Maximizing Citizen Value Requires New Innovation Model

This weekend, I facilitated City Start Boston — a design studio that shines the spotlight on the important design challenge facing our cities:

How might government efforts to accelerate innovation within cities create value for citizens and neighborhoods?

It is an important challenge because it raises questions about how government led innovation efforts creates value and for whom.

Government innovation efforts focus heavily on venture creation. Cities create “innovation hubs” and “innovation centers,” often in neighborhoods that have seen better times. These centers concentrate access to talent, capital, and the functional resources required to get a company off the ground. Innovation hubs are cool, and quickly create gravity — especially among the young, educated classes with high earning potential, accelerating local economic activity and increasing property value. Often, they lead to other benefits — decreases in crime, vacant buildings, etc.

But if citizens are shareholders, we have to consider whether these innovation models are maximizing value creation for them.

This is a very corporate view of the relationship between citizen and government; it is also an unlikely (some might say naive) view given how politics works and the many varied interests groups asking government to support diverse needs.

But what if we took this lens seriously? In what scenarios might innovation efforts maximize efforts for citizens?

Scenario one:

If innovation is about creating new value for people, could new start ups coming out of these centers focus on their neighbors as the people they are creating value for?

Given that the accelerator/incubator models emphasize fast-paced scale, the local neighborhoods are too small to make it as a solid go-to market strategy. But in that containment, they do make good testing conditions — small user groups, ability to see the whole picture about how a product/service is being adopted (or not). If you want to use your local neighborhood as a test case, you have to have good relationships — which will lead people to break down the walls between “innovation hubs” and the neighborhoods- possibly generating trust, good will, and supporting relationships. This is a good outcome. But does it maximize value for citizens or is it an ancillary benefit? Likely the latter.

Scenario two:

Let’s imagine our focus is on skill and talent development within communities. New ventures are attracting great talent with 21st century skills. How might this facilitate education and technology skill transfer into our communities?

This is an often heard value proposition — but I’m not sure it translates in the real world. The world of venture creation is an elite world — looking for the best people. Someone said on Saturday that investors would prefer “an A team with a B idea than a B team with an A idea,” and this bias is pretty prevalent. Case in point:

It begs the question how well will that philosophy enable hiring and training of unskilled labor? I have done enough work with investors to know that this then begins to look like a social venture, and enough experience to know that the social component will be considered a “distraction” that needs to eliminated.

So we’re left with scenario three:

How might innovation efforts enhance wealth creation for citizens?

This is my second year facilitating this event. In the last year, the program has gone through a number of changes. For two years, students had been the primary participants. This year, the event was open to the public — engaging citizens and anyone else who wanted to participate.

The immediate impact of this change is that we heard immediately how citizens experience innovation efforts:

Most expressed concern that innovation hubs increase property value, increasing the tax rate, and forcing citizens out of the homes that they and their families have lived in for decades. Its breaking down family structures, and moving families out of neighborhoods. We tend to wave our hands through this, arguing that it gives citizens choices. It doesn’t. Whether you’re talking about an individual household or a small business, the scenario is the same:

Monthly expenses increase, while monthly revenue stays the same.

In all scenarios, my conclusion is that, in our current model, gains to citizens are “soft,” unrealized gains.

Maximizing value for citizens requires realized gains — for individuals, families, and businesses. And for this, we don’t have the right model.

We often conclude that it is inevitable that communities will change as a result of innovation efforts and citizens should embrace this change.

I think this is the wrong conclusion. In order to maximize value for citizens, the innovation model has to change.

We need to understand what value creation means for citizens, and how to best deliver on that promise. We need to understand how they are trying to maximize value for themselves (education, venture creation, whatever) and organize to help them do it.

It is not citizens’ job to make innovation efforts better for them, it is government’s job to ensure that innovation efforts transform — in a real and positive way — the citizen experience.


N E X T → Citizens in Charge

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