One of the handiest words in the world of business is “innovation.” It is right up there with “new and improved” as a shorthand way of describing just about anything.
What a disservice to a word that has formed the underpinning of a massive shift in the entire business landscape. And no place is that shift more apparent — or significant — than to the economy of the Chicago region.
To explain what I mean, it is important first to scrape away the buzzword quality of the word “innovation” and get to the heart of a clear and simple definition: Find a need in the marketplace, and create a product or service to fulfill the need and capture its value. This can be economic value or social value.
Right now is a great moment to reflect on the impact of innovation on the Chicago economy, as Tuesday marks the 15th annual Chicago Innovation Awards. As co-founder with Dan Miller, I have witnessed a remarkable shift not only in the importance companies place on innovation in their organizations, but also how this trend has influenced the entire economic ecosystem of Chicago.
The spirit of innovation lies at the heart of a demand-based economy. It drove the transformation we saw in the industrial age. In the past, new technologies and market opportunities paired to form new product innovations. Anyone who has gone from VHS to DVD to live-streaming knows exactly what I mean. But as technologies have continued to advance while product markets have become increasingly saturated, we are now seeing a new form of innovation take over the business landscape.
Today we’re seeing a much greater focus on innovation in business to business, or B2B, companies, featuring integrated solutions and greater connective capabilities driven by what has come to be called the Internet of Things. This expansion of the focus of innovation can be seen in industries from healthcare to telecom to transportation.
The Chicago region has proven to be a uniquely fertile ground to capitalize on the integration of digital technology and innovation.
To the many afflicted with innovation tunnel vision, Silicon Valley is the one true innovation capital. To them I say this: Quality trumps quantity. In a recent report by Pitchbook on venture capital returns, Chicago led the nation in home-run exits, with 45 percent of them yielding 10-fold returns on their initial investment.
This isn’t luck — it’s thanks to Chicago’s critical mass of resources available to innovators and, perhaps most important of all, the remarkable diversity of its economic base.
According to World Business Chicago, our city has the most diversified economy in the nation, with no industry topping 14 percent of the total workforce. This is a little known but hugely important aspect of Chicago’s economic strength. It provides balance in an unstable economy that other regions simply cannot match. If one sector lags, others grow. As a result, Chicago attracts talented innovators, investors and entrepreneurs from every industry.
In the pursuit of community integration and education through innovation, groups such as Chicago Ideas Week and Technori create opportunities for innovators young and old to connect, share and learn together.
Chicago is home to many organizations using innovation as a means to give back to their communities, promote well-being and do good for others. Impact Engine invests financial and human capital in early-stage, for-profit technology businesses that are improving education, health, economic empowerment, and resource efficiency. LEAP Innovations has created a platform that connects developers with teachers and schools to create a more personalized approach to innovation instruction and development. And LuminAID created a solar-powered, inflatable lamp that is often used for humanitarian aid and relief.
These organizations — and there are many more like them — are excellent examples of how innovation can be used for profit and for good.
What lies ahead? I predict that in the coming years, this diversity among industries will be our city’s greatest strength as we see more and more companies big and small looking to acquire, connect and grow. The region’s tradition of cultural, ethnic, and gender diversity will lead to even more talent choosing Chicago as the place to build their careers.
What I’m really looking forward to is seeing how the amazing community and ecosystem revolving around innovation will continue to grow and change over the next 15 years and beyond.