As the world becomes more digital and technology-focused, the need for innovation has never been greater. Startups and entrepreneurs drive this innovation, creating solutions to problems that have never been solved before. However, innovation is more than just creating a new product or service – it requires a supportive ecosystem to thrive. This is where the government can play a crucial role.

What role should governments play in encouraging, supporting, and growing innovation success?

Each of the three levels of government (local (city), regional (state), and national (federal)) has a role to play in enabling innovation so that their constituents can compete in the innovation economy.

Local (City) Government and Innovation

The local government can play a pivotal role in growing innovation success by creating an ecosystem that supports startups and entrepreneurs. They can achieve this by providing access to affordable office space, promoting networking events, and offering tax incentives to attract startups to the area. In addition, local governments can invest in initiatives that support the growth of the local startup ecosystem. The result will be an increase in the number of startups and entrepreneurs in the area, which will drive job creation, economic growth, and innovation.

Strengthening Education and Workforce Development

Local governments can enhance innovation success by bolstering education initiatives and workforce development programs, especially in science, technology, engineering, and mathematics (STEM). By fostering a solid educational environment, local governments can ensure a steady stream of skilled workers to meet the needs of innovative industries. Workforce development programs can also offer adult retraining options, providing all community members can contribute to and benefit from the thriving innovation ecosystem.

One example of a successful partnership between local government and education to support innovation is the LaunchCode program in St. Louis, Missouri. This initiative provides free coding boot camps for individuals interested in pursuing careers in technology. The city government has invested in this program, recognizing the potential for job creation and economic growth through developing a skilled workforce.

Providing Infrastructure and Resources

Robust infrastructure is a fundamental requirement for the growth of innovative businesses. Local governments can provide high-speed internet, efficient transportation, and reliable utilities, making the area attractive for startups. They can also facilitate the establishment of innovation hubs, incubators, and co-working spaces that provide entrepreneurs with vital resources, mentorship, and networking opportunities.

One example is the Cambridge Innovation Center (CIC) in Boston, Massachusetts. The city government supported the development of CIC by providing tax incentives and helping navigate regulatory processes. Today, CIC houses over 1,000 startups and has played a significant role in establishing Boston as a leading innovation hub.

Affordable Housing and Competitive Cost-of-Living

The presence of affordable housing and a competitive cost of living are critical elements in fostering a thriving innovation ecosystem. Affordable housing options allow entrepreneurs, startup employees, and other local talent to live and work in the same area, supporting a diverse and inclusive community. A competitive cost of living can help attract and keep talent, as individuals and families are more likely to settle in regions where their income stretches further. By actively working to maintain or lower the cost of living, local governments can ensure that their region remains attractive for innovation-focused businesses and the talented individuals they employ.

One example of a local government addressing housing affordability for innovation success is the City of Austin, Texas. The city implemented an innovative program called “Affordability Unlocked” to encourage developers to include affordable units in new developments. This has helped maintain Austin's status as a desirable location for startups and entrepreneurs while ensuring that affordable housing remains accessible.

Streamlining Regulatory Environment

Lastly, local governments can play a significant role in streamlining the regulatory environment. By simplifying business registration processes, easing zoning restrictions, and creating straightforward tax systems, local governments can make it easier for startups to launch and scale their businesses. They can also promote transparency, stability, and predictability in their regulatory processes to ensure innovators can focus on their work without bureaucratic hindrances.

One notable example is the city of Fargo, North Dakota. The city has implemented a streamlined online business registration process called “StartFM,” which allows entrepreneurs to register their businesses in as little as 15 minutes. This initiative has made it easier for startups to enter the market, contributing to the growth of innovation and entrepreneurship in Fargo.

Regional (State or Provincial) Governments Role in Innovation

Regional governments can also have a significant impact on innovation success. They can invest in initiatives that support the growth of the startup ecosystem in the region by creating incubators, accelerators, and grant programs to fund early-stage startups. In addition, they can collaborate with universities and research institutions to develop a pipeline of talent that can feed into the startup ecosystem. Finally, they can provide access to capital for startups through angel investor networks, public-private partnerships, and venture capital funds.

Advancing Research and Development

Regional governments can advance innovation by committing to research and development. They can collaborate with local universities and research institutions to stimulate scientific and technological advancement, encouraging the burgeoning of innovative startups in their regions. By promoting and investing in R&D, regional governments can position their region at the forefront of technological progress.

The North Carolina Innovation Fund, established by the state government, provides grants to universities and research institutions for groundbreaking research projects. This has helped foster a strong innovation ecosystem in North Carolina, leading to numerous successful startups and attracting investment from large technology companies.

Fostering Regional Collaboration and Partnership

Another pivotal role that regional governments play is fostering collaboration and partnerships, both within and outside the region. They can encourage cross-regional collaboration to share knowledge, resources, and best practices. Such collaboration can expedite innovation processes and yield more robust results. Besides, regional governments can facilitate public-private partnerships, combining the strengths of both sectors for the common goal of innovation.

The New York Digital Health Accelerator program is one example of successful cross-regional collaboration. The state government partnered with healthcare providers, technology companies, and venture capital firms to support and mentor early-stage digital health startups. This initiative has led to a thriving healthcare innovation ecosystem in New York and has attracted significant regional investment.

Implementing Sound Economic Policies

Regional governments can make the economic environment conducive to innovation through sound economic policies. Policies that stimulate economic growth, encourage investment, and promote competition are beneficial. They can also offer tax incentives and subsidies to innovative businesses to promote entrepreneurship and innovation.

The “Innovative Rhode Island Small Business Express Program” offered by the state government provides loans and grants to small businesses, demonstrating potential for innovation and growth. This program has helped many startups in Rhode Island overcome financial barriers and succeed, contributing to the region's overall economic development.

Nurturing an Innovation Culture

Regional governments can also nurture a culture of innovation by recognizing and celebrating success. Regularly highlighting local startups and entrepreneurs making a difference can ignite a spirit of innovation among the populace. They can also organize innovation challenges and competitions to spark creativity and generate original solutions to regional challenges.

The “Innovate BC-New Ventures Competition,” organized by the British Columbia government, is a prime example of fostering an innovation culture. This annual competition offers mentorship, education, and funding opportunities for early-stage tech startups in the province, attracting international attention and investment to the region.

Championing Legislative Support

On a legislative level, regional governments can champion laws that promote and protect innovation. They can ensure the existence of strong intellectual property laws that protect the rights of innovators, thereby encouraging more people to innovate without fear of their ideas being stolen. They can also lobby for legislation that supports startups and makes funding more accessible.

The “Michigan Invests Locally Exemption” law passed by the state of Michigan exempted crowdfunding from securities regulation, making it easier for start