Boise's evolution as high-tech region continues

BYLINE: Eddie Kovsky

The emergence of Boise in the last two decades as a hub for innovation, entrepreneurship and high-tech has happened without the existence of the kind of infrastructure that usually portends success. Thirty years ago Boise had no reputation for technology or innovation, no venture capital and no world-class university to support research and a talented workforce.

High-tech regions can emerge without a major university. Portland, Phoenix and Kansas City have all become innovation hubs without a large university at the center.

These regions are what Heike Mayer calls second-tier regions - technology sectors that emerged in the '70s and '80s when large corporations moved there because the regions were cheap places to expand operations.

Mayer is an assistant professor at Virginia Tech studying economic growth and best practices for these regions.

Boise owes its economic growth to the large corporations, particularly Micron and Hewlett-Packard, that have created a market for supplies and services. These large companies have also spawned smaller startups, which have kept the area growing.

"These are the incubators," Mayer said. "From there you have entrepreneurs. "

Employees at large firms have a technical education, networking connections with other engineers, and an understanding of the market. Between the technical and business education employees possess, and the in-house research they conduct, large companies serve as the birthplace of second-tier communities.

Mayer calls it the HP legacy in Boise, but it's a model she has seen elsewhere.

Portland developed in a similar fashion when Intel arrived in the '70s.

The city had no significant research and didn't draw on its universities. Venture capital investment was also very low.

Intel's presence in Portland created a cluster of suppliers who bought and sold to one another. Professional and technical services, such as lawyers and construction companies, also settled in.

Intel's culture was very focused, Mayer said. Research and development was done in-house, where it was linked directly to manufacturing, and employees weren't likely to leave, she said.

But the corporate business model has changed drastically in the last 30 years. Cost advantages continued to fuel corporate restructuring and outsourcing, and less research and development was being done in-house.

This created opportunities for employees to take research that no longer fit the corporate mission and strike out on their own.

Traditionally, Mayer said, high-tech areas need talent, innovation and entrepreneurship to succeed. Large universities usually plant that seed.

While cities like Boise and Portland were able to emerge as technology sectors without a research university at the hub, they won't be able to sustain economic growth without it.

In-house R&D labs are gone, Mayer said, leaving large companies to partner with universities and smaller, more enterprising startups.

"Open innovation is about finding ideas in many different places," Mayer said. "Ideas come from outside. "

Some level of state involvement in research and development funding can make a big difference. Small firms benefit more than large corporations, though tax breaks also encourage big companies to stay put.

Idaho's research and development support has been uneven, which is often the case when there isn't political support, Mayer said.

The Governor's Science and Technology Advisory Council was founded in 1999; most of their suggestions in 2001 were not funded. This year, Gov. C.L. "Butch" Otter didn't take up their recommendations.

"That poor council," Mayer said. "They did a lot of hard work and were turned down a lot. "  

According to data collected by the American Electronics Association 2007 Cyberstates survey, Idaho still has a lot of work left to do. High-tech wages in Idaho are more than double the average private sector wage, but the state is 24th in R&D per capita, and 46th in venture capital investments. (The full report is available online at www.aeanet.org.)

One of Mayer's suggestions for state governments is to make the right bets - recognize strengths and fund them.

"I think that's where this regions' strength is - keeping R&D in-state," Mayer said. "You can grow high-tech without a university, but higher education has become more important because of a changed innovation model. "