Innovation Works a New Approach To Technology Business Development

PITTSBURGH--Innovation Works, a non-profit corporation aimed at

creating 8,000 new jobs in knowledge-based and technology-oriented

startup companies in the next five years, was introduced today (Nov. 17)

by an alliance of organizations led by Carnegie Mellon University and

the University of Pittsburgh. Work on organizational and implementation plans for the new economic development entity has already begun.

Innovation Works, to be headed by a soon-to-be-appointed Board of

Directors and chief executive officer, includes the business development

services formerly provided by the Ben Franklin Technology Center of

Western Pennsylvania and the Enterprise Corporation. Building on the

successes of these two organizations, Innovation Works will provide

early-stage investment capital and specialized management assistance to

its customers, technology and knowledge-based startups in southwestern

Pennsylvania. Ongoing discussions with several other economic

development entities may result in their joining Innovation Works in the

future.

"This new economic development organization results from a partnership among the rapidly growing high-tech business community, foundations, local and state government, and the universities," said Carnegie Mellon President Jared L. Cohon. "We believe this approach will be a model for regional technology development programs. Through Innovation Works we have identified and brought together the key elements that are crucial to new business development."

"In creating Innovation Works, we recognized that creating new

enterprises in the 21st century requires different strategies and

resources than in the past," said University of Pittsburgh Chancellor

Mark A. Nordenberg. "To succeed in the information economy, innovative, knowledge-based companies require greater capital investment, more intensive deployment of management and business expertise, and a stronger focus on marketing and business services. It will take time to achieve the success enjoyed by Silicon Valley, Austin, Tex., and Boston, but we believe Innovation Works can be the catalyst we need to help the region build a technology-oriented economy."

To achieve its investment and business creation goals, the organization anticipates it will need annual support of $8 million, of which $6 million will be invested in growing firms and $2 million will support management assistance and market development. These funds include an anticipated renewal of the $6 million previously provided by the Commonwealth of Pennsylvania for the Ben Franklin Technology Center, pending approval of the state Ben Franklin Board, Cohon and Nordenberg said. Carnegie Mellon and the University of Pittsburgh have already committed an initial $500,000 to aid in the development of Innovation Works. The organization is to include an initial staff of at least 20.

"The state commends the efforts of Carnegie Mellon and the University of Pittsburgh," said Sam McCullough, secretary of the Pennsylvania Department of Community and Economic Development. "Innovation Works appears to offer a real vision to help retain western Pennsylvania's young people and startup high-technology businesses. The state is anxious to see Innovation Works brought before the statewide Board for consideration."

To foster startup companies, the new organization will:

• Provide startup funds. The organization will implement a large-scale early stage seed capital investment strategy. Over time, the average

funds invested in a Innovation Works-supported company may increase to more than $300,000. These funds will be used for research and

development, for marketing and other business support services.

• Provide ongoing management support. Reflecting the increased

importance of "human capital" to match invested financial capital, the

organization will increase staff resources by creating a network of

"entrepreneurs in residence," analysts and "enterprise advocates" to

support new businesses through their early growth challenges.

• Provide knowledge and market-based services. Innovation Works will engage in extensive market research, provide more in-depth knowledge of markets and market development, and focus on building regional and national business alliances.

• Broker and provide quality business services. Innovation Works will either directly provide business services such as market analysis, staff recruiting, intellectual capital acquisition and securing of venture

capital or it will broker these services with other providers.

"What is needed for success goes far beyond our ability to develop new technology and technologically oriented products," Cohon said. "As the subtitle of the concept paper says, 'Welcome to the 21st Century, The Rules Have Changed.' We need deeper market knowledge, better information and distribution of that information, more and better networks and strategic alliances, and the ability to rapidly move products tomarkets."

"Our region's ability to provide developing companies with experienced management and professional expertise will be key to our success," Nordenberg said. "Management, market and product development skills, experience in enterprise formation and early-stage company growth are essential elements of a successful entrepreneurial venture."

Innovation Works, Cohon and Nordenberg said, will "adopt" emerging companies and access and coordinate a range of business services for those companies. To help insure quality and performance among those supporting these adopted businesses, Innovation Works will create an incentive system tied to the performance of these companies.

The organization will be governed by an 11-member Board of Directors. Six members will be from the private business sector, one from the economic development community and two each from the University of Pittsburgh and Carnegie Mellon. Cohon and Nordenberg have appointed a nominating committee, including business, community and technology-business representatives, to propose names of the six directors from business and one from the economic development community.

The nominating committee includes C. Fred Fetterolf of Q-Core

Enterprise; Angela Kennedy, president of Wisdom Technologies Corp.;

Thomas J. Murrin, dean of the A.J. Palumbo School of Business

Administration at Duquesne University; Walt H. Plosila, vice president

of public technology management at Battelle; and Frank Tugwell,

executive director of the Heinz Endowments. A national search will be

conducted for a chief executive officer.

"Our top priority will be to appoint a board that reflects the

communities Innovation Works will serve," Fetterolf said. "We'll want to

include entrepreneurs as well as representatives from well established

businesses and organizations who will bring their stature and insights

to the board. To avoid conflicts of interest, board members' companies

will not be eligible to receive Innovation Works funding."

Innovation Works will administer the Ben Franklin Challenge Grant

program.

###