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MedicalSuds Evening Gathering
March 5, 2002
University of Minnesota
MBBNet – mbbnet.umn.edu
Introductory remarks by Bill Hoffman
MedicalSuds, March 5, 2002
"Clusters of Innovation:  Minnesota, Looking Ahead."
 
 Before "Looking Ahead" I'd like talk about the past briefly.  Clusters are about history and people as well as about economics, competition and strategy.
  
Michael Gorman of St. Paul Venture Capital  mentioned something recently about paying attention to things that are "in the soil."  His remark reminded me of people and ideas I've written about that sprang from the Minnesota soil.
 
Last Wednesday I got a call from an executive at Immunex Corp. in Seattle - which is where you end up if you follow that proposed route for a transcontinental railroad from St. Paul westward.  He said he had read my column about the collaboration between Charles Lindbergh and Alexis Carrel at the Rockefeller Institute in the 1930s, and that his "jaw dropped“ when he read it.
 
Lindbergh met  with Carrel, the world's greatest surgeon and a Nobel laureate, after learning that his sister-in-law was suffering from heart disease.  He couldn't accept what he was told about open-heart surgery being impossible.  Carrel agreed to work with him.  A few years later the "Lindbergh Pump" made its debut with much fanfare, including a cover story in Time magazine in July 1938.  It was not a heart-lung bypass system at all, but a perfusion pump for keeping animal organs alive outside the body so Carrel could study them.
 
What really got Immunex's attention though was my speculation about what Charles Lindbergh might have done if he had had molecular biology as the chief technology of his youth instead of "Maria," the family's Model T.  He died in 1974, the year recombinant DNA technology made its debut.
 
In May, Lindbergh's grandson Erik will attempt to follow in his grandfather's flight path to commemorate the 75th anniversary of the transatlantic flight and, as Erik put it, to honor his grandfather's  legacy of innovation.  It is possible only because of Erik's near miraculous response to the blockbuster biotech drug Enbrel, made by Immunex.  He has suffered from rheumatoid arthritis for 15 years and could barely walk until he started taking Enbrel about a year ago.  When he sets off in May for his solo flight in a single engine plane, just like his grandfather he will not be carrying a parachute.  Too heavy.  But he will have a supply of Enbrel.
 
His grandfather also carried medicine in the cockpit of the Spirit of St. Louis.  He had one of Henry Wellcome's little "medicine chests" of compressed medicine's called tabloids.  All the explorers of the time carried  these chests on their expeditions, compliments of Wellcome. 
 
Henry Wellcome was the founder of Burroughs Wellcome.  He grew up in Garden City just south of Mankato (the southern most blue star).  He worked in his father's drug store on Main Street during the period after the Civil War.  He always had his nose in his uncle's anatomy books.  He uncle was a surgeon and took Henry to meet a friend of his in Rochester, William Worrall Mayo.  Dr. Mayo put Henry to work with his sons William and Charles at the drug store beneath his office, tutored him in physical chemistry, and later sent him off to pharmacy school.
 
In 1880 Wellcome and his partner founded their company in London, and  in 1894 Wellcome established the his Physiological Research Laboratory.  In that act he laid the scientific foundation for the modern pharmaceutical industry.  Anyone taking a prescription drug since that time, including Erik Lindbergh, owes something to Wellcome's passion for science and medicine.  His legacy is also the Wellcome Trust, the largest biomedical research philanthropy in the world with an endowment of $22 billion and the chief funder for the UK's participation in the Human Genome Project.
 
The reliable cardiopulmonary bypass system that Charles Lindbergh sought to save his sister-in-law came into being not in the Princeton - New York corridor where he built the Lindbergh Pump but just a hundred miles or so downstream from his boyhood home in Little Falls (the middle star) -- at the University of Minnesota Hospital.   It was called the helical reservoir bubble oxygenator.  It was invented by Richard DeWall and C. Walton Lillehei.
 
The cluster of talent that drove the revolution in surgery here in the 1950s needed someone unique to channel all the that creative energy.  That someone was Owen Wangensteen, a farm boy from Lake Park (upper left star).
 
Wangensteen was chief of surgery from 1930 to 1967 and was himself was an inventor of note.  His suction device for treating intestinal blockage, the "Wangensteen tube, " was a life-saver for hundreds of thousands of patients.  In 1983 he was inducted into the Minnesota Inventors Hall of Fame.
 
In September we will commemorate the 50th anniversary of the world's first successful open-heart operation.  It was done at University of Minnesota Hospital by F. John Lewis assisted by C. Walton Lillehei and Richard Varco .
 
Four years later it was the surgeon who approached the engineer -- just the opposite of Lindbergh approaching Carrel .  The surgeon of course was Dr. Lillehei and the engineer was Earl Bakken who ran a little repair business called Medtronic.  That was the real beginning of biomedical engineering and the first chapter in the story of one of the world's leading biomedical clusters.
 
Clusters are highly-evolved regional economic ecosystems that are productive, competitive, and that innovate rapidly – they are constantly churning out new products and services.
Clusters are complex systems with many feedback loops.  No one knows exactly how they come about.   Anchor companies appear to be important early on in some industries, spawning new life in the ecosystem:  Hewlett-Packard in Silicon Valley, Nokia in Helsinki, Medtronic in Minnesota.
The term “cluster” was first used by Michael Porter’s in his landmark study The Competitive Advantage of Nations (1990).  Porter builds on the work of Albert Hirschman (1950s) on industrial linkages and Alfred Marshall (early 20th century) on the role of knowledge in industrial districts in the UK.
Minnesota’s medical device industry is one of Porter’s preferred models for showing how clusters keep upgraded. 
The Council on Competitiveness is a Washington, DC-based nonprofit of CEOs, university presidents and labor leaders.
 Michael Porter is a member of the Council’s Executive Committee and has guided cluster studies of these five regions in the US – San Diego, Wichita, Research Triangle, Pittsburgh, and Atlanta.
The National Governors Association (NGA) began a partnership with the Council late last year and co-sponsored a conference “National Clusters of Innovation” in Washington, DC in December 2001. 
The NGA’s Center for Best Practices is holding Regional Competitiveness Forums in 2002 in Denver and Atlanta.
Arizona, Connecticut, Oregon and Wisconsin are among states that have launched cluster initiatives.
The Harvard Cluster Mapping Project provides a search tool to help states identify their statewide or regional clusters.  The Institute for Strategy and Competitiveness at the Harvard Business School hosts the search tool on its web site at www.isc.hbs.edu
Examples of biomedical clusters around the world. 
Minnesota
Bay Area of California
San Diego
Boston Area
Cambridge Network – United Kingdom
Medicon Valley – Sweden and Denmark
BioValley – Switzerland, France and Germany
Zurich MedNet – Greater Zurich Region
Monash Research Cluster for Biomedicine - Melbourne
The language Porter uses in his book The Competitive Advantage of Nations (1990) to describe clusters:  links, linkages, linkage mechanisms, connections, interconnections, communications channels, networks.   This is the language of the Internet.
Porter describes his diamond model for upgrading clusters as “interactive.”
MBBNet was designed from the beginning in 1994-95 to provide the links Porter describes as an essential characteristic of clusters.
University of Minnesota conducts 90% of the publicly funded research in the state, more than $500 million/year.
University of Minnesota has a high level of patenting and licensing activity and ranks among the top five universities nationally for spinning out business start-ups. 
Michael Porter’s research shows that the Twin Cities area and Rochester have a higher level of patenting activity than comparable regions
There is renewed interest in innovation and entrepreneurship and how they are related.
Results reflect the organizational advantage achieved through a cluster-driven Web portal.
The State and Local Policy Program at the Humphrey Institute of Public Affairs is a national cluster resource center that has been conducting clusters studies for 10 years.  Currently it is evaluating “Rural Knowledge Clusters” in a study funded by U.S. Department of Agriculture.
The Great North Alliance is a civic leadership organization working to enhance regional competitiveness in a global economy.  The GNA conducts critical regional benchmarking studies comparing the Twin Cities region with other leading metro regions.
University of Minnesota President Mark Yudof’s Working Group on the Minnesota Economy released a report in December 2000 that included a cluster-based development strategy among its recommendations.
Higher Education
Minnesota State Government
Industry Trade Associations 
Technology Development Organizations
Networking/Matchmaking Organizations
Regional clusters of innovation are increasingly viewed as national resources with a global reach.
The MBBNet – Zurich MedNet Web Portal Link, joining the heart of North America with the heart of Europe, was dedicated at the University of Minnesota and the Swiss Embassy in Washington, DC in September 2000.
Zurich MedNet is a medical/biotech cluster of the Winterthur Consortium and the Zurich Network.
The Zurich region is “economic Switzerland,” strong in precision machining and medical devices, especially orthopedic devices. 
Switzerland is one of the countries studied by Michael Porter in The Competitive Advantage of Nations (1990).  It has a solid innovation infrastructure, a strong system of public education and significant capital resources, but it lacks a tradition of entrepreneurship.
Zurich MedNet has engaged in its activities the Universities of Applied Science in Winterthur and Wadenswil and the Federal Institute of Technology (ETH) in Zurich, which is spinning off biotech start-ups.
The pioneering New Product Design and Business Development (NPDBD) program has been supported by Swiss companies and has graduated Swiss students.  The NPDBD program is a collaborative venture between the Carlson School of Management, the Departments of Mechanical and Biomedical Engineering, and sponsoring companies.  Teams of graduate engineering and business students and faculty along with company employees work to develop a working prototype of a new product and a business plan.
Genesis Business Centers, under Harlan Jacobs, is the on-the-ground liaison for building the MBBNet – Zurich MedNet Link in Minnesota.
Factor Conditions are inputs in Porter’s “Diamond of Advantage” for how the public and private sectors can work together.  In a regional cluster system, they are the investments.
Stem cell technology being developed through the Stem Cell Institute in the University’s Academic Health Center is a broadly enabling technology with important implications for regenerative medicine. 
Biomaterials and biosensors:  Initiative lead by the University’s College of Biological Sciences and Institute of Technology through the interdisciplinary Biotechnology Institute that looks to use biocatalysis (enzymes and microbes) to make brand new environmentally friendly materials out of plant matter/biomass, with applications in healthcare and industry. 
Miniaturization and nanotechnology:  Minnesota has significant engineering research capabilities for miniaturizing medical devices and diagnostic instruments.
Technology-enhanced health services may be an emerging cluster in Minnesota.
Our biomedical innovators have inspired poets through the centuries.
Owen Wangensteen, chief of surgery during the revolution in surgery in Minnesota during the 1950s, invented a suction device called the “Wangensteen Tube” for treating intestinal blockage.  He was inducted into the Minnesota Inventors Hall of Fame in 1983.