The following analysis is presented in depth in the Atlas of Innovation Districts, in which readers can explore and compare data on 50 prominent US Innovation Districts.
Cities have two options regarding innovation; they can leave it to take place organically in a diffused, unsupported environment, or they can concentrate the resources that support innovation in a chosen area and accelerate it. But simply setting up the innovation space is not enough to turn innovation districts into sustainable engines of economic activity. Many readers who are affiliated with an existing innovation district may find themselves wondering, "What steps can I take today to create sustainable cycles of innovation?"
To shed light on this question, let's take a closer look at one of the nation's most successful Innovation Districts: Kendall Square in Cambridge, MA. Kendall Square, whose story of development was recently featured on the Aretian blog, is located adjacent to the Massachusetts Institute of Technology (MIT) and has a close relationship with the university. In fact, Israel Ruiz, the Executive Vice President and Treasurer of MIT and President of the MIT Corporation, has this to say about Kendall Square:
“MIT is intensely interested in supporting the evolution of Kendall Square, which is being transformed into an urban, mixed-use district with a focus on strengthening community interaction and the area’s innovation ecosystem. We welcome academic studies and methodologies that help us to better inform strategic decisions that accelerate innovation. More than a century after physically moving MIT’s campus to Cambridge, the Kendall development project allows us to create a destination and talent magnet – an environment where people can live, work and play, unleashing a new era of groundbreaking discovery and economic growth across the region. I can imagine Kendall Square a decade from now, with the expanded capacity making it possible to realize an amplified innovation playground anchored on and around MIT.”
How does MIT achieve the goal of supporting Kendall Square? Part of the answer lies in the organizational support structures it has created to strengthen innovation in the district. These support structures are a key ingredient for successful innovation ecosystems.
Massachusetts Institute of Technology (MIT), Cambridge, Massachusetts
Widely recognized as one of the most influential universities in the world, MIT is a major player in technology transfer. The university's success at transferring innovative ideas to the market is the product of well-designed organizational support systems, which help innovators succeed at every stage of the innovation process.
Each year, MIT affiliates publish around 2000 theses. Only a third of the solutions proposed in these theses, about 700, reach the market as a product or service offering. But the innovation and technology transfer of these 700 theses alone is significant. In fact, if we calculate the economic activity generated by companies founded by MIT alumni since the university’s founding in 1861, the dollar value would be equivalent to the GDP of the 9th largest economy in the world.23 World-changing innovations such as the internet, satellite navigation, nuclear and renewable energy solutions, medical and pharmaceutical technologies, robotics, artificial intelligence, advanced materials, and more - all developed with contributions from MIT affiliates.
MIT has many advantages that promote innovation. The university itself provides a strong Academic & Research anchor organization for innovation. Dozens of additional universities and research institutions in the greater Boston region enhance the availability and density of talent. MIT’s location in Cambridge provides attractive amenities and convenient connections to the surrounding areas. Greater Boston is also home to a significant venture capital industry.
The Problem: Underdeveloped Organizational Structures in Support of Innovation
MIT has long-standing networks of talent and urban design in place, but its network of organization structures in support of innovation are newer to the scene. These organizational structures were introduced gradually and addressed a common underlying need; despite the university’s strength in talent and infrastructure, too few ideas were making the transition from concept to product. MIT correctly recognized the need to develop stronger support structures to foster innovation and enable technology transfer.
Insights from MIT
At the heart of MIT’s success has been the development of mutually-reinforcing programs to support of innovation. These structures have provided a stable, supportive environment for turning new ideas into marketable solutions. At the core of these programs is the 7-stage approach to innovation at the human level, with support services and benchmarks provided at each stage. This clear, well-supported process brings innovators through the steps of idea creation, data gathering, hypothesis development, prototyping, validation and calibration, the creation of a minimum viable product, and production at scale. Each stage of development presents unique difficulties and risks that the innovator must overcome, and so MIT’s innovation environment responds by providing tailored support at each stage with the aim of maximizing the number of successful ventures. Crucial to MIT’s success is that it operates with a system of meritocratic incentives, empowering the teams with the strongest ideas to access the resources they need for success.
MIT’s organizational support structures in support of innovation operate at all three phases of innovation. At the Research and Academia phase, the university 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.
In designing its support structures, MIT needed to be mindful that innovation life cycles take place on varying timescales. For AI and software development, the innovation cycle generally takes 1 year to complete. For hardware and semiconductors, 2 years. Product design takes 2-3 years. Infrastructure innovations take 5-7 years. Pharmaceutical innovations take 10-12 years, and energy systems take as long as 15 years to complete their life cycles.