A West Michigan Workforce Innovations Lab

1. A West Michigan Workforce Innovations Lab April 20 , 2006

2. Contents • The Innovation Economy Challenge • The WIRED Initiative • Guiding Principles • Our Innovation Management System • The WIRED West Michigan Innovation Portfolio • Regional Partnerships • Implementation Plan

3. Key Messages • Our economy is in the middle of a transformation that has far-reaching implications. • Innovation is at the core of this transformation. • The WIRED Initiative is focused on helping align our workforce development, education and economic development system to the needs of the emerging “innovation economy.” • The focus is on redesigning and realigning systems, not on providing resources for existing systems. • We will use a discipline innovation management system to get the maximum benefit from our investments. • The “portfolio of innovations” we are working on are based on over a decade or prior work in the region. • West Michigan is uniquely positioned to be a model for workforce development and education innovation for the rest of the country.

4. The Innovation Economy Challenge

5. The Challenge of Regional Economic Innovation “Although global competition is typically seen as a national challenge, the front lines of the battlefield are regional – where companies, workers, researchers, entrepreneurs and governments come together to create a competitive advantage in the global economy. That advantage stems from the prosperity-creating power of innovation – the ability to transform new ideas and new knowledge into advanced, high-quality products or services.” (Source: USDOL ETA WIRED Request for Proposals)

6. The “information economy” is rapidly becoming the “innovation economy.” Consumers are more educated, more demanding and less forgiving. Manufacturers who excel at innovation grow four times faster and have twice the profitability of non-innovators. (McKinsey, 1999) Innovation is not just about products – it is also about services, business processes and business designs. Innovation is a business discipline, not an “art.” The Importance of Innovation

7. The National Innovation Challenge “For the past 25 years, we have optimized our organizations for efficiency and quality. Over the next quarter century, we must optimize our entire society for innovation.” “If America were a company, freedom and exploration would be our core competencies. And the capacity to innovate is the foundation for bringing our competitiveness into full fruition.” Source: Innovate America, Report of the National Innovation Initiative, Council on Competitiveness (www.compete.org)

8. The Innovation Economy “The innovation economy is fundamentally different from the industrial or even the information economy. It requires a new vision, new approaches and a new action agenda. The United States must create the conditions that will stimulate individuals and enterprises to innovate and take the lead in the next generation of knowledge creation, technologies, business models and dynamic management systems. A new relationship among companies, government, educators and workers is needed to assure a 21st century innovation ecosystem that can successfully adapt and compete in a global economy.” Source: Innovate America, Report of the National Innovation Initiative, Council on Competitiveness (www.compete.org)

9. Rapid diffusion Global infrastructure Multi-disciplinary Technologically complex Requires high levels of collaboration Blurs traditional boundaries The Rapid Evolution of Innovation • Blurred Boundaries: • Users and producers • Private and public intellectual capital • Manufacturing and services • Different disciplines • Public and private enterprises • Large and small firms • Business sectors

10. Economic Challenges In West Michigan • Since March of 2001, the region has lost 27,100 jobs, a decline of 4.6% • 90% of the region’s job losses occurred in manufacturing. • West Michigan is more than twice as dependent on manufacturing compared to the nation as a whole. 22% of the workforce is in manufacturing. • Between 2000 and 2004, real median income decreased in the region, and the poverty rate rose from 8.4% to 10.1%. • The wages in growing industries are only 50% of the wage levels in declining industries.

11. Summary of Manufacturing Challenges • Challenges: • Overcapacity and price deflation • Extreme demands for operational excellence • Competition from global value chains, including Low Cost Countries • Rapid currency valuation shifts • Shortening of product lifecycles • Required Competencies: • Cost reduction (lean manufacturing) • Rapid innovation in products, processes & business designs • Management of flexible global supply chains • Management of complex business alliances & partnerships • Enterprise & systems integration • Environmental performance

12. Impact on Human Capital Needs (1) • Fewer jobs. Due to increases in productivity, it is likely that employment in manufacturing will continue to decline, as more goods are produced with fewer workers. • Higher skill requirements. Production systems are becoming increasingly technology-intensive. There are fewer and fewer “low skilled” jobs in manufacturing. Most jobs will eventually require certification beyond high school. • More rapid changes in skill requirements. The life-cycle of technologies are shortening, with rapid changes in fundamental processing and material technologies requiring frequent training and skill upgrading. • Blurring of traditional discipline boundaries. Jobs are requiring more cross-disciplinary training (e.g. “mechatronics” that combines electronic and mechanical engineering).

13. Impact on Human Capital Needs (2) • More collaboration. Work is becoming more team-based, and companies are organizing around flexible network-designed value chains, with increasingly complex structures being enabled by integrated communications technologies. • Core process disciplines. Continuous improvement and waste elimination (lean manufacturing) are becoming required core disciplines for all employees. • More frequent career changes. The turbulence of the market requires more frequent career changes over the lifetime of the worker.

14. Weaknesses in the Current System • The K-12 system is largely failing to produce graduates who meet basic reading, math and science competencies. • The percentage of college graduates going into math, science and engineering career tracks has been declining. • Technical training providers (such as community colleges) are unable to keep up with rapid changes in technology and occupational categories. The cycle time (“time to market”) in educational systems is so long that curricula are often out of date by the time they are developed. • More and more of the skill development is occurring within firms on a real-time basis. The current model is unable to keep up with real-time training changes. • The credentialing system is out of date and continues to emphasize traditional academic competencies over the practical skill competencies that are actually used in the workplace. • Educators at all levels (K-12; 2 year and 4-year) lack practical understanding of how manufacturing companies work.

15. What Employers Need From the WFD System • Companies competing in a global marketplace need a strong workforce that has the technical and critical thinking skills that support world class practices in manufacturing and non-manufacturing environments. This has driven an increased demand across industry sectors for highly skilled workers with a core set of competencies. • To support the development of a workforce with these skills, the workforce development system must be adaptable, innovative, and well connected to the world of work. • To support and encourage these qualities within the workforce development system, employers must commit to supporting work-based learning initiatives, provide access to educators and students, and join with educators, administrators, and parents to advocate for supportive policies.

16. The WIRED Initiative (Workforce Innovation in Regional Economic Development)

17. Purpose of the WIRED Initiative “The ultimate goal of the WIRED Initiative is to expand employment and advancement opportunities for American workers and catalyze the creation of high-skill and high-wage opportunities in the context of regional economies.” “By participating in the WIRED Initiative, regions will be empowered to implement ground-breaking strategies that will result in their workforce investment system becoming a key component of their region’s economic development strategy.” “The WIRED initiative will help participating regions move to the next level of system innovation and transformation.” “The goal of the WIRED initiative is to transform regional economies by enlisting the skills of the numerous and varied players in those economies to research and produce long-term strategic plans that prepare workers for high-skill, high-wage opportunities in the coming years and into the next decade.” (USDOL Materials) • Transform workforce investment & education systems to support the skill requirements of the innovation economy • More strategically integrate workforce development and economic development • Focus on long-term systems change, not short term job training slots (For more information, see the ETA website, www.doleta.gov)

18. Background • The West Michigan Strategic Alliance (WMSA) submitted a proposal under the USDOL’s Employment and Training Administration’s WIRED (Workforce Innovation in Regional Economic Development) grant program. • The WMSA proposal was funded for the full requested amount of $15 million over three years. • The WIRED project area is the seven West Michigan counties of Kent, Allegan, Ottawa, Muskegon, Newaygo, Barry and Ionia. • WMSA is the grant recipient and Grand Valley State University will serve as the fiscal agent. • The Workforce Innovation Lab initiative builds on over a decade of investments in education, workforce development and economic development innovations in West Michigan. • Twelve other proposals were funded across the country, including another initiative in mid-Michigan.

19. Resources Provided By ETA • $15 million in grant funding over three years • Intensive technical assistance from national experts • Peer to peer learning opportunities with all 13 funded regions from across the U.S. • Networking with leaders from the private sector (innovation leaders; venture capitalists; commercialization brokers; R&D labs)

20. Guiding Principles

21. Purpose of WIRED West Michigan The overall goal of WIRED West Michigan is to develop and manage an “innovations lab” designed to spawn a wide range of innovations in our regional economic development, workforce development and educational systems. Result: Compete and win in the “innovation economy”

22. Our Guiding Principles • Invest in genuine innovations that deliver performance improvements at reduced costs • Compress cycle times • Create customer pull Innovation • Target performance outcomes against global benchmarks and global value chains • Create global awareness at every level of the system • Source from the best in the world International • Create seamless integration between the K-16 education system; workforce development and training; economic development; and enterprise development • Integrate work and learning Integration

23. The Traditional Labor Market System Workforce Development Suppliers Labor Demand • K-12 • Two year • Four year • Graduate Education System Regional Economy Labor Supply • Sectors: • Private • Public • Non-Profit • Non-credit training • Temp agencies • Recruiters • Non-profits • Public sector Emerging Workforce Development Suppliers Existing Firms Transitional or Disconnected • Incumbent workforce • Employer-based training • OJT Employers & Existing Workers Workplaces Occupations • Neighborhoods • Families • Peer groups Neighborhoods and the Informal Sector Wage Levels

24. Workforce Innovations for the Innovation Economy • OUTCOMES: • Economic diversification • Job growth • Income growth • Higher education levels • Continuous skill upgrading • Life-long learning • New business formation • CHARACTERISTICS OF THE INNOVATION ECONOMY: • Globalized (the “flat” world) • Rapid diffusion; shorter product cycles • Multi-disciplinary • Technologically complex • Requires high levels of collaboration • Blurs traditional boundaries Workforce Development Education Economic Development Employers • CURRENT SYTEM CHARACTERISTICS: • Low math, science and technology achievement • Product-push • Long development times • Disconnections between work and learning • Lack of provider integration • Outdated credentialing system • NEW SYSTEM PRINCIPLES: • Continuous innovation • Compressed cycle times • Customer-pull vs. product push • Global awareness, global standards, global sourcing • Integration of providers • Integration of work and learning

25. Our Innovation Management System

26. Our Innovation Framework & Management System • Based on the Innovation Framework developed by The Right Place’s Manufacturers Council.* • Creates a disciplined process for managing the development cycle of innovations – from concept to business case, prototype and launch. • Aligns our process and language with best practice in the private sector. • Allows for clear and unambiguous communication about the status of multiple innovations. • Creates a context for making disciplined investment decisions on moving innovations from one stage to another. *To download a copy of this report (150 pp), go to The Right Place web site (http://rightplace.org/Info_Center/library.shtml). Then click on “Full Document” under A Framework for Manufacturing Innovation.

27. The Core Innovation Processes 5. Managing the R&D Portfolio 1. Opportunity Identification 2. Opportunity Selection 3. Development & Testing 4. Production & Launch

28. Innovation Management Stages

29. Our Definition of What Makes Something An “Innovation” Performance Improvements It achieves improvements in the performance outcomes and reductions in the cost of outcomes. Financial Sustainability It is based on an economic model that is sustainable on existing resource availability and do not require excessive subsidies over extended time frames. Scalability The innovation can be expanded using a common set of core systems; it is not context-dependent. Systems Change Substantially changes an existing system, or contributes to the creation of a new system.

30. Operating Implications • Each innovation is treated like a new product development process. • The WIRED grant resources are treated like an “R&D investment fund.” • Investments are linked to achievement of criteria to move from one Stage to another. • The design of innovations is expected to change, based on new information and opportunities. • Not all innovations will be expected to succeed. • Resources will be continuously redeployed as appropriate. • Partnerships are based on the contributions partners can make to the advancement of an innovation. • All innovations are designed to be eventually self-supporting within the constraints of existing resources (“sustainability”)

31. The WIRED West Michigan Innovation Portfolio

32. What If? • West Michigan manufacturers were able to organize an effective block of demand so that local workforce development providers were completely aligned around their needs? • You could post ANY job opening in the Press and had qualified West Michigan citizens who were technically ready to start tomorrow? • Every high school graduate applying for work or participating in an internship had a WorkKey certificate documenting their skill sets, and this assessment matched your own internal profile of skills required for each job, so you immediately knew where they were weak and where they were strong? • You have three people who need an introduction to project management today and you could start a training program at the end of the week with 12 other Council peers, taught by a Council firm employee with the learning credentialed by higher education?

33. What If? • You have a “materials” challenge, post it on a closed bulletin board of Council peers and are able to schedule a learning exchange the next day? • You could recruit employees from a set of “Global High Schools” where every graduate understands the dynamics of globalization; has global experiences; and meets world class global performance benchmarks in math, science and technology? • The region was able to provide jobs to 100% of employable welfare recipients, and the retention rate of these employees exceeded 90%? • You could translate the success of entrepreneurs into a specific teachable skill set which you could use to develop your own internal entrepreneur community? • You had immediate access to an entire new family of intellectual property that was ready to be translated into commercial products?

34. Our Four Categories of Innovations Market Intelligence Better understand the structure of regional employment clusters and the emerging skill requirements for the innovation economy. Workforce System Transformations Restructure key elements of our workforce development and education systems for emerging, existing and transitional workers InnovationWORKS Catalyze, support and sustain strategies to support innovation in our regional economy. Enterprise Development Stimulate entrepreneurship and new business creation in key sectors of the innovation economy.

35. Our Four Categories of Innovations Market Intelligence Better understand the structure of regional employment clusters and the emerging skill requirements for the innovation economy. InnovationWORKS Catalyze, support and sustain strategies to support innovation in our regional economy. Workforce System Transformations Restructure key elements of our workforce development and education systems for emerging, existing and transitional workers. Enterprise Development Stimulate entrepreneurship and new business creation in key sectors of the innovation economy. • Emerging Sector Skill Analysis • Regional Supply Chain Evolution analysis • Economic Development & Knowledge Workers • Innovation Curriculum • Industrial Design Council • Innovation Forum • Intellectual Property Commercialization • Global School Model • Accelerated Engineering Program • Manufacturing Skill Development Coop • Performance Based Credentialing Using WorkKeys • Manufacturing Skills Standards • Health Care RSA • Regional SOURCE Initiative • West Michigan Entrepreneurial League System

36. Summary of Innovations

37. Summary of Innovations

38. The Systems We Are Seeking To Change Economic Development Education Workforce Development New Enterprises WEALTH CREATION Existing Enterprises TALENT Growth K-12 2 Yr 4 Yr

39. Seeding Innovation – Market Intelligence Knowledge Workers & ED Global Supply Chain Emerging Sector Analysis Economic Development Education Workforce Development New Enterprises WEALTH CREATION Existing Enterprises TALENT Growth K-12 2 Yr 4 Yr

40. Seeding Innovation – InnovationWORKS Economic Development Education Workforce Development New Enterprises WEALTH CREATION Existing Enterprises TALENT Growth K-12 2 Yr 4 Yr Innovation Curriculum Commercialization Infrastructure Industrial Design Council Innovation Forums

41. Seeding Innovation – Workforce System Transformations Global School Accelerated Engineering WorkKeys & WBL Economic Development Education Workforce Development New Enterprises WEALTH CREATION Existing Enterprises TALENT Growth K-12 2 Yr 4 Yr Regional SOURCE Manufacturing Skills Coop Health Care RSA Manufacturing Skills Standards

42. Seeding Innovation – Enterprise Development Economic Development Education Workforce Development New Enterprises WEALTH CREATION Existing Enterprises TALENT Growth K-12 2 Yr 4 Yr Entrepreneurial League System

43. Seeding Innovation Throughout the System Knowledge Workers & ED Global Supply Chain Emerging Sector Analysis Global School Accelerated Engineering WorkKeys & WBL Economic Development Education TALENT Workforce Development New Enterprises WEALTH CREATION Existing Enterprises Growth K-12 2 Yr 4 Yr Innovation Curriculum Commercialization Infrastructure Regional SOURCE Manufacturing Skills Coop Ent. League System Industrial Design Council Health Care RSA Manufacturing Skills Standards Innovation Forums

44. Regional Partnerships

45. Key Regional Partners • West Michigan Strategic Alliance • Grand Valley State University • Best Michigan • The Right Place, Inc. • Regional Manufacturers Councils • Grand Rapids Community College • Kent County Intermediate School District • Workforce Investment Boards and Michigan Works! Agencies • West Michigan Science and Technology Initiative • West Central Michigan Health Care Regional Skills Alliance • The Van Andel Institute • The SOURCE • The Delta Strategy • The Kellogg Foundation

46. Specific Partner Roles

47. Regional Outreach and Engagement • Specific resources will be committed to engage businesses, organizations and citizens in an ongoing dialogue about the opportunities to transform our workforce systems to support the innovation economy. • There will be opportunities for employers, economic developers and workforce/education organizations to participate in individual innovation initiatives.

48. Regional Advisory Groups for Every Innovation WorkKeys and Work-Based Learning Regional Advisory Group Regional Advisory Group Manufacturing Skills Standards Regional Advisory Group Regional Advisory Group InnovationWORKS Health Care RSA Emerging Sector Analysis Regional SOURCE Model Regional Advisory Group Regional Advisory Group Entrepreneurial League System Regional Advisory Group Regional Advisory Group Supply Chain Analysis Economic Dev. & Knowledge Workers Manufacturing Skills Coop Regional Advisory Group Regional Advisory Group Accelerated Engineering Regional Advisory Group Regional Advisory Group Global School Hundreds of stakeholders involved in this first round of innovations.

49. Engagement Opportunities for Employers • Participate in the emerging sector analysis • Participate in the supply chain evolution analysis, by sharing information on the likely evolution of your value chains • Provide input to the development of the Innovation Curriculum; implement the curriculum in your company • Participate in the Innovation Forums • Participate in the Intellectual Property (IP) exchange pilot • Implement WorkKeys in your company • Implement the Manufacturing Skills Standards in your company • Become a member of the Manufacturing Skills Development Coop • Participate in the Health Care RSA (if you are a health care employer) • Join a regional SOURCE initiative • Identify potential entrepreneurs for participation in the Entrepreneurial League System; collaborate on the implementation of ELS for “intra-preneurs” in your company

50. Engagement Opportunities for Economic Developers • Get employers in your area to participate in the emerging sector analysis • Help identify key areas of emerging skill demand • Identify employers to participate in the supply chain evolution analysis • Participate in the “Economic Development and Knowledge Workers” project • Recruit employers to contribute to and implement the Innovation Curriculum • Suggest speakers for the Innovation Forum • Host an Innovation Forum in your community • Work with schools and employers in your region on WorkKeys implementation • Recruit employers for Manufacturing Skills Standards implementation • Organize a process for dialogue with your area employers on the Manufacturing Skills Development Coop • Recruit employers for engagement in the Health RSA and the Regional SOURCE models • Identify potential entrepreneurs in your region for participation in the Entrepreneurial League System