable? What do you need to do for sustainable systems or clean technology? You need biochemistry, you need bio, you need material science, you need information technology and environmental law. That's where we're going, taking a look at how we get stronger in those core functions that will bring convergence opportunities forward.
Most smart people believe the future is about intersections, not about pathways. It's about where do these technological intersections exist and how do you develop the capability to exploit those? So it's what comes next and what haven't we even thought of yet?
You have to remember that most major discoveries in the history of humankind came when someone was looking for something else. They got famous for what they discovered, but that wasn't what they were looking for. It's about that capability.
mm: How did RTP get past that generation of influence by Big Tobacco and Big Textiles and start new?
Weddle: You got to remember that we developed on land that no one wanted. So we were kind of a new experiment in the middle of nowhere. We were allowed to incubate those first 10 years or so without really threatening.
The problem I think you have --and I have worked in an oil patch and tobacco economies-- with the auto industry, and this message will self destruct after it leaves my lips, is whether your interests as a region are fully aligned with your interests not of the industry but of the companies. Those of us in the leading edge of economic development are beginning to ask ourselves if the people we allow to run our states and towns are really on our team. That's a huge question, because we're hardwired to think that they are on our team and therefore we ought to let them lead and drive our processes.
What am I talking about? Are these companies local companies or are they national companies or are they transnational companies? Do they belong anywhere? For example, when they say, "We really want to help your town," do they really mean it and do shareholders allow them to? Not like they used to. They're transnational companies. Look and see where all of the CEOs of the major companies have their retirement homes. You'll see they're in Dubai, not in the U.S. Most of these major companies are not going to have native-born people running them, because most of the growth is not in the United States. The question is, now that we have unbundled profitability and prosperity for the first time in history, who really should run towns? I don’t have an answer to that question. But it should be people whose interests are aligned with the interests of the town. To be honest with you, if my interests aren't aligned with yours you don’t want me running your program because I'll clip your coupons for my own benefit and I am out of here when I am done.
mm: Most of the business incubators for new-economy jobs in Michigan are located in city centers next to universities. For example, Ann Arbor Spark is right next to the University of Michigan and TechTown is right next to Wayne State University. RTP used the one central location between its universities. How important is it to have that one centralized location?
Weddle: Proximity to the universities is important. We are a bit unique with this triangle of three universities. It's really kind of unheard of to have a spot like that. But I think mostly what makes incubators work is the right business model so you don't get hung up on "we're not making money."
I was at this university in Beijing a few weeks ago and we were talking about their incubator. This Chinese business guys says, "These things never make any money. They all require subsidies."
Incubators don't make money. A lot of incubators expect the real-estate will pay the bills. Not going to if you're doing it right. Not going to. Once the business model requires that the real-estate pays the bills then you're worried more about filling it up than creating companies. Sometimes you need to kick the companies out, and if you're worried about your lease payments you won't kick them out. So you'll find a lot of incubators that have permanent start-ups. Then you have flower shops or PR firms or things of that sort that really have no business being in that rich pot of creative incubation activity.
mm: Whenever there is a budget crunch here, one of the first things to get cut is higher education. How important is it in North Carolina to keep funding higher education at consistent levels?
Weddle: I think you're eating your seed corn. Funding higher education has been important all along but it's more important in the future than it was in the past because there is just not going to be any average jobs left in America. I personally think the days of getting a high school education and going to work for the big companies and having a good life and living the American Dream are over, and they're not coming back. All you need to do is go to China and go to India and look those folks in the eye and realize they're going to have your job. They're going to work cheaper. They're going to work harder. They're going to be more economically capable of doing that. It's about lifelong education. It's about continual skill upgrading. The half-life of an engineering degree today is about three to five years, so even smart guys have to go back to school. That didn't used to be the case. It used to be you would get out of school and go, 'Whew, got that over with. Now I can work and I don't have to do much more thinking.' Higher education is vitally important.
Let me tell you another thing that's important, infrastructure. Look where China is spending their money, infrastructure. We have ignored our infrastructure woefully to our peril. Look where China is spending its money. It's spending it on education and on infrastructure, and we're not spending it much on either.
mm: Michigan is trying to set up a something similar to RTP with its major research universities by separating their funding from the rest of the state's public universities. Opponents to this method say separating the funding will potentially leave the state's smaller, non-research universities behind. What do you think about that type of argument?
Weddle: Generally, and people may not want to say this, there is a lot to be said about concentrating your resources where they will have the most impact. Some states follow the model where they spread their resources out smoothly across the whole state. And they have good schools, but none that are excellent or show stoppers. North Carolina's model is to concentrate, not duplicate. That's changing somewhat over time, but historically they didn’t have enough money to have tier-one research universities in every major city in North Carolina. So they loaded up and stacked the deck where they could achieve excellence. That flies in the face of that idea. You probably don't need tier-one research universities everywhere. Not every community is going to have the same resources. Most small communities will say, 'Whoa, what about us?' But they have different roles and different purposes.
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