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Frequently Asked Questions
What is innovation from a business perspective?
Innovation has a variety of definitions. A workable definition may include the following: Innovation is when a product offering, service, business model or operation is meaningfully improved to enhance the experience of one or more internal or external customers. Some of the drivers of innovation come from changing customer demands, other from governments controls, and still others from the desire to operate more efficiently or improve the quality.
Certain business industry sectors that rely on technology and research are considered innovation-based industries, including, but not limited to, information technology and telecommunications, pharmaceuticals, automotive, aerospace media.
How is innovation changing businesses operations?
According to the 2012 GE Global Innovation Barometer, businesses are embracing a new model in how innovation is being undertaken. 80% of the respondents to this most recent survey said that the way businesses innovate is totally different from before. Among other changes, innovations are increasingly being driven through collaborations among different size businesses, universities and governments. 86% of the U.S. respondents believed that small businesses, more than ever, were important players in innovation. 60% of respondents said that innovation was the main lever to create a more competitive economy in their home country.
What are the key innovation challenges to keeping California globally competitive?
According to the California Council on Science and Technology's 2011 report, Innovate2Innovation, the state faces four fundamental challenges:
- Educating, retaining and attracting enough scientists and engineers to grow the state's innovation economy;
- Ensuring that industries, research labs and educational institutions work collaboratively to translate research into more products and jobs;
- Supporting entrepreneurial leadership; and
- Creating a statewide business climate that is friendly to the formation, growth and retention of innovative industries.
Why are small business and early stage companies so important to the innovation economy?
"After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses," President Barak Obama, January 2012 State of the Union Address.
While historically Americans have always favored the idea of helping small businesses, more and more research is finding that, statistically speaking, small businesses are in fact the engine that runs the economy. According to the US Census Bureau, more than 65% of net new jobs were created by small businesses in the last 17 years. The Kauffman Foundation's research over a slightly different period found that young firms—defined as one to five years of age—accounted for nearly two-thirds of job creation in 2007. This trend is expected to continue well into the post-recession economy because of the ability of small size firms to best met the specialized and evolving needs of an innovation economy.
How important are immigrants to the innovation economy?
Immigrants have always played an important economic role within the U.S. and will continue to play an ever increasing role as markets continue to expand and business models include integration of global networks to provide R&D, production and consumption. By way of example, between 1995 and 2005, at least one of the key founders of 25% of technology and engineering companies was a U.S. immigrant.
Over the past decade, immigrant founded venture funds created 450,000 jobs and represented market capitalization of roughly $500 billion. Immigrant inventors are responsible for many international patents including 72% of QUALCOMM's patents, 65% of Merck's patents, 64% of GE's patents, and 41% of government patents.
Studies also show that immigrants with advanced degrees in STEM fields actually increase jobs in the U.S. According to a 2012 report that looked at employment from 2000-2007 by the American Enterprise Institute and the Partnership for a New American Economy, for every 100 foreign-born workers who had earned a STEM advanced degree from a U.S. university and then worked in those fields, an additional 262 jobs were created.
Does the U.S. still have a manufacturing base or is everything off shored?
The U.S. still has the largest manufacturing sectors in the world, with an estimated market share of about 20%, according to The Manufacturing Institute. One in six private sector jobs in the US is still directly or indirectly tied to manufacturing. Manufacturing is also a major driver of innovation and technology. Among other things, new technologies aid U.S. manufacturers in reducing energy consumption and CO2 emissions.
More than half of U.S. exports are manufactured goods. Of California's $159 billion in exports in 2011, the top five were: Computer & Electronic Products ($46 billion); Transportation Equipment ($15 billion); Machinery, Except Electrical ($14.8 billion); Miscellaneous Manufactured Commodities ($13.1 billion), and Chemicals ($12.4 billion).