|Leadership changes at RIO raise questions about the mission of the organization.|
The end came, as it often does, with a resignation submitted to head off a firing.
“It has been my absolute honor and pleasure to serve the entrepreneurs, economic development professionals and entire entrepreneurial community over the past 19 months as the managing director of RIO,” Terry Jones said, in a prepared statement released May 17 announcing his departure as head of the Regional Innovation Organization. The statement didn't say why he was leaving.
When launched early last year, RIO was described as a neutral party that would work to strengthen the Capital Region's entrepreneurial ecosystem. Jones, whose resignation is effective July 31, technically is a Baton Rouge Area Chamber employee. But it was the board of directors of the Research Park Corporation, which runs the tax-subsidized Louisiana Technology Park on Florida Boulevard, that wanted Jones out. In May, they got their wish.
The RPC wants the next RIO director to also be its CEO. It's an arrangement that doesn't sit well with entrepreneurs who would prefer that RIO have some measure of independence. But the RPC funds RIO, so the RPC calls the shots. And it's now the RPC that's unequivocally responsible for the project's success or failure.
RIO's missions include building excitement and hype around the entrepreneurial community, connecting people with resources such as incubators and universities, and, perhaps most important, improving access to early-stage capital.
“The work is incredibly important to this community,” says Stafford Kendall, principal with Covalent Logic and a member of RIO's advisory board.
Some of RIO's work has been in conjunction with JumpStart, a nonprofit venture development organization. Its success in its home region of northeast Ohio, JumpStart says, led to the formation of JumpStart America, an effort largely funded by the federal Economic Development Administration and national foundations.
JumpStart is working on a regional entrepreneurship plan for RIO. The EDA is supporting the effort with a $429,000 grant, which the RPC and BRAC have matched.
At the public meeting immediately following the announcement of Jones' departure, poor communication was cited as the reason for the RPC board's dissatisfaction. Board Chairman Terrell Brown, who could not be reached for this story, was quoted saying Jones had not kept the board informed about JumpStart. This, despite the fact that Jones made multiple presentations to board members about the project, that information about JumpStart had been published in local media, that one RPC board member and two Tech Park employees are on the JumpStart advisory board, and that the RPC provided letters of support for the EDA grant application.
“[RPC] board members felt they didn't have good communication about the strategy,” says BRAC President/CEO Adam Knapp. “If they didn't feel it, it's right. … They're the major funder of making this happen, and so their frustration is very real and has to be taken into consideration.”
According to an internal document shown to Business Report, the discussion about nudging Jones out and officially bringing RIO under the RPC umbrella, by merging the positions of RIO director and RPC chief executive, dates back to at least March. The document indicates that RPC officials wanted to tread carefully to avoid jeopardizing the EDA grant or their relationships with JumpStart and national foundations, such as Knight and Surdna, that have worked with JumpStart.
“Something doesn't smell right,” says one entrepreneur who benefited from the advice Jones provided and the connections he facilitated. “If there needs to be a body such as RIO, then it needs to be independent. It doesn't need to have a handful of bosses and people to answer to. [But] how do you fund it, and have it be independent?”
On June 7, the RPC board voted to extend its $250,000 in annual support for RIO for another year. While board members discussed the pending search for a new RIO director and their plans to merge the position with that of RPC head, three JumpStart officials in the audience appeared to be glancing nervously at each other. But when asked, they said the arrangement would not cost RIO the federal grant, as long as the director worked full-time on RIO during the first phase of the implementation process, which ends March 31, 2013.
“They're both full-time jobs,” says JumpStart Community Advisors President Mike Mozenter to a reporter after the meeting.
When asked whether the proposed model fits with best practices around the country, JumpStart officials say models can vary and the decision ultimately rests with the board.
Part of RIO's mission is to serve as an honest broker among the region's business incubators, and if successful, RIO one day will control an investment fund. RPC runs the tech park incubator, which struggles to fill its space. So what's to prevent the RIO/RPC head from favoring the tech park rather than working for everyone's benefit?
“You're asking a question that hasn't been answered yet,” Knapp says. “But it's been asked. That is a central issue that has to be part of the work of the next few months as this business plan is designed.”
A research park, which often features mature companies, is not the same thing as an incubator, which typically houses startups. As such, the Research Park Corporation was never supposed to be an incubator manager. Knapp argues RIO is a logical evolution of the RPC, since several of the goals laid out by the 1992 statute [found in R.S. 17:3396.3] that established the RPC are also goals for RIO.
But Arthur Cooper, director of the Louisiana Emerging Technologies Center, says the RPC primarily was supposed to establish a true research park that would collaborate with the universities. That's why the state put some $38 million into the cooperative agreement with the RPC, he says. The tech park also continues to receive a portion of the East Baton Rouge Parish hotel/motel tax, up to a cap of $1.525 million per year. The subsidy, about $1.1 million for the past three years, funds about half of the park's operations budget in a typical year, the park's spokesman says.
“My interest is just having the RPC continue to work toward its goal of creating a good research park,” Cooper says. “The missions are a little different.” He says RIO can play an important role, although its shortcoming is that it doesn't really have authority over anyone.
RPC board member Claudie Fanning says the corporation hasn't had a CEO in place for some time, and says the job is separate from that of tech park director, currently Stephen Loy. Part of the search process, which begins immediately, will be to ensure the new CEO has the high ethical standards to perform his role as RIO head without showing favoritism toward the tech park.
Ultimately, as Fanning points out, it will be the RPC board that will hold the RIO head accountable. So if local entrepreneurs care about the future of RIO, they're the folks to watch.
Terry Jones has been reluctant to publicly criticize the RPC and BRAC for his ouster. But he still believes in the mission of RIO.
“They don't want me to be part of RIO, and that's OK,” Jones says. “But let's move forward.”
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