Guest blog post by Nish Acharya, Director of the Office of Innovation and Entrepreneurship in the U.S. Department of Commerce’s Economic Development Administration .
The National Advisory Council on Innovation and Entrepreneurship (NACIE) supports President Obama’s innovation strategy by helping to develop policies that foster entrepreneurship and identifying new ways to take great ideas from the lab to the marketplace to drive economic growth and create jobs.
One of the guiding forces of NACIE is its co-chair, Dr. Desh Deshpande, who is also Chairman and President of the Sparta Group and has been involved with many other companies, such as A123 Systems, Sycamore Networks, Tejas Networks, Sandstone Capital, and HiveFire. He is also the founder of the Deshpande Foundation , and creator and supporter of the Deshpande Center for Technological Innovation  at the Massachusetts Institute of Technology (MIT), which is a leading proof of concept center.
In the last of a series of conference calls with members of NACIE, on June 27, participants spoke with Dr. Deshpande, with whom I have worked closely to identify and implement strategies to spur entrepreneurship and innovation.
During the call, Dr. Deshpande defined innovation as coming up with new ideas, while entrepreneurship is putting those ideas into practice. He pointed out that all innovation is contextual, in that no group of individuals can just sit down and solve all the world’s problems. It is important, he noted, that innovators live in the areas where the problems exist. His point echoed one that has been made by several other NACIE members, namely that innovators have a greater chance of success if they begin by solving the problems that exist in their own communities.
I asked Dr. Deshpande what are the qualities of a successful proof of concept center. He replied that there is a simple formula: innovation + relevance = impact. In order to be successful, a proof of concept center needs to ensure that innovation is directed at a real-world problem. While innovation cannot be mandated, because it derives from the freedom to think creatively, it needs to be directed to solving specific real-world problems if it is to be successful.
Dr. Deshpande set forth four requirements of a successful proof of concept center: (1) ideas, (2) entrepreneurs (typically not faculty members), (3) mentors, and (4) access to capital. A center that includes all four elements will thrive. He pointed out that there is no requirement that ideas must be big, or the money must be plentiful—there are many opportunities, he said, to solve problems of all sizes, with different amounts of funding.
According to Dr. Deshpande, proof of concept centers should have a multidisciplinary focus, because it is difficult to direct innovation toward just one issue. Moreover, areas that appear important and relevant today can change quickly. By starting out without a specific area of focus, a successful proof of concept center will be free to fund a good idea in any area. If expertise in a specific area develops organically, then the proof of concept center can then focus on that area.
Dr. Deshpande reiterated a point made in previous conference calls: it is possible for proof of concept centers to thrive in geographic areas other than the traditional ones of Boston, New York, Silicon Valley, etc. From his personal experience, Dr. Deshpande has seen proof of concept centers that are located outside these areas become successful because there is less pressure, less turnover, and less competition for talent and other resources in nontraditional locales.
At the end of the conference call, Dr. Deshpande responded to several questions about the practical aspects of proof of concept centers. Regarding the traits of an institution seeking funding to develop a center, he said that he would look for support from the top leadership of that institution. There should not only be a commitment from the leader and his or her team, but also a willingness to solve the problems in the community.
When asked about the all-important first hire, he replied that he would look for someone who enjoyed being in and around universities, but was someone from outside the university setting—that is, someone who had spent considerable time working in the private sector.
Finally, when asked about how he would structure the innovation infrastructure such that entrepreneurs are supported throughout the process, Dr. Deshpande responded that education was the key. Many people are required to ensure that an idea results in a successful company, not just the entrepreneur. Being surrounded by people who have gone through the process before, and who can serve as mentors, run workshops, etc., is important to the success of the effort.