Exec Spin: The Next Wave of Innovation - Physical Products
Thursday, September 26, 2019
Posted by: Gary Hotze
Haven Allen, CEO and Co-Founder, mHUB
Illinois is positioned to lead in the fourth industrial revolution, and for the sake of our economy, it must. I’ve seen the opportunity grow firsthand – first in my role as lead economic development strategist for manufacturing at World Business Chicago and subsequently through leading the launch and growth of mHUB, to supporting Argonne, the Museum of Science and Industry and Chicago Cook Workforce Partnership in a leadership capacity.
Manufacturing is essential to our economy. Currently at $103 B1 in revenue, it is directly supported by more than 12,000 business and over 585,000 employees. This size has a substantial effect on the larger economy through jobs, with every job supporting 2.91 additional jobs, and revenue, with ever dollar supporting another $1.33. This results in a total of 2.3M jobs, and a total of $239B of revenue attributed to the gross regional product. And, the great thing about these jobs is you don’t need a college degree – which 74% of adults in Illinois don’t have – to participate or prosper.
Looking back over the last decade, Illinois’ manufacturing industry experienced a dip due to automation and globalization that resulted in the loss of thousands of businesses and over 200,000 jobs. But overall, it has done a good job of not falling victim to the Rust Belt’s level of extreme and steady industrial decline. This is partially due to our competitive advantages such as world-class universities and diversified industry base, and also to our comparative advantages including our location that positions us as a leader in transportation and logistics and the capital of the Midwest economy.
In 2013/2014, our civic leaders took more proactive steps to strengthen the industry and protect against further decline. This led to over $400M in long-term investment focused on supporting talent development and product innovation, and market growth and expansion. On the talent front, efforts were made to extend the pipeline into high schools with programs like ICATT and the creation of state-of-the-art training facilities like mTECH. Substantial investments in process and product innovation were made to create centers of innovation like MxD and mHUB, and to further expand the capacity at the Illinois Research Park at the University of Illinois. And on the market side, there was a massive recruitment effort that led location and expansion of corporations like Cargil, ADM, Google and McDonald’s.
Yet with all of these investments, a funding gap persists for manufacturing and physical product companies that is crucial for forward momentum. As it stands today, there is a $15 to $1 funding gap between digital and physical startup companies. That gap gets even bigger the later the stage of funding.
This inequity between software and hardware made sense a decade ago, but is a missed opportunity today, and one that Illinois can benefit from. 10 years ago, affordable access to advanced hardware (e.g. processor, transistors, etc.) was not available to entrepreneurs. Today, they are readily available, and pricing has collapsed. Just years ago, access to high-speed computing capacity didn’t exist and data transmission was too slow to connect anything besides apps to satisfy an individual’s need for a date, food or parking spot. Today, there is unlimited cloud computing and with the evolution from 3G to 4G, and soon to be 5G, latency and volume issues are erased.
These macro industry trends, along with our region’s competitive and comparative advantages and recent long-term investments, make Illinois a fertile ground for technology innovation entering into the next industrial revolution. It’s imperative that we keep our foot on the pedal. mHUB is doing this by launching an accelerator to swell the pipeline of high-potential product teams and connecting industry with highly sought after high-skilled talent for outsourced product development. It’s also what MxD is doing as it forges pathways for a future cyber security workforce. And it’s the hope the State of Illinois and our universities are putting into Discovery Partners Institute (DPI), and the tech community is putting behind the nascent efforts of P33.
But, this is just the beginning. I encourage industry to get involved in driving the next industrial revolution here in Illinois. Together, we can turn the Midwest into a global driver for innovation.