Innovations Happens Where New People do What?
|January 13, 2014||Posted by Staff under Social Change|
This 2014 excerpt of Pacific Standard, Jan 11, is by Jim Russell.
Large companies, universities, and other anchor institutions help spread the fixed costs of research (think buildings, suppliers, etc.). And by massing large numbers of research and development workers together in large organizations, they give the capacity to capitalize on new inventions. The presence of just one large-scale firm can be a huge advantage in providing the institutional heft behind a fledgling innovative economy.
But these big companies tend to focus on things that relate to their existing products and may overlook inventions in other areas. Regions with large numbers of smaller, more entrepreneurial companies can gain an edge in capitalizing on these innovations that larger companies might pass over. The story of Steve Jobs’ trip to Xerox’s Palo Alto Research Center — walking away with a whole host of ideas Xerox hadn’t brought to market — is perhaps the most legendary example of this.
The population-weighted density approach reveals that the areas with people living at the highest density levels —- metro areas with 5,000 or more people per square mile —- were clustered mainly in California and along the corridor stretching from Boston to Washington. Other very dense metro areas included Chicago, Honolulu, Laredo, Las Vegas, Miami, Milwaukee, and San Juan. Low-density metro areas, on the other hand — those with fewer than 1,000 people per square mile -— were generally clustered in the South.
While we usually think of the knowledge economy as having a strong bi-coastal orientation, most of Lumosity’s top 25 brainiest places are in the Midwest. Milwaukee is the highest-ranked large metro. Minneapolis-St. Paul is second, Boston third, Pittsburgh fourth, and Indianapolis fifth. Kansas City, Rochester, Seattle, Cincinnati, and Austin round out the top 10 among large metros. San Francisco is 11th, San Jose (the Silicon Valley) 13th, and D.C. 14th among large metros.
Milwaukee is the brainiest. Milwaukee is also among the most dense. Yet Milwaukee isn’t the most innovative.
Take a look at Portland, Oregon, and Rochester, New York. Both have about 1,000 inventors apiece. But Portland had twice the number of quality-adjusted patents per inventor. Though both metros had similar numbers of large labs, Portland registered a whopping five times as many smaller labs as Rochester. Having a diverse firm base — with at least one large lab and many smaller labs — can increase innovation by 17 percent.
Migration matters. Portland is a destination for ambition. Rochester is the place the prodigal daughter leaves. The more parochial a place, the more ineffective the talent.
Ed. Notes: Wherever people go they bring their land values with them. And the more the gather in one spot, the more they push up the value of locations, and do so exponentially. Eventually those high site values, unless recovered and shared, will drive away the original innovators, a phenomenon seen in every hip neighborhood in every city.