Building Hawaii’s
Innovation Economy

Summary of a Symposium

Charles W. Wessner, Rapporteur

Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives

Board on Science, Technology, and Economic Policy

Policy and Global Affairs

NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

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Charles W. Wessner, Rapporteur Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives Board on Science, Technology, and Economic Policy Policy and Global Affairs

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract/Grant No. DE-DT0000236, TO# 28, (base award DE-AM01-04PI45013), between the National Academy of Sciences and the Department of Energy; and Contract/Grant No. N01-OD-4-2139, TO# 250, between the National Academy of Sciences and the National Institutes of Health. This report was prepared by the National Academy of Sciences under award number SB134106Z0011, TO# 4 (68059), from the U.S. Department of Commerce, National Institute of Standards and Technology (NIST). This report was prepared by the National Academy of Sciences under award num- ber 99-06-07543-02 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the National Institute of Standards and Technology, the Economic Development Administration, or the U.S. Department of Commerce. Additional support was provided by the Heinz Endowments, the Association of University Research Parks, Acciona Energy, Dow Corning, IBM, and SkyFuel, Inc. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 13: 978-0-309-25663-6 International Standard Book Number 10: 0-309-25663-1 Limited copies are available from Board on Science, Technology, and Economic Policy, National Research Council, 500 Fifth Street, NW, W547, Washington, DC 20001; 202-334-2200. Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2012 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examina - tion of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the Na - tional Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives* William C. Harris Mary L. Good, Chair President and CEO Donaghey University Professor Dean, Donaghey College of Science Foundation Arizona Engineering and Information W. Clark McFadden II Technology University of Arkansas at Little Rock Partner and STEP Board Dewey & LeBoeuf, LLP Richard A. Bendis David T. Morgenthaler President and CEO Founding Partner Innovation America Morgenthaler Ventures Michael G. Borrus Edward E. Penhoet Founding General Partner Director X/Seed Capital Management Alta Partners Susan Hackwood Tyrone C. Taylor Executive Director President California Council on Science and Capitol Advisors on Technology, LLC Technology *As of January 2011. v

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PROJECT STAFF Charles W. Wessner Sujai J. Shivakumar Study Director Senior Program Officer Alan Anderson David S. Dawson Consultant Senior Program Assistant McAlister Clabaugh David E. Dierksheide Program Officer Program Officer vi

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For the National Research Council (NRC), this project was overseen by the Board on Science, Technology, and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the STEP Board is to advise federal, state, and local governments and inform the public about economic and related public policies to promote the creation, diffusion, and application of new scientific and technical knowledge to enhance the productivity and competitive - ness of the U.S. economy and foster economic prosperity for all Americans. The STEP board and its committees marshal research and the expertise of scholars, industrial managers, investors, and former public officials in a wide range of policy areas that affect the speed and direction of scientific and technological change and their contributions to the growth of the U.S. and global economies. Results are communicated through reports, conferences, workshops, briefings and electronic media subject to the procedures of the National Academies to ensure their authoritativeness, independence, and objectivity. The members of the STEP Board* and the NRC staff are listed below: Paul L. Joskow, Chair Ralph E. Gomory (NAS/NAE) President Research Professor Alfred P. Sloan Foundation Stern School of Business New York University Lewis W. Coleman and President & CFO President Emeritus DreamWorks Animation Alfred P. Sloan Foundation John Donovan Mary L. Good (NAE) Chief Technology Officer Donaghey University Professor AT&T Dean, Donaghey College of Engineering and Information Alan M. Garber (IOM) Technology Henry J. Kaiser, Jr. Professor University of Arkansas at Little Rock Professor of Medicine Richard K. Lester Director, Center for Primary Care and Outcomes Research Japan Steel Industry Professor Stanford University Head, Department of Nuclear Science and Engineering Faculty Co-chair and Founding Director, Industrial Performance Center Massachusetts Institute of Technology *As of January 2011. vii

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Amory Houghton, Jr. Arati Prabhakar Former Member of Congress General Partner U.S. Venture Partners William F. Meehan III William J. Raduchel Lecturer in Strategic Management Raccoon Partners Lecturer Chairman in Management Opera Software ASA Stanford University Laura D’Andrea Tyson and Director Emeritus S.K. and Angela Chan Professor McKinsey and Co., Inc. of Global Management Haas School of Business David T. Morgenthaler University of California, Berkeley Founding Partner Hal R. Varian Morgenthaler Ventures Chief Economist Joseph P. Newhouse (IOM) Google, Inc. John D. MacArthur Professor Alan Wm. Wolff of Health Policy and Management Of Counsel Harvard Medical School Dewey & LeBoeuf LLP Edward E. Penhoet (IOM) Director Alta Partners viii

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STEP STAFF Stephen A. Merrill Charles W. Wessner Executive Director Program Director Adnan Aslam Aqila Coulthurst Christine Mirzayan Science & Program Coordinator Technology Policy David S. Dawson Graduate Fellow Senior Program Assistant Paul T. Beaton David E. Dierksheide Program Officer Program Officer McAlister T. Clabaugh Sujai J. Shivakumar Program Officer Senior Program Officer ix

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Contents PREFACE xv I. OVERVIEW 1 II. PROCEEDINGS 15 DAY 1 17 Welcome 17 Howard Carr, Board of Regents, University of Hawaii M.R.C. Greenwood, University of Hawaii Mary Good, University of Arkansas at Little Rock Opening Remarks 19 The Honorable Daniel K. Inouye, United States Senate Presentation of The Hawaii Innovation Council Report 21 Moderator: M.R.C. Greenwood, University of Hawaii Session I: The Global Challenge and the Opportunity for Hawaii 31 Moderator: Tyrone Taylor, Capitol Advisors on Technology The Innovation Imperative and Global Practices 31 Charles Wessner, The National Academies xi

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xii CONTENTS State and Regional Economic Context 38 Carl Bonham, University of Hawaii Economy Research Organization (UHERO), University of Hawaii at Mānoa Focusing Federal Resources: The Obama Administration Innovation Initiatives 45 Ginger Lew, White House National Economic Council Luncheon Address 51 The Honorable Neil Abercrombie, Governor of the State of Hawaii Session II: Leveraging Federal Programs and Investments for Hawaii 53 Moderator: The Honorable Brian Schatz, Lieutenant Governor of the State of Hawaii The Manufacturing Extension Partnership: The Network Effect 53 Roger Kilmer, Manufacturing Extension Partnership Program, National Institute of Standards and Technology DoD Strategic Technology Capability Thrusts: Opportunities to Fuel Hawaii’s Innovation Economy 58 Starnes Walker, University of Hawaii The Military and Higher Education 62 Vice Admiral Daniel Oliver, USN (Ret.), Naval Postgraduate School, Monterrey, California Infrastructure for the 21st Century Economy: The Role of the Economic Development Administration 66 Barry Johnson, Economic Development Administration, U.S. Department of Commerce Session III: Small Business, Universities, and Regional Growth 72 Moderator: Keiki-Pua Dancil, Hawaii Science and Technology Institute 40 Years of Experience with Technology Licensing 72 Katharine Ku, Office of Technology Licensing, Stanford University

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xiii CONTENTS Universities and Economic Development: Lessons from the “New” University of Akron 76 Luis Proenza, The University of Akron Converting University Research into Start-Up Companies 80 Barry Weinman, Allegis Capital LLC Improving Industry Partnerships 83 Mary Walshok, University of California at San Diego DAY 2 89 Welcome and Introduction 89 M.R.C. Greenwood, University of Hawaii Opening Remarks 90 The Honorable Daniel K. Akaka, United States Senate Session IV: University of Hawaii’s Current Research Strengths and Security and Sustainability: Energy and Agriculture Opportunity 92 Moderator: William Harris, Science Foundation Arizona Hawaii’s Satellite Launch Program 92 Brian Taylor, School of Ocean and Earth Science and Technology, University of Hawaii at Mānoa Astronomy in Hawaii 96 Robert McLaren, Institute for Astronomy, University of Hawaii Data Analytics: A Proposal 99 The Honorable Daniel S. Goldin, Intellisis Corporation, and 9th NASA Administrator (Ret.) Hawaii: A Model for Clean Energy Innovation 102 Maurice Kaya, Hawaii Renewable Energy Development Venture (HREDV) Sustainable Agricultural Systems: Challenges and Opportunities 105 Sylvia Yuen, College of Tropical Agriculture and Human Resources, University of Hawaii at Mānoa

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xiv CONTENTS Session V: Medical Opportunities in Hawaii 110 Moderator: Virginia Hinshaw, University of Hawaii at Mānoa Clinical Trials in Hawaii 110 Art Ushijima, Queen’s Health Systems/The Queen’s Medical Center University of Hawaii Medical Initiatives 113 Jerris Hedges, John A. Burns School of Medicine, University of Hawaii at Mānoa Advancing Innovation and Convergence in Cancer Research 116 Jerry S. H. Lee, Center for Strategic Scientific Initiatives, National Cancer Institute, National Institutes of Health Biomedical Innovation with Global Impact in Hawaii 119 Hank Wuh, Skai Ventures and Cellular Bioengineering, Inc. Session VI: Roundtable—Next Steps for Hawaii 125 Moderator: M.R.C. Greenwood, University of Hawaii The Honorable Mazie Hirono, United States House of Representatives The Honorable Colleen Hanabusa, United States House of Representatives Peter Ho, Bank of Hawaii and APEC 2011 Hawaii Host Committee Richard Rosenblum, Hawaiian Electric Company Donald Straney, University of Hawaii at Hilo Charles Wessner, The National Academies III. APPENDIXES 133 A Agenda 135 B Biographies of Speakers 140 C Participants List 163 D Bibliography 176

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Preface Responding to the challenges of fostering regional growth and employment in an increasingly competitive global economy, many U.S. states and regions have developed programs to attract and grow companies as well as attract the talent and resources necessary to develop innovation clusters. These state and regionally based initiatives have a broad range of goals and increasingly include significant resources, often with a sectoral focus and often in partnership with foundations and universities. These are being joined by recent initiatives to coordinate and concentrate investments from a variety of federal agencies that provide significant resources to develop regional centers of innovation, business incubators, and other strategies to encourage entrepreneurship and high-tech development. PROJECT STATEMENT OF TASK An ad hoc committee, under the auspices of the Board on Science, Tech- nology, and Economic Policy (STEP), is conducting a study of selected state and regional programs in order to identify best practices with regard to their goals, structures, instruments, modes of operation, synergies across private and public programs, funding mechanisms and levels, and evaluation efforts. The committee is reviewing selected state and regional efforts to capitalize on federal and state investments in areas of critical national needs. This review includes both efforts to strengthen existing industries as well as specific new technology focus areas such as nanotechnology, stem cells, and energy in order to better understand program goals, challenges, and accomplishments. As a part of this review, the committee is convening a series of public work - shops and symposia involving responsible local, state, and federal officials and xv

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xvi PREFACE other stakeholders. These meetings and symposia will enable an exchange of views, information, experience, and analysis to identify best practice in the range of programs and incentives adopted. Drawing from discussions at these symposia, fact-finding meetings, and commissioned analyses of existing state and regional programs and technology focus areas, the committee will subsequently produce a final report with findings and recommendations focused on lessons, issues, and opportunities for comple - mentary U.S. policies created by these state and regional initiatives. THE CONTEXT OF THIS PROJECT Since 1991, the National Research Council, under the auspices of the Board on Science, Technology, and Economic Policy, has undertaken a program of activities to improve policymakers’ understandings of the interconnections of sci- ence, technology, and economic policy and their importance for the American economy and its international competitive position. The Board’s activities have corresponded with increased policy recognition of the importance of knowledge and technology to economic growth. One important element of STEP’s analysis concerns the growth and impact of foreign technology programs.1 U.S. competitors have launched substantial programs to support new technologies, small firm development, and consortia among large and small firms to strengthen national and regional positions in stra - tegic sectors. Some governments overseas have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.2 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of technical expertise, underscore the need for national R&D programs to support new and existing high-technology firms within their borders. Similarly, many state and local governments and regional entities in the United States are undertaking a variety of initiatives to enhance local economic development and employment through investment programs designed to attract knowledge-based industries and grow innovation clusters.3 These state and re- gional programs and associated policy measures are of great interest for their potential contributions to growth and U.S. competitiveness and for the “best practice” lessons they offer for other state and regional programs. 1 National Research Council, Innovation Policies for the 21st Century: Report of a Symposium, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2007. 2 For example, a number of countries are investing significant funds in the development of research parks. For a review of selected national efforts, see National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices: Report of a Symposium, Charles W. Wessner, ed., Washington, DC: The National Academies Press, 2009. 3 For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2010 State New Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and ITIF, November 2010.

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xvii PREFACE STEP’s project on State and Regional Innovation Initiatives is intended to generate a better understanding of the challenges associated with the transition of research into products, the practices associated with successful state and regional programs, and their interaction with federal programs and private initiatives. The study seeks to achieve this goal through a series of complementary assessments of state, regional, and federal initiatives; analyses of specific industries and technologies from the perspective of crafting supportive public policy at all three levels; and outreach to multiple stakeholders. The overall goal is to improve the operation of state and regional programs and, collectively, enhance their impact. THIS SUMMARY The symposium reported in this volume convened state officials and staff, business leaders, and leading national figures in early-stage finance, technology, engineering, education, and state and federal policies to review challenges, plans, and opportunities for innovation-led growth in Hawaii. The symposium included an assessment of Hawaii’s natural, industrial, and human resources; identifica - tion of key sectors and issues; and a discussion of how the state might leverage national programs to support its economic development goals. This summary includes an introduction that highlights key issues raised at the meeting and a summary of the meeting’s presentations. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what oc - curred at the workshop. The planning committee’s role was limited to planning and convening the workshop. The statements made are those of the rapporteur or individual workshop participants and do not necessarily represent the views of all workshop participants, the planning committee, or the National Academies. ACKNOWLEDGMENTS On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants in this meeting. We are especially indebted to M.R.C. Greenwood, President of the University of Hawaii, for her leadership in organizing the event, identifying topics, and generating interest across a broad spectrum of participants. We are also grateful to Alan Anderson for preparing the draft introduction and summarizing the proceedings of the meeting and to Sujai Shivakumar and David Dierksheide of the STEP staff for preparing the report manuscript for publication. SPONSORS We are grateful to our project and event sponsors and extend particular recognition to the National Institute of Standards and Technology, the Depart - ment of Energy, the Economic Development Administration, the National Cancer

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xviii PREFACE Institute, the Heinz Endowments, the Association of University Research Parks, Acciona Energy, Dow Corning, IBM, and SkyFuel, Inc. for their support of the program. For the Hawaii conference, special recognition goes to the University of Hawaii Foundation, Hawaiian Electric Company, the Weinman Innovation Fund, American Savings Bank, the Queen’s Medical Center, HiBEAM (Hawaii Busi - ness and Entrepreneur Acceleration Mentors), the Intellisis Corporation, HDTC (High Technology Development Corporation), the Hawaii Business Roundtable, Inc., Rainbowtique of the University of Hawaii, and Gebco Hawaii. NATIONAL RESEARCH COUNCIL REVIEW This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures ap - proved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process. We wish to thank the following individuals for their review of this report: Saul Behar, Philadelphia Science Center; Keiki-Pua Dancil, Bio-Logical Capital; Harold Masumoto, Pacific International Center for High Technology Research; Stephanie Shipp, Institute for Defense Analyses; and Donna Vuchinich, Univer- sity of Hawaii Foundation. Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final con - tent of this report rests entirely with the rapporteur and the institution. Charles W. Wessner Mary L. Good