Join UNC Kenan-Flagler Business School, our talented panelists and our moderator, Paul Wetenhall, President of Ventureprise at UNC Charlotte and UNC Kenan-Flagler alumnus (MBA 1975), as…
Charlotte and Innovation: We’ve Got Work to Do
December 19, 2013 at 6:43 AM
The engineer in me can never get enough data. This month’s arrival of the Milken Institute’s Best-Performing Cities report and the new North Carolina Innovation Index has left me happily scrutinizing the numbers.
Let’s start with Milken’s annual ranking of the largest 200 U.S. cities (using Census metropolitan statistical areas to define a “city”). Charlotte-Gastonia-Rock Hill ranks a strong #27, up from #37 last year. Long an excellent performer, Austin is ranked first this year. And, for those among us who want to beat Atlanta in more than football, Milken comes through with Atlanta at #41.
But, Charlotte isn’t tops in the Carolinas. It may surprise you to learn that Charlotte’s favorite weekend destination, Charleston, is #11 this year (#9 last year). Raleigh-Cary at #13 is close behind. How many of us have noticed that Charleston has become more than history, houses, and great food?
Why do we care about the Milken High-Performing Cities ranking? It helps establish metro perceptions among economic development and business leaders. And, it has been around a long-time and is soundly constructed (unlike the many trivial rankings found in certain periodicals).
I pay attention to it because it offers an assessment of substantive economic performance measures. It heavily weights job growth as well as wages and salaries growth. A healthy Charlotte is one that creates good jobs for our citizens. Paying attention to wages and salaries is one way to measure the quality of the jobs we are creating.
Milken goes beyond these basic economic indicators to measure high tech sector growth and concentration. Why the high tech emphasis? These are the industries that contribute to long-term metro economic success. High tech jobs have high multiplier effects meaning that each new high tech job creates many additional jobs in the community.
What can we learn from Charlotte’s ranking at 27 (out of 200 cities)? First, we had very strong job and wages and salaries growth from 2011 to 2012. That will strengthen the region if it continues in 2013. Second, we are an average city in terms of the contribution of the high tech sector to our overall economy. However, our high tech GDP is growing somewhat faster than the average large U.S. metro area.
Efforts that diversify the Charlotte economy by strengthening the high tech sector will bolster our Milken rankings in the years ahead. More importantly, a stronger high tech sector will contribute to a regional economy that better serves our citizens.
One final Milken observation concerns the nine large North Carolina metros. Five are in the top 100 metros, four are in the bottom 100…an overall average outcome. But, only three of the nine improved their ranking in 2013 while the other six declined. Is this an indicator that our state is becoming less competitive?
That troubling question serves as an introduction to an excellent, comprehensive report just published by the NC Board of Science & Technology. The North Carolina Innovation Index 2013 examines 38 measures over a decade. They assess five categories: economic well-being, research & development, commercialization, innovative organizations, and education & workforce. The report focus is on the state level but local data is included for some measures.
The Index overview clearly articulates why we must care about its conclusions, “Innovation fuels a knowledge-based economy: it creates new industries, makes existing ones globally competitive, and sustains economic growth.”
The overall Index conclusion is that North Carolina has an average rank of 24 among the 50 states. The state’s individual measures are ranked from 5 to 47. Disappointingly, we are below average on 27 of 38 measures.
Not surprisingly, the state’s innovation strength is primarily centered in a few major metros, especially the Research Triangle area. For instance, 85% of the state’s academic R&D spending and 82% of the academic patents occur at Duke, NC State, and UNC Chapel Hill.
Next time, I will highlight key messages, good news and big challenges, for Charlotte from the Innovation Index.
- Paul Wetenhall, Ventureprise president
Paul Wetenhall has served as president of Ventureprise, Inc. since returning to the Carolinas in 2008. He has been involved in every aspect of entrepreneurship and innovation since leaving a corporate career in the 1980s to co-found a software venture that commercialized technology from Xerox PARC. His perspective includes experiences as CEO, corporate director (public, private, and non-profit), entrepreneur coach, university lecturer, and leader of efforts to build regional entrepreneurial ecosystems.