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Technology regions grow first by fostering innovation, then by anchoring it
By Douglas Koelemay, Senior Advisor
Northern Virginia Technology Council
Old technology gurus will tell you that scientists love surprises but engineers hate them. That’s because joy in discovering what we might do once competed with showing competence in what we already know how to do. No more.
In the fast moving world of innovation and commercialization, everyone prepares for the surprises, the changes, the revolutions that new products and services drive forward at alarming speed. One day no one has it, the next, millions want it. That means engineers are never very far behind the latest materials science, proteomics or process innovation. They can’t afford to be. The majority of corporate profits worldwide now are driven by products and services that didn’t even exist five years ago.
Innovation now means innovative people, individuals who by definition do not see the world in the same way that it has been seen. Change for the better, faster, easier is their constant.
To see how regions can harness this change, consider what happened in northern Virginia. Creative, innovative scientists and engineers married up with entrepreneurs and technology companies in the 1980s as the federal government built new, robust communications networks and began to consume ever larger quantities of information technology equipment. The challenges that followed in systems integration, wireless communications and the Internet helped change northern Virginia’s understanding of itself from being dominated by “defense contractors” to fostering “technology companies.”
Northern Virginia exploded into a world center in information technology, software development, telecommunications, the Internet and e-business in the 1990s as angel investors, venture capitalists, accountants and attorneys improved the region’s capacity to move ideas into the marketplace. These forces provide the cutting-edge of innovation in any region.
But there was a hidden strength for innovators and technology companies in northern Virginia: instant access to experienced and responsive policy-makers. They are the hidden anchors who can keep innovation happening.
Without understanding the world of policy, laws, regulations and rules, innovators can find themselves up against huge barriers to the changes they are driving. They can discover right at the moment of their greatest potential that the world doesn’t necessarily appreciate change and may be organized to keep things as they are. What the law is, what the law could be, what the law needs to be are the three questions that can help anchor and stabilize an innovation system.
Barriers left unattended might include arcane tax policies, such as depreciation schedules drawn up for machine tools being applied to computers and peripherals, sales taxes applied inconsistently to contracts that include both goods and services, tax credits that cannot be used by small or young companies that create thousands of jobs.
For example, Fairfax County, Virginia reformed its business property tax depreciation schedules for computers and peripherals, making the term “useful life” reflect what the marketplace was doing. The Commonwealth of Virginia revised its “true object test” for contracts and adopted new regulations that determine whether sales tax might apply.
Barriers also can be hidebound, poorly administered workforce policies that don’t recognize the need for diverse, highly skilled workers from around the globe, or the need for constant retraining made necessary by the new technologies and processes streaming into the marketplace.
Northern Virginia technology companies led what became federal initiatives to match H-1B visa policy to changing demand, and to encourage training of more American technology workers. Northern Virginia technology companies also became leaders in the policy tools needed to allow people and businesses everywhere to pursue what they really wanted from the Internet, telecommunications and information technology: sharing information safely. Tech companies in the region led the charge to change the notion of “strong encryption” from a national security concern to a global business necessity. Export controls came off.
The results include a series of ground-breaking policies on computer trespass, theft of computer services, computer fraud, criminal anti-spam penalties for the worst hacker-spammers, and breakthroughs on electronic signatures and computer information transactions.
The results also are a rich policy infrastructure that includes the nation’s first Secretary of Technology position in Virginia government; a Virginia Research & Technology Advisory Commission of scientists, engineers, venture capitalists, university research officers and tech executives; legislative committees on science and technology; and a Joint Commission on Technology and Science that charges legislators and citizen experts with studying breakthroughs, trends and innovation year-round. None of these institutions existed ten years ago.
Here’s one way to know that northern Virginia has benefited from a marriage of corporate and policy-making leadership: The region has been the economic engine of the Commonwealth of Virginia and the Washington area for two decades and shows no sign of losing that distinction. Technology regions grow first by fostering innovation, then by anchoring themselves in forward looking rules, regulations, public processes and laws that keep innovation happening.
Thousands of companies have chosen Fairfax County, Virginia, located just west of Washington, D.C., as the best place to expand or relocate. Fairfax County is home to six Fortune 500 companies, 4,900 IT companies and more than 350 foreign-owned firms. Fairfax County features a quality of life that's hard to beat, with a top-ranked public school system, excellent public services, and access to the historical and cultural activities in Washington. Fairfax County has one of the highest percentages of residents with bachelor’s degrees or higher in the nation. And being close to the federal government provides access to billions of dollars in federal contracts. If you are thinking about expanding or relocating your company, give Fairfax County a look. The award-winning Fairfax County Economic Development Authority has experts who can help – at no charge. Call 703-790-0600 or check out www.FairfaxCountyEDA.org.
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