A few years back, Paul C. Light was not necessarily a welcome sight to community development organizations. In fact, they would hold their collective breath when they saw him coming. He says, with a grin, that he was known as "The Coroner."
Light was referring to the days when he visited businesses and organizations that had been deemed innovative to discover what made them so. What he often found were organizations that had at one time been innovative but were unsuccessful at sustaining innovation. Instead of declaring them innovative, Light would report that their culture of innovation was dead.
Light, a professor at NYU Wagner, was one of several keynote speakers at Exploring Innovation: A Conference on Community Development Finance from May 2-4 in St. Louis, sponsored by the Community Affairs Office of the Federal Reserve Bank of St. Louis. More than 200 people attended to learn how to be innovative and how to apply the process to community development.
There are four important characteristics that high-performing, innovative organizations share, Light said:
Andrew Hargadon, another expert on innovation who spoke at the conference, is an associate professor at the University of California, Davis. Innovation is much more than one person with one great idea, he said. In today's technological world, it's more likely to be a collaboration of people taking a great idea and improving it.
A perfect example is Bill Gates. The founder of Microsoft didn't invent anything, Hargadon said. Instead, he and his partners took computer products that already existed and made them practical and marketable to the general public. He was innovative.
Hargadon emphasized that innovation alone is not enough. "Success depends on your ability to mobilize your network around an idea," he said. The more people you know and connect with, the more likely you are to be successful.
How does one take all this information on innovation and apply it to community development?
The industry is well-positioned to innovate at this point in time, said Sandra Braunstein, director of the Division of Consumer and Community Affairs for the Federal Reserve System.
Although nonprofit lending groups have become innovative in their approaches to lending, the majority of funding still comes from the federal government. "Are there ways to get better at this while remaining true to the mission?" she asked.
Improving the sustainability of initiatives could open up opportunities for innovation, she said. Processes, from financial counseling to loan servicing, could be improved.
In new marketplaces, companies get the opportunity to test and verify and pilot. The community development field needs to develop funding sources for this type of research and development.
The private sector connects the dots through consortiums and product development groups. "We could create that type of institution and share our knowledge with one another," she said.
These are just some of the ideas presented at the conference. For more, read the articles in this special issue of Bridges and the proceedings from the conference, which can be found at www.exploringinnovation.org.
Keep up with what’s new and noteworthy at the St. Louis Fed. Sign up now to have this free monthly e-newsletter emailed to you.
Fed in Print: An index of the economic research conducted by the Fed.