The announcement by LG Electronics, the South Korean multi-national electronics company, that it has chosen West Virginia for a $700 million dollar investment has caused heads to spin. Frankly, it has been difficult to fully comprehend what the company has in mind, exactly.
Let’s start with what it is not. LG Electronics is a global leader in the production of popular consumer products like televisions, communication equipment and home appliances. For example, LG has 18 percent of the global market for smart TVs.
But that isn’t what this is. LG is not building a factory here to make televisions or refrigerators. Instead, this is about making, or more precisely fostering, ideas for future products and solutions. That comes from the company’s LG NOVA division that started just a few years ago. Its mission is to “nurture the process of new business creation—from the outside in.”
“We’re calling on startups, founders and entrepreneurs to help us create new business that will shape the future of how we live, work and play,” the company says, and that’s what it wants to do in West Virginia with a focus on health care, renewable energy and industries of the future.
Frankly, that takes some getting used to. In West Virginia, we are more familiar with making things; digging coal, pumping natural gas and providing services in the private and public sectors. We tend to think of innovation as coming from someplace else and then being applied here.
LG NOVA and the West Virginia leaders, like Marshall University President Brad Smith, who spent the last year pitching our state to the company, believe that innovation can happen here.
Smith, who previously served as CEO of the financial software company Intuit, said, “What this means is we’re going to have the ability to focus $700 million worth of investment, creating several hundred high value jobs to focus on things like digital health, clean tech and artificial intelligence, and in particular to show that rural markets can lead the way in these efforts.”
Smith said these tech innovation zones in West Virginia will have the “flywheel effect.” That is the concept from the book Good to Great where innovation begins slowly, like the first pushes of a giant flywheel, but as you push, it picks up speed and creates its own momentum. In the business application, innovation will draw in private businesses.
West Virginia is putting up $54 million in state dollars for its share, but Smith believes the state beat out what was stiff competition because it demonstrated it was nimble. “Everyone you need to make a decision can fit in an SUV in West Virginia. And our commitment (was to) remove roadblocks and barriers,” Smith said. “You can come here and make things happen (which) is, quite frankly, hard to compete with.”
LG is a business, so it is looking to make money, but according Sokwee Rhee, the head of LG NOVA, there is also an altruistic motive. “We benefit from a business perspective, but at the same time, West Virginia gets a benefit because they become the first state to adopt such advanced technologies to help out their residents.”
Smith believes the LG investment represents a “strategic milestone” for the state. “For a long time, we’ve needed to see it to believe it. Well, we’re seeing it now,” Smith said. It’s time to start believing that we are capable, and we are competitive and great things are happening here, and I’m optimistic that LG NOVA knows this for the long term, and we’re committed to making sure they’re successful.”
It may take awhile for the rest of us to get our heads around what this actually is. After all, we’re a long way from Silicon Valley, but it is reasonable to be excited about what this could mean for West Virginia.