Three biggest hurdles for Chicago’s innovators

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Updated: August 4, 2011 4:20PM

Central to the innovation process in business is paying close attention to customer needs and moving swiftly to meet them with new products and services. In that spirit, we asked the 332 nominees for the 2010 Chicago Innovation Awards about their three greatest needs.

As the Chicago region emerges from the recession, its economic engine will be driven by the entrepreneurs who run its small- to medium-size businesses, many of them in the manufacturing sector. One piece of evidence that this sector is growing is that the number of nominees for the Chicago Innovation Awards rose by nearly 100 from the year before, a clear sign that it takes more than a lousy national economy to keep a good business down. It was in the teeth of the recession, for example, that 2009 award winner Groupon was launched and went on to become a multibillion-dollar company.

The Chicago Innovation Awards, now in their 10th year, recognize the most innovative new products and services brought to market in the Chicago region each year.

Policymakers who want to encourage business growth in the Chicago region and venture capitalists who want to support it would do well to listen closely to what the innovators told us they need.

Challenge 1: Getting known

With cost-efficient do-it-yourself advertising, like social networking and viral videos, it doesn’t take deep pockets and a team of corporate marketing executives to create and deliver a compelling message to the marketplace. The bootstrap entrepreneur can compete against large firms for eyeballs. The playing field is much more level. 

This may seem like great news, but the solution is also the problem. Since every company can have a presence on Facebook and Twitter, every company is already there. The Internet doubles in size every six months! A good idea can still break through. Threadless is an example of a Chicago company that used word-of-mouth buzz, social media and crowd-sourcing to achieve tremendous success. They understood that by running online T-shirt design contests, paying cash prizes to the winners, and selling a limited edition of each shirt that they could build a virtual community of people worldwide that would follow them closely. Threadless came to the table with a new idea and a unique business model that delivers real value.

The lesson in this for entrepreneurs and those who support them is that the ability to reach a global marketplace for free is not enough. Equally important is a very old-fashioned element of business success — a powerful value proposition. A great idea powerfully delivered will find its market.

Challenge 2: Capital to grow

While we expected access to capital would be at the top of the list of innovator needs, it came in second. One surprising reason for this turned out to be that many of them already have it. On a trip to New York City to ring the opening NASDAQ bell with this year’s Chicago Innovation Award winners, Mike Samson, co-Founder of crowdSPRING, the online source of creative talent, said that his firm has received a number of offers from venture capital firms and angel investors. It reminded us that a good idea cannot hide and that every effort to be visible will do nothing for a bad one.

A second reason we believe the need for capital didn’t top the list is that a significant number of innovators don’t want to give up control in return for an infusion of money. That is perfectly reasonable, but certainly not in every case. It may highlight the need for education about how the venture capital process works and the meaning behind the old saying that “20 percent of a watermelon is better than 100 percent of a grape.”

There is a robust and growing venture capital community looking to invest in promising Chicago companies. New World Ventures, Lightbank, Sandbox Industries, and the I2A Fund are a few. There are many more. Through the work of organizations like the Illinois Venture Capital Association, we are seeing growing connections between the community of innovators and those who can provide the money needed to grow businesses in this region.

Challenge 3: Finding and keeping Chicago talent

Northwestern University, University of Chicago, University of Illinois at Chicago, the Illinois Institute of Technology and others are world-class institutions right here in our backyard. They overflow with talent at the undergraduate and graduate level. Yet Chicago’s innovators — especially those in the high-tech sector — report that the talent they need is hard to find. How can this be? 

A recent poll conducted by the Illinois Technology Association revealed that 73 percent of college seniors in the Chicago region interested in high-tech jobs said they want to leave for Silicon Valley upon graduation. The city that reversed the flow of the Chicago River should certainly be able to figure out how to reverse the flow of its most talented young people. 

As we looked more deeply into this question, it seems clear that the challenge is not one of first jobs, it is one of ongoing careers. Bright young people need connections with others who share their interests and might, if the opportunity were right, team up to form new businesses. Part of the allure of Silicon Valley is the breadth and depth of opportunity. The challenge for the Chicago region is to create that same sense of possibility here.

The lesson in this for firms seeking top local talent is to not just sell the idea of working for one business, but the opportunity to become a member of a larger community with unlimited potential.

Looking ahead 

Through our work with the Chicago Innovation Awards we have come to recognize the breadth of innovation in this region—high tech, low tech, and no-tech. The future of Chicago’s economy is in the hands of innovators that will bring a steady stream of new products and services to the market each year. The challenge for policymakers, venture capitalists and successful innovators themselves is to work together in ways that will accelerate the growth of new business and to keep the talent that drives it here in the Chicago region.

Luke Tanen is director of the Chicago Innovation Awards, which honor the most innovative new products and services in the Chicago region each year. Tanen’s upcoming book, Innovating . . . Chicago-Style: How Local Innovators are Building the National Economy, will be published in November.