• Sam Zegas

3 breakthroughs in measuring innovation. How does your district rank?

This analysis is explored in depth in Aretian's new Atlas of Innovation Districts and accompanying report. You can access the interactive Atlas and download the full report at www.aretian.com/atlas.


Innovation. Over the last few decades, innovation has been a buzzword in economic development and urban planning. It is broadly accepted that innovation strengthens regional economies and can be used to drive equitably-distributed economic prosperity. But if you ask most people - including urban developers and political leaders - what innovation actually means, you'll get some fuzzy answers. Everyone agrees it has something to do entrepreneurship, invention, startups, and the creation of new goods and services, but these definitions are imprecise and do not provide a rigorous definition for innovation.


And if we can't define it, how can we measure it to know if we're succeeding at innovation?


That's why Aretian is developing a new science of cities. We believe the world desperately needs new quantitative methods for understanding how innovation ecosystems function and how they influence the broader economy. Only with that quantitative understanding can we make well-informed decisions that reliably improve people's lives.


In the Atlas of Innovation Districts, Aretian developed three core metrics for measuring innovation. These are Innovation Intensity, Innovation Performance, and Innovation Impact.


Innovation Intensity measures the collective effort deployed to create knowledge networks. Innovation Intensity is calculated as the percentage of employees working in knowledge-intensive roles per geographic unit. Our research shows that the average community in the United States has an Innovation Intensity of around 11%, while Innovation Districts typically operate at or above 25%. Density matters in innovation spaces; collaboration and cross-pollination depends on building dense networks of innovators and entrepreneurs. The top performing Innovation Districts are high-intensity environments: the top 10% have an Innovation Intensity of 50% and above, while the top 1% reach 85-95%.


Innovation Performance measures the tangible outputs of innovation created on an annual basis by the innovation community per geographic unit. Innovation Performance measurements reflect the output of new products, services and production processes, new patents and their associated revenues, scientific research papers, and other R&D outputs. Innovation Performance allows us to measure how productive an innovation ecosystem is with regard to the key outputs of knowledge workers.


Innovation Impact describes the benefits to the broader community that result from the development of knowledge-intensive activities. Innovation Impact is measured through a variety of contributing indicators, including the number of innovation-intensive employees in the district, the meritocracy index, the prosperity index, the inequality index, measurements of indirect employment generation, measurements of diversity, and industry alignment with the broader metropolitan area. Three types of Innovation Districts - the Research and Academia, City Government, and Entrepreneurial types - are particularly effective at creating merit-based environments where hardworking and talented individuals have access to high-quality jobs, thus generating distributed prosperity. For more information about the 5 district types explored in the Atlas, check out this blog post.


City leaders and urban planners need new quantitative tools for understanding innovation if they want to harness it for economic development. With these new KPIs, Aretian hopes to advance the discussion about how data science can give us valuable new perspectives on cities.


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