Building Innovation-driven Entrepreneurial (IDE) Ecosystems

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Dr. Phil Budden

Senior Lecturer, MIT Sloan

Starting with “Innovation”

Innovation is a key buzzword of the early-C21st, but what exactly is it, and why does it matter?

MIT’s Innovation Initiative (MITii) defines ‘innovation’ as the process of ‘taking ideas from inception to impact’

Innovation happens in start-ups, but also in corporations, non-profits, governments & universities

MIT’s Innovation Capacity Taking ideas to impact in the global economy

$600M

~1/yr

~5000

~375/yr

Annual spending on research

Number of Nobel prizes(~10% of total)

Number of publications by faculty each yr

Number of patents issued (~50% faculty)

….and Entrepreneurial Capacity (E-Cap)

0

50

100

150

200

250

300

350

# Teams in MIT $100K Competition

MIT faculty create ~25

companies a year from labs

MIT students create ~150/yr

MIT alumni create ~900/yr

4 @MIT_REAP

Changing Career Choices

J. D. Kim, Early Employees of Venture-backed Companies: Evidence from MIT, 2016. Data from 2006-2014,

undergraduate seniors who indicate plans to be employed fulltime during the year following graduation.

How is innovation organized? Innovation-driven enterprises (IDEs)…

Start-ups whose competitive advantage &

therefore growth potential are driven by

innovation –

- ie taking ideas from inception to impact

to solve critical problems

Two distinctive types of Enterprises: SMEs & ‘innovation-driven enterprises’

SME revenue over Time

Rev

Time

IDE revenue over Time

Time

Rev

SMEs IDEs

Why focus on IDEs? Start-Ups create most new jobs in the economy

Why focus on IDEs? …and they create jobs in SMEs too.

“Enrico Moretti’s groundbreaking research shows

that you don’t have to be a scientist or an

engineer to thrive in one of the brain hubs.

Carpenters, taxi-drivers, teachers, nurses, and

other local service jobs are created at a ratio of

five-to-one in the brain hubs, raising salaries and

standard of living for all.”

The ‘Moretti multiplier’: 1x IDE job => 5x SME ones

Growing concentration of innovation & entrepreneurship

In the new global innovation economy, the world is NOT flat…..

…a growing number of innovation ecosystems with unique comparative advantage that can support entrepreneurship across sectors.

In the North East US they are concentrated in MA especially around Greater Boston

And within Boston, they are concentrated in Kendall Square

Stakeholders for Henry Ford’s car?

Stakeholders for your project?

Leading to changes for five important stakeholders in each ecosystem

Q&A

@Phil_Budden