Greater Richmond Chamber of Commerce Partner and Trustees Luncheon
Feb. 26, 2014
The Jefferson Hotel, Richmond, Va.
Thank you for that introduction, and thank you all for inviting me.
I love coming to The Jefferson Hotel. It’s a great place. It’s also an appropriate stage for a conversation about innovation. This hotel’s namesake was one of our great innovators in American history.
Every day for 50 years, Thomas Jefferson rose with the sun, waking as soon as he could read the hands of the small clock he kept next to his bed. He began every morning by engaging in scientific discovery. He would measure the temperature, the wind’s speed and direction, the amount of precipitation that had fallen overnight, a process he would repeat twice a day. He would note which birds and flowers he would see, based on the season and the weather conditions.
Then he would dress, filling his pockets with scientific instruments that he would use throughout the day wherever he went: scales, a thermometer, a surveying compass, a level, even a miniature globe. He carried a small ivory notebook in which he would record his discoveries throughout the day. At night, he would transcribe those observations into his vast catalog of journals, then erase the writing in the ivory notebook to begin anew when the sun rose again.
For Thomas Jefferson, every day was dedicated to innovation. And you can still see many of his inventions when you visit Monticello.
He began a long history of innovation and creativity in Virginia. Generations of visionaries across the commonwealth have built on that foundation in the 200 years since. Jefferson focused on how the world worked. Virginians today are imaging how the world could be.
Forbes magazine recently picked Virginia as the second-best state in America for business, and called Richmond one of the top 10 “up and coming cities in the world” for entrepreneurs. Notice that was top 10 in the world, not just in the United States. We live and lead in an innovative city that’s in the heart of a pioneering commonwealth.
But I worry that we may have hit a ceiling.
It’s time to invest in innovation as a priority for our region.
The Center for Innovative Technologies, on whose board I have the privilege of sitting, recently released a report that looked at how we’re doing in terms of innovation. It showed mixed results.
While we are exceedingly productive at filing patents, awarding STEM degrees, engaging entrepreneurs, and researching and developing new products, we lag behind in some key areas. For example, too many well-educated workers — those who earn those STEM degrees — are leaving Virginia for opportunities elsewhere. Too few federal grants for research flow into our state. There is not enough access to startup capital, and so we’re only holding steady in terms of startups. And of particular interest to me, Virginia’s universities are not licensing enough of the technologies they create.
What the CIT report really shows us is that we have challenges, but we have also been incredibly productive in spite of them. But how can we be even more productive? How can we ensure that Virginia — and its capital city in particular — is internationally renowned as a home for innovation?
Let’s talk today about how we can commit ourselves, as leaders of Richmond and of the American Dream, to developing a culture of innovation.
Let’s invest in innovation at a time when it’s more important than ever.
Let’s ensure that Richmond is well-positioned to be a 21st-century leader in innovation — just as Forbes said we can be.
Let’s build a culture of innovation in Richmond.
By that, I mean a pervasive commitment — across our region — to reimagine our future and re-engage our partners. I mean a dedication to building a community that’s fueled by passion over politics and results over recognition. I mean a team of thinkers and doers who share the vision of Richmond as a place where anything is possible.
There are many reasons why this is a good idea, of course. Given our limited time together, I’ll talk about three, which in my mind can make the biggest difference quickly.
No. 1: Creating a culture of innovation has a profound impact on the economy.
And creating that culture, I believe, begins with higher education.
In a Roanoke Times op/ed two weeks ago, a former secretary of education in Virginia wrote: “States that have a research-driven economy will have a distinct advantage in the national and global market. Our strong research universities have enormous potential … [and] a robust system of research universities with an international perspective will be central to Virginia’s growth in the future.”
He’s right. Modern economies are built by ideas as much as by capital and labor.
Our nation’s GDP now exceeds $16 trillion. By some estimates, half of that is based on intellectual property, much of which is developed in the laboratories of American research universities. Taken alone, the market value of American research exceeds the entire GDP of every other nation in the world except China. And even that’s close.
Last year, a study by the National Bureau of Economic Research found that every dollar spent on publicly funded research returns as much as $10. These days, almost all of that research is conducted in universities, some $65 billion last year. You won’t be surprised, then, to hear that 50 percent of the nation’s GDP is produced in about 20 metro areas — those where the largest research universities are located.
The good news for Virginia is that we have three national research universities. That includes VCU. What began 175 years ago as a small medical school is now one of America’s “up-and-coming” universities, says U.S. News, and a top 200 research university internationally, according to a rankings agency in Shanghai.
Our vision is to be America’s premier urban, public research university. And we’re well on our way thanks to the talent and resolve of my colleagues and, increasingly, our students.
But what does it mean to be the nation’s best urban, public research university? Well, for one, it means helping catalyze innovation and growth in Richmond, our home. And I am committed that our impact will be much broader than just the university.
Let me tell you about Phillip Gerk. He’s a professor in Pharmaceutics at VCU. In his laboratory just down the street from here, Professor Gerk has pioneered drug-delivery products that make it safer for expectant mothers to take medications they might need without harming their unborn babies. His inventions will absolutely help women and children be healthier — even before they’re born — and will undoubtedly save lives.
But here’s why it’s critical to have a real culture of innovation, not just pockets of innovation: Phillip Gerk needs help.
Innovations by Professor Gerk, and others, are profoundly important to our economy, and to people’s lives. But they cannot help people if they are sitting in the lab. We have to move innovation into the marketplace, and that takes all of us. Universities, corporations and economic development organizations have to be good partners in helping innovations reach the marketplace quickly and efficiently. This nexus is the space where the future is invented.
But to get there, we need to bring great inventors together with great investors. We need to engage each other as partners, and ask one another to focus on results that matter, like high-paying jobs that will keep all of our STEM graduates here, and economic development that elevates Richmond nationally.
Let’s make sure more research dollars flow into Richmond to ensure that more innovations are flowing out.
Let’s help our startups avoid stop-downs.
Let’s build a culture of innovation in Richmond.
Of course, innovation is a whole lot more than just economic returns. Which brings us to the second part of our conversation: Creating a culture of innovation has a profound impact on society.
Just as innovation is about more than economics alone, it’s also about more than breakthroughs in science, engineering and medicine. It’s also about knowing who we are. So in a culture of innovation, we have to engage in the arts and humanities, because these speak to our identity as a society and as human beings.
Art and innovation are inseparable. And that is why you’ve all heard me talk so often about the Institute for Contemporary Art, which is a priority for VCU, our No. 1-ranked School of the Arts and for Richmond. By the way, many of you have personally invested in this transformative project, or your companies have, and I am deeply grateful. This is a facility for all of Richmond and for the world.
The ICA is innovation in art and through art. It will change our community and our citizens, because what does great art do? Or great theater, or music, or literature? It evokes senses and emotions that have never been experienced. It changes how we see the world and empowers us to imagine what we might contribute to it. It becomes part of a process through which we are all educated about our lives and ourselves and our fellow human beings.
That’s innovation. And it makes life beautiful.
We know life isn’t always beautiful.
Every day, we face grand challenges and wicked problems, and we’ve got to be innovative enough to solve them for ourselves and others. As a society, what will we do about the increasing demands for safe food and clean water? Or eradicating global pandemics and curing diseases? Or the energy crisis?
These issues take investments in innovation that will allow us to respond quickly and nimbly with partners across the globe — or across town.
Like VCU’s groundbreaking partnership with Dominion. It’s a five-year project to test energy-efficient micro-grid technologies. It gathers power-consumption data on a micro-grid installed in our engineering building and makes continuous adjustments to the building, lights and equipment to use energy more efficiently. While the economic benefit is important — about $100,000 in reduced energy costs over the lifetime of the project — it’s really about saving energy and rethinking the way we power our lives.
This may become one answer to the energy question, but we will need others. Society’s calls for innovation are constant, and they are varied, so it’s critical that we all answer.
Let’s bring our best ideas forward to ensure that we’re ready to answer today’s questions and focused on tackling tomorrow’s.
Let’s remember that inspiration is innovation, and that evoking our senses changes our world.
Let’s build a culture of innovation in Richmond.
We now ask our students why they chose to come to VCU when they were academically qualified to go anywhere. One of the most common answers we get is our wonderfully diverse urban setting.
Our students love living and learning in Richmond. But too often, they cannot stay in Richmond.
Last semester, I met a very bright student named Abigail. It was almost time for her to graduate, so I asked her how she was doing with finding a job. The good news for Abigail was that her GPA, resume and experience were excellent. The bad news was that, even with all of this, she was struggling to find an attractive job here in Richmond. And she told me that many of her classmates faced the same challenges.
I’m proud to say that Abigail graduated in December, and she found a job that she loves. The problem is that job is in Northern Virginia. For the first time in her life, Abigail lives, works and contributes someplace other than Richmond.
We all know that there are great opportunities here, including at many of your companies. But we also know that there aren’t always enough opportunities to match the robust talent in this city, and that’s true across industries.
Which brings us to our final point: A culture of innovation will build a sustainable and productive workforce.
Why is that? Because innovative regions increase both the supply of and demand for a skilled workforce.
A couple of years ago, a team of researchers from the Federal Reserve Bank in New York wanted to see what the strongest predictor of sustained economic vitality for a region would be. What they found was interesting.
Those areas that had the longest periods of sustained economic success, they discovered, were those that also had sustained human capital. In these regions, universities were graduating highly educated and motivated people. Families stayed in the area for generations, and new families moved in, attracted by the companies headquartered there. And more and more companies relocated there, drawn by the endless line of potential employees.
The researchers found direct links between increases in population and wages, income and innovation. Moreover, during economic downturns, these regions could reinvent themselves rapidly and continue to thrive.
One of the regions highlighted in this study, by the way, was Northern Virginia/D.C.
So what about Richmond?
There is enormous talent here, in our schools, businesses, churches and homes. There is also tremendous ambition and extraordinary determination to succeed.
About half of the students at VCU say they would like to start their own company someday. Half! And, remarkably, 14 percent have either already started one or are in the process of doing so, even before they graduate. Understand that that’s more than 1 in 10 of our students!
There’s a sea of entrepreneurs bubbling up. We must ensure they have every resource and every opportunity they need, not only to stay here but to thrive here. That includes, from my perspective, moving forward with the next phase of the Virginia BioTechnology Park, which needs to be a significant resource for our region.
We must ensure that these young entrepreneurs are part of a larger culture of innovation.
With some notable exceptions, the tenure of a CEO is short. Among the Fortune 500, it’s less than five years. That means we have to think about more than our success today, but the sustainable success of our entire region. So we need young leaders in every industry who are game changers, who will work effectively in any environment, who can respond to changing circumstances and who will solve problems that others cannot or will not — even if they have long returns.
The good news is that we have young leaders like that right here.
Last year, the number of students who graduated from the colleges and universities in Greater Richmond exceeded the total local workforce of Capital One and HCA Virginia combined. Imagine that. There is enough well-educated talent in this city to renew the workforce of two of our largest employers every single year.
Let’s give these young women and men more than a diploma. Let’s give them a chance to make a difference.
Let’s ensure that the opportunities here match the talent here — not only right now, but in the long-term — so that the success we’ve built is sustainable.
Let’s build a culture of innovation in Richmond.
It’s been an honor to be with you today. I appreciate our partnerships, and all you do for this great city. And I’m excited about the future of Richmond because I know a culture of innovation is not only possible, we’re already working toward it.
We are standing on the shoulders of Thomas Jefferson. And together we’re going to achieve things that, even in his wisdom, he could not imagine.
We’re going to build a culture of innovation in Richmond, and we’re going to do it together.