Speaking at the Economic Development Administration’s 2016 national conference yesterday in Washington, D.C., Victor Hwang, Ewing Marion Kauffman Foundation Vice President of Entrepreneurship, told the gathering, “Innovation is not a place. It’s a state of mind.” Serving on a panel about how to create innovative ecosystems, Victor shared emerging lessons on how economic development leaders can change their thinking from an old mindset to one that addresses the root causes of innovation.

1. © 2014 Ewing Marion Kauffman Foundation
The “New” Economic Development
Victor W. Hwang, VP of Entrepreneurship
Kauffman Foundation
www.kauffman.org
© 2016 Ewing Marion Kauffman Foundation

2. © 2014 Ewing Marion Kauffman Foundation
Innovative economies are not really about incubators,
accelerators, venture capital, universities, research…
Symptoms, not root causes.

3. © 2014 Ewing Marion Kauffman Foundation
Innovation is not a place.
It’s a state of mind.

4. © 2014 Ewing Marion Kauffman Foundation
But innovation ecosystems are invisible.
So how do we architect the
invisible infrastructure?

5. © 2014 Ewing Marion Kauffman Foundation

6. © 2014 Ewing Marion Kauffman Foundation
weeds crops
Rules of the Rainforest
(for innovation)
1. Break rules and dream
2. Open doors and listen
3. Trust and be trusted
4. Seek fairness,
not advantage
5. Experiment and
iterate together
6. Err, fail, and persist
7. Pay it forward
1. Excel at your job
2. Be loyal to your team
3. Work with those
you can depend on
4. Seek a competitive edge
5. Do the job right
the first time
6. Strive for perfection
7. Return favors
Rules of the Farm
(for production)

7. © 2014 Ewing Marion Kauffman Foundation
Openness
Diversity
Serendipity
Fairness
Experimentation
Play
Giving
Excellence
Loyalty
Dependability
Success
Quality
Precision
Reciprocity
weeds crops

8. © 2014 Ewing Marion Kauffman Foundation
TIME
Ideas Products (scale)
VALUE
cost
benefit
“Innovation mindset” “Production mindset”

9. © 2014 Ewing Marion Kauffman Foundation
So what?
It’s an emerging field, but here are some
early lessons for practitioners...

10. © 2014 Ewing Marion Kauffman Foundation
Lesson #1
OLD: Economies are a black box, so we must shove more
stuff into the box.
NEW: Ideas matter. Successful economies nurture ideas
through the life cycle from birth to full production.

11. © 2014 Ewing Marion Kauffman Foundation
OLD: Innovation is a “thing” that is distinct.
NEW: Innovation and production are ends of the same
spectrum, from idea creation to scale. The key is crossing
that invisible chasm. Constant experimentation and failure
are routine.
Lesson #2

12. © 2014 Ewing Marion Kauffman Foundation
OLD: People are anonymous cogs in the system. Cluster
them to get results.
NEW: People matter. Innovation comes from human
relationships. Individuals form teams, which grow into
startups, mature companies, and institutions.
Lesson #3

13. © 2014 Ewing Marion Kauffman Foundation
OLD: Morality is irrelevant.
NEW: Values matter. Culture is key to driving economic
growth at scale. Certain patterns of behavior cause certain
economic outcomes. Trust is the glue of the social fabric.
Lesson #4

14. © 2014 Ewing Marion Kauffman Foundation
OLD: Economies are based on cold mathematics.
NEW: Economies are a fusion of hard and soft. We can
apply design thinking to economic ecosystems – human-
centered, attuned to the full range of emotional interaction,
conscious of the overall environment.
Lesson #5

15. © 2014 Ewing Marion Kauffman Foundation
OLD: Grow jobs by creating incentives to relocate
businesses from other places.
NEW: Grow what you have organically, by shifting from
zero-sum to positive-sum activity. Help people break down
social barriers of distrust, fear, disconnectedness.
Lesson #6

16. © 2014 Ewing Marion Kauffman Foundation
OLD: Measure the inputs and outputs of an economy.
NEW: Measure the metabolism. Measure the flow of
resources inside a system, including the velocity of ideas
and the nimbleness of organizing teams to bring ideas to
life. Measure social networks for density, fluidity,
connectivity, diversity.
Lesson #7

17. © 2014 Ewing Marion Kauffman Foundation

18. © 2014 Ewing Marion Kauffman Foundation
Photo by Roger Culos

19. © 2014 Ewing Marion Kauffman Foundation
Ewing Marion
Kauffman Foundation
www.kauffman.org
© 2016 Ewing Marion Kauffman Foundation
Victor W. Hwang
VP of Entrepreneurship
@rainforestbook