Innovation Joins Labor, Capital as Economic Indice

As more than 4 million businesses receive and complete the quinquennalis Economic Census, a new report to the U.S. Secretary of Commerce for the first time recognizes that innovation has joined labor and capital as components of the economic engine.

Download the January 2008 report of The Advisory Committee on Measuring Innovation in the 21st Century Economy, Innovation Measurement: Tracking the State of Innovation in the American Economy.


There has been a growing recognition that innovation is distinct from invention or productivity. The new report defines innovation as:

the design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm.

This definition is considerably beyond the current recognition in economic development where innovation equates to invention and invention applied produces productivity.

The purpose of the report is not to advocate for the recognition of innovation as the grease (no pun intended), but rather to champion the call for measurement of innovation. This call necessarily recognizes that data either does not exist or is woefully inadequate as a decision base for economic policy to address fostering innovation. Among many researchers, there is agreeement that the nation's continuing shortchanging of financial resources for our presently scoped data needs must be fixed. A call for more research only begs the question of where supportive resources are to come from.

Perhaps aspects of the report's recommendations that will cause more heartburn that others, are the calls for data sharing, especially of IRS data, and to organize data on an individual firm (company) basis. There is recognition within the report of a necessity of privacy and confidentiality. Achieving such a standard when the walls of separation are breached will be much more difficult. What is someone's stovepipe limiting data access is another's firewall.

For those who prefer market driven solutions to provide needed goods and services in the economy will quickly share a caveat within the report; that a recognition of the importance of innovation will drive economic policy to good or ill effects. Whatever the quality of data about innovation, public policy will seek to drive or enable it. It is better to work in light than in the dark.

Spotlight: Avue Technologies

Linda Rix founded Avue Technologies Corporation profiled today in the business section of The News Tribune.

She’s since grown the Tacoma company to 80 employees with offices downtown; and in Washington, D.C.; Victoria, B.C.; and – most recently – Bremerton.

Rix: "I moved here as a kid and grew up here. My dad deployed to Vietnam from Fort Lewis and when he came back he wanted to retire in Tacoma. I went to school here and college here and started the company here.By the time it got to a national company and a big D.C. presence – which has been in the last eight years – we were already really well-established here. In terms of recruiting, we get some really fabulous people from the University of Washington campus here in computer science and engineering. That campus has made a huge difference in the labor market."

Rix, 50, spends most of her workweek in D.C., getting face time with her clients – federal government agencies.

Resources for Local Enterprises: Life Sciences

Pierce County has a small but growing cadre of enterprises devoted to different aspects of life sciences; the most visible enterprise at the current time is Urban Waters. Like other emerging businesses throughout this state and beyond, local firms are in a constant scramble for new ways to raise capital and to market their services and products.

The Washington State Department of Community, Trade and Economic Development (CTED) assists businesses in profitably accessing the global marketplace. Interested firms can sign up between now and January 31st for a free listing in the Washington State Life Sciences Directory, a publication that will be distributed to potential business partners and buyers through CTED's overseas offices during seminars and trade shows.

The Life Sciences Discovery Fund (LSDF) has just announced two different kinds of grant competitions for 2008: projects and programs. Projects are investigator-initiated scientific studies, relatively limited in scope, with a sharply defined research focus. Programs are strategic research initiatives designed to address problems within a field of study and to position an organization or organizations for future competitiveness and leadership.