Estimated read time: 5-6 minutes
- Utah's economy thrives on a robust innovation ecosystem, supported by higher education and collaboration.
- A new report highlights Utah's top ranking in innovation attributes and industry-aligned ecosystems.
- Challenges include attracting venture capital and more research opportunities and spaces for sectors like health care and energy production.
SALT LAKE CITY — Utah's strong economy is driven by many things but a successful innovation ecosystem can be seen as the glue that holds everything together and keeps the Beehive State running as a well-oiled economic machine.
"An ecosystem takes place inside of an economy, right? And there's a culture of innovation that exists here in Utah ... that's very strong," said Nate Lloyd, director of economic research at the Kem C. Gardner Policy Institute.
But what is an innovation ecosystem and why is it so important to economic performance?
A new report from the Gardner Institute, co-led by the Economic Development Corporation of Utah, highlights the characteristics contributing to Utah's success, including the state's higher education institutions, a well-trained workforce, social infrastructure, collaboration among innovation ecosystem actors and a culture of innovation.
"As we researched Utah's broad umbrella innovation ecosystem, we learned that Utah ranks at or near the top among U.S. states across various innovation attributes," Lloyd, who served as the lead author of the report, said. "And with specific industry-aligned innovation ecosystems in Utah now identified, this initial evaluation highlights opportunities for their continued maturity and success."
An innovative state
The Indiana Business Research Center produces the Innovation Intelligence Index and measures core attributes of innovation using five "core indices" or components: human capital and knowledge creation, business dynamics, business profile, employment and productivity and economic well-being.
Utah sits first among U.S. states in this metric, ranking sixth or better in each of the aforementioned "core indices."
Utah is no stranger to embracing a mindset of innovation.
In 2023, HB42 established the Utah Innovation Fund, a venture capital fund aimed at helping local startups with long-term potential that traditional investors may overlook.
"We've known for a while that Utah does well in innovation and entrepreneurship but we haven't been able to quantify that or show that. This is something that really speaks to solidify, almost, what we've known for a while now," Lloyd said.
Within this umbrella of innovation are innovation ecosystems, districts and hubs.
Innovation itself, according to the report, is the process of "implementing new methods, products, and ideas to create new market demand or cutting-edge solutions to economic, social and environmental challenges."
Innovation ecosystems are the dynamic set of actors, activities, artifacts, institutions, and relationships that influence and are essential for the innovative performance of an individual actor or a population of actors, according to the report. Within this ecosystem is the innovation district, which is a geographic area where leading-edge anchor institutions and companies cluster and connect with startups, business incubators, and accelerators.
Finally, the report defined innovation hubs as physical or virtual entities that serve as a space where innovators gather to share ideas, collaborate on projects and develop solutions to complex problems.
'Industry aligned'
Michael Stachitus, director of research at the Economic Development Corporation of Utah, said that while compiling the report, it quickly became apparent many of Utah's innovation ecosystems are "industry aligned."
The report identified five industry-aligned ecosystems that exist in Utah at various levels of maturity:
- Aeronautics, space exploration and defense
- Energy production
- Finance, fintech and headquarters
- Health care and life sciences
- Technology and information systems
"We did not plan to have these aligned so well with the state's efforts at targeted industry clusters but they happened to do that and I think it's because the state has been focusing so heavily on these and there's a robust network for these ecosystems already," Stachitus said.
Strengths and gaps
Once researchers determined Utah's primary innovation ecosystems, they could start identifying potential strengths and gaps in each.
The analysis revealed several common strengths across the five ecosystems: human capital development, strong or established anchor companies, social capital and networks and a culture of innovation.
"Utah's broad innovation ecosystem benefits significantly from the robust support of higher education institutions. Universities, technical colleges and community colleges offer a range of degrees and programs that effectively serve each ecosystem, from directly producing innovation to supporting the workforce," said the report. "Anchor companies in Utah are pivotal in collaborating with government and educational institutions to foster innovation. Additionally, Utah's culture of innovation creates an environment that encourages and supports creativity, experimentation and implementation of new ideas."
Despite these strengths, potential gaps also exist within Utah's five innovation ecosystems.
The report said ecosystems such as health care and life sciences, energy production and aeronautics, space exploration and defense have struggled to attract venture capital, which is a contrast to the information technology and financial services sectors, which enjoy more stable capital inflows.
This suggests those ecosystems could benefit from additional lab spaces, incubation and research facilities.
"This information is going to be so critical for us on the practitioner side, on the entrepreneurial side but also as policymakers," said Rep. Jefferson Moss, R-Saratoga Springs, who also serves on the board of directors of the Utah Innovation Fund. "What this report, to me, really highlighted was really bringing the next level of understanding about, 'How do we better integrate what we're doing in higher education on the research side, what we're doing on workforce, how government can help support that and really making sure that industry is helping to drive those decisions."
The full report can be found here.
