• Sam Zegas

The 3 ingredients that unleash the innovative potential of cities: does your city have them?

Updated: Jun 26

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.

Promoting and sustaining innovation is a difficult task. If urban planners and city leaders want to succeed in the effort to create economic prosperity through innovation, they need to understand the 3 ingredients that drive innovation in cities.

Innovation ecosystems are composed of three kinds of networks. These are networks of Talent, networks of Organizational Structures, and Networks of Urban Infrastructure.

Networks of Talent are composed of individuals with valuable skills and abilities, working together to solve complex problems. First and foremost, innovation spaces are problem-solving communities where talented people come together develop novel approaches to the world's challenges. Networks of talent, therefore, must include people with a variety of related and complementary skills. The strongest networks of talent include people in roles related to research & academia, technology transfer, and business operations. It is helpful for a talent network to span several related industry spaces; this enables the regional economy to benefit from diversification and to become more resilient through regional supply chain integration.

What happens to a district when its talent network is too weak? An example of a district that faced this problem is the Pittsburgh, Pennsylvania during the collapse of its steel industry between the 1960s and 1980s. In the years before the collapse, Pittsburgh gradually become overly focused on steel production while its activity in the research and technology transfer phases of innovation began to lag. Due to this imbalance, Pittsburgh hit a crisis when demand for steel dropped and the city had no innovative alternative products to offer. In the 1970s and 80s, many of the city's factories closed and Pittsburgh lost 40% of its population. By 1983, the city had a 17% unemployment rate. This became a downward spiral; without a network of talented workers, Pittsburgh could not revive its economic competitiveness. The city's economic renaissance over the last 20 years has been due in large part to investments in the city's universities. These efforts have re-built Pittsburgh's talent network in research and academia, helping do kickstart the city's future economic prosperity.

Networks of Organizational Structures serve as the foundation for collaboration and enable merit-based promotion of the best ideas. Examples of these support structures include startup incubators and accelerators, venture capital networks, university programs to to guide prototyping and technology transfer, nonprofit organizations that advocate for small businesses, mentorship programs, and co-working spaces and maker spaces, among others. These organizational structures represent some of the most cost-effective ways to support innovation. All of these structures should be established on the principle of meritocracy: helping the best ideas flourish while pushing bad ideas out of the pipeline. Cities that let innovation and collaboration to develop in an unsupported environment are leaving significant value on the table. With smart, affordable investments in networks of organizational support structures, cities can kickstart their innovation ecosystem.

What does a successful network of organizational support structures look like? MIT's innovation ecosystem is an example of a high-functioning, mature system that provides organizational support structures at all phases of innovation. While this example showcases structures put in place by a university, these structures could just as easily be established by a city government, industry leader, or community of entrepreneurs. At the Research and Academia phase, MIT operates a series of Applied Research Labs, including the MIT Computer Science and Artificial Intelligence Lab (CSAIL), MIT.nano, the MIT Center for Transportation and Logistics (CTL), the Center for Energy and Environmental Policy Research, the MIT MediaLab, the Senseable City Lab, the Broad Institute, the Koch Center for Oncology Research, the Water & Food Security Lab, and others. At the Technology Transfer phase, it operates the MIT Industrial Liaison Program (ILP), the MIT Technology Licensing Office, the Lincoln Laboratory, the 100k Entrepreneurship Competition, the MIT Martin Trust Center for Entrepreneurship, the Reap Program, the Legatum Center for Entrepreneurship in Developing Countries, among others. Its programs for the Production phase include a series of incubators and accelerators, such as the DeltaV program, the Engine, and the MIT Venture Mentoring Services program. By flooding the environment with organizational structures in support of innovation, the university greatly improves the chances that new ideas created at MIT will successfully launch as innovative products and services.

Networks of Urban Infrastructure support innovation by keeping the district well connected, desirable, and able to facilitate fruitful human interaction. Convenient transportation connections, for example, can make or break a district's desirability to workers who need to commute from the wider region. Easy connections to air and rail travel are also valuable assets that promote collaboration with other cities and boost the capacity of the area as a center of manufacturing and distribution. It is also important that a district offer a variety of attractive, mixed-use spaces that make the district livable and convenient. The highest-functioning innovation spaces in the United States feature park space, retail, and residential options that pull people into the district and stimulate economic activity. Aretian's research also indicates that there is an ideal building height and neighborhood density for innovation districts: the districts included in the Atlas with the highest intensity of innovation cluster tightly in the 5-to-7 story range. This type of neighborhood is dense enough for close concentration of people but with buildings low enough for fruitful interactions at a human scale.

What happens to a district that lacks adequate urban infrastructure? Kendall Square, Cambridge is an example of a district that faced this challenge. Over the last 25 years, Kendall Square has transformed from an abandoned post-industrial neighborhood with high crime to one of the nation's most celebrated and high-functioning innovation districts. Infrastructure played a major role in the district's transformation: the completion of Boston's Big Dig provided a connection to the downtown Boston and Logan Airport in less than 15 minutes. Subway connections linked the neighborhood to the area's many universities. A major urban renewal effort transformed the derelict streets into an attractive neighborhood with high-quality public spaces and a strong retail presence. Kendall Square would not be the success it is today if not for these infrastructural investments.

Cities must manage all three of these networks to create a holistic environment that supports innovation. Learn more about the Atlas of Innovation Districts at www.aretian.com/atlas.


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