A study released today from the Office of Advocacy of the U.S. Small Business Administration and the Edward Lowe Foundation ranked Colorado as #1 in both innovation and entrepreneurship.
The research summary states: “This research addresses the needs of local policymakers to understand the role of entrepreneurship and innovation in creating an environment where local economic growth can thrive.”
Obviously, this is a great bit of news to hear, confirming my belief in the thriving local business community, but it also raises the question of why, as an active entrepreneur, I don’t see any signs of innovation or entrepreneurial assistance from our State agencies?

Some methodology notes: Indexes were used to rank the 394 regions studied, and the regional entrepreneurship index was composed of the number of new firms per 1,000 labor force participants, average annual change in the number of new firms and the percent of rapidly growing firms.
This is particularly interesting because many of the entrepreneurs I know are carefully flying under the proverbial radar of local government agencies, suggesting that the usual disclaimer about “as reported to the statistical collection agency” clause applies here too. In particular, I don’t know whether the U.S. Census Bureau knows about my consulting firm, for example.
Innovation was measured by factoring in R&D expenditures, number of patents and hi-tech’s share of the local economy. This suggests to me that there’s a bias against innovation that isn’t hi-tech. I live in the hi-tech world, obviously, but I’m not sure that this is completely defensible as a methodology. Are we really saying that if a computer or the Internet isn’t involved, it defacto can’t be innovative? New composite materials for manufacturing, different methods of sowing seeds, harvesting crops, or even great ideas in structuring schools are all de facto not innovative because they’re not “hi-tech”?
�Entrepreneurship is the link between inventors, innovation, and economic growth,� said Brian Headd, Economist for the Office of Advocacy. �It�s not enough to just focus economic development on inventors and innovation. Entrepreneurs need to be cultivated as well, so that innovations can be turned into jobs and economic growth.�
Surprisingly, the top place in the entire United States for new firm “births” per 1,000 labor force participants is Glenwood Springs, Colorado, a city that I much more associate with the amazing Hot Springs Pool than any astonishing level of innovation. This also means that Glenwood Springs is more entrepreneurial than Silicon Valley, Manhattan, Research Triangle, or anywhere else. Amazing. The least entrepreneurial city? Mansfield, Ohio. The annual rate of change of new firms ranged from a remarkable 11.7% for Springfield, Mass to a low of -8.3% for the non-tourist town of Hilo, Hawaii.
More interesting facts: after controlling for size, the report states that there’s no significant difference in the number of new firms created between small, medium and large regions. If you’re thinking this means that you must live in a busy “braintrust” town like San Jose, California or Raleigh, North Carolina, this research indicates that you’re wrong. Live where you want to live, create and grow your company where it’s best for your needs, and it’ll succeed or fail on its own merits.
On the other hand, the five most “innovative-entrepreneurial regions” in the United States are:

• Fort Collins, Colorado
• Raleigh, North Carolina
• Provo, Utah
• Austin, Texas
• Boston, Mass

One surprise to me in these ratings is that Lafayette, Indiana, home town (well, immediately adjacent to West Lafayette) to Purdue University is one of the twenty worst performing regions in terms of annual change in new firm births. A surprising result for a town only a stone’s throw from a major university!
Another nice thing: six of the top twenty regions in the list of “percent of firms growing rapidly” are in Colorado: Fort Collins, Cortez, Glenwood Springs, Denver, Colorado Springs and Grand Junction. Missing from the list is my home town, though, Boulder.
Again quoting from the report, “The results demonstrate that entrepreneurship enhances the regional economic impact of investments in innovation. Innovations are highly portable, whereas entrepreneurship is place-based… Developing strategies, policies and programs for leveraging the nexus between innovation and entrepreneurship, therefore, appears to be of vital importance to the competitiveness and vitality of the region.”
Nicely stated. It’s what I’ve been saying here all along, actually: cities that support both entrepreneurs and innovation reap a significant benefit in the local economy, and cities that are run by the “old guard” traditional businesses, are risk averse, and barely dip their proverbial toe into the swirling maelstrom of technology are the cities that are obsolete and headed for economic hard times.