MAGDEBURG - Germany's new side is on display in this former Communist Eastern Block location near the once-divided city of Berlin.

Magdeburg has served as the capital of Saxony-Anhalt – one of 16 states shaping the unified German economy – since the Berlin Wall fell almost 20 years ago.

It's a city steeped in history that finds itself at another crossroads in time.

Now, as part of the European Union, Magdeburg has begun to capitalize on a strategic opportunity: a transformation away from an economic legacy of heavy manufacturing engineering, bulk materials, and agricultural commodities logistics.

As part of its diversification plan, Magdeburg is creatively leveraging heritage assets like its old harbor on the Elbe, the ancient river that flows through the heart of East and Central Europe. Instead, this former Soviet satellite is selling the information-age commodities of talent, intellectual capital, and - most important - innovation, making the bold claim of being "The City of Science" in doing so.

The LEADER Magazine's recent editorial survey of this rapidly-emerging metro center of roughly 500,000 people shows that Magdeburg is making good on the claim, based largely on a redevelopment approach surrounding key new-economy segments like integrated technology and process engineering.

The Zephram Idea Factory provides a primary example of the city's forward-facing perspective.

The new company is centered on the concept of "idea engineering," according to its co-founder and CEO, Dr. Graham Horton, who also teaches Informatics at Otto-von-Guericke-University - one of several higher educational institutions contributing to Magdeburg's mainstream emergence.

The start-up is located in the Wissenschaftshafen, or the so-called Science Harbor, a place where activities like virtual design driven product innovations are replacing the storage and distribution of grain, sugar and other agricultural commodities.

Zephram is one of the many new occupants of a series of grain elevators within the old harbor now being quickly transformed into high-tech R&D and engineering hubs. It's making for an effectively integrated economic development strategy incorporating sustainable practices and brain power.

"No one before has systemized idea generation," says Horton, a computer scientist who hatched the concept with two other student-partners to help companies of all sizes brainstorm around new products and other innovations while he was still in school earning his Ph.D. He won a special student grant to start the company.

Since innovation and new products equate to global competitive advantage for multinational companies as conceived in CoreNet Global's CoRE 2010 research model on the globally networked enterprise, Horton has hit on an important model facilitating critical ideation exercises for various market-leading clients like Microsoft, Siemens, BASF, Daimler and BMW.

"We call it an 'idea factory,' Horton outlines, "because we made this (ideation and creativity) into an engineering science." The model employs standards, synthesis and metrics. "It worked very well for BMW," he recounts. The German automaker's engineers and designers came away from a recent idea factory with some promising new product possibilities.

In another case, Zephram (named for Zephram Cochrane, the yet- born fictitious scientist from Star Trek who invented 'warp -speed' space travel) enabled a large regional European company to build a model for municipal governments to outsource the recycling of residential waste, establishing a viable new business niche almost overnight for the client.

The scenario is a promising one because the recycling company represents the small- and mid-cap niche that Horton's team is pursuing along with large global corporations.