How and why did the Index get started?
Flynn: There was a good deal of research in the 1980s and 1990s on high technology in Massachusetts and New England. It attempted to show how critical high tech was to Massachusetts. We’re not a low-cost state, and we need to take advantage of our skilled workers and our universities.

Often, I would get very frustrated with the manner in which the data were collected. They were actually aggregated by industry—the computer industry, the chemical industry, etc. What the research ‘showed’ was that you couldn’t measure innovation by measuring the industry group.

Massachusetts, as did other states, compiled lists of  “high-tech” industries to focus on. Yet within the so-called ‘high-tech’ computer industry, for example, some companies were assembling circuit boards, and said they could really use workers with good needlepoint skills. In contrast, the textile industry in Massachusetts, which was often put on a ‘low-tech’ or ‘no-tech’ list, required workers with the ability to run very sophisticated, high-level electronic equipment.

The point was this: The existing data didn’t help us when we were trying to make our case for the innovation economy. We needed a different kind of analytical research tool.

When was this?
Flynn: It was early 1997, and Joe Alviani (the former executive director of MTC) and I had crossed paths several times, and we had discussed frustration with data availability, and its limitations in helping to promote strategies and investments in the innovation economy.

The next thing I know Joe suggests I join the board of MTC and suggests we create an analytical tool to help us better assess these issues.

And so the Index of the Massachusetts Innovation Economy was born.

Developing the Index was particularly important for Massachusetts, because of our industry base, our high-tech types of activity, which were critically historically, and are key to the future of the state as well.

It must have been a very daunting task.
What were the first steps you took in organizing the project?
Flynn: It was challenging, but we had a lot of help. We first put together an advisory committee. We started out with 18 people. Remarkably, ten years later, ten of us are still serving on the advisory committee:

Along with myself, there’s Alain J. Hanover, with Navigator Technology Ventures, Yolanda Kodrzycki, with the Federal Reserve Bank in Boson, Jim Utterback, a professor of Management and Innovation at MIT, David Fleming with Genzyme Corporation. Jeff Grogan a partner with Monitor Group, Aram Chobanian dean of the medical school at Boston University, Tom Chmura, vice president of economic development at the University of Massachusetts, and Bill Guenther, the president of Mass Insight. We subsequently added another twenty advisors from business, government and academia.

It’s a very impressive group of people.

The first question we asked was: If we are going to try and measure innovation and its impact on the economy, what kinds of data of do we need? Does it even exist?

We decided to mine a lot of existing data: venture capital investments, educational levels. We also made the decision to focus on three things:

We also decided to compare Massachusetts with its competitors, with other leading technology states. That first year we had six other leading technology states, so we could look not just at what was happening here in the Commonwealth, but in states around the country.

So, you were prepared to give the good news and the bad news?
Flynn: Yes, we wanted to be fact-based, historical, and we wanted to provide both the good news and the bad news in terms of benchmarks, laying out the problems as well as the successes, to identify what we have to do better compared to our competitors. We wanted to track our progress —or lack thereof—against our competitors; we also wanted to learn from them.

The Index creates a set of facts in a quantitative fashion and identifies what the issues are. It looks at Massachusetts historically, looking at trends, examining years of data.

The Index doesn’t focus on specific policy implications, or make specific recommendations about how state money should be spent. It identifies and clarifies the key issues and economic trends, laying the groundwork for development of policies in the public and private sectors.

In 1997, this had never been done before and you were cutting from whole cloth. Is that correct?
Flynn: Yes. We created the first Index of the Innovation Economy. Today, there are more than 20 states that are publishing a similar kind of document—they often call it a science and technology report, with a similar format. The UK did do an “Innovation Index,” and they cited us as the model.

How have things changed in 10 years of producing the Index?
Flynn: The indicators we use are evolving, as the Massachusetts Innovation Economy evolves. As new data comes to our attention, we try to incorporate it. Our overall philosophy has remained the same—with the focus on results, the innovation process, and awareness about what our resources are.

The Index has never been a p.r. document. I once gave a presentation to a group of corporate executives who complained that they couldn’t include the Index in their promotional materials because it laid out the problems as well as the good news.

That’s exactly our goal: To identify the cracks in the system so that that people can react before they become fatal flaws. The Index isn’t a marketing document; it is a analytic tool to help assess where Massachusetts is, and what we must do to remain competitive. We aren’t hiding anything.

Looking ahead to the next Index, what do you see?
Flynn: I think what we’ll see is that Massachusetts as a state is still very strong. We still do very well in several important areas associated with the Innovation Economy, such as in research and development and in venture capital. Yet, there are cracks in the system. The gaps between us and our competitors have been narrowing. The ten-year perspective should show where and how the other leading technology states are gaining on us.

There are also certain chronic issues in Massachusetts—housing costs, migration patterns, and the relatively low level of support for public higher education—that have emerged on a consistent basis over the last 10 years.

Regardless of who wins the election this year, the Index goes on. It is not about politics, it is about the underlying infrastructure and competitive advantage of the state. Massachusetts is never going to be a low-cost manufacturer. Its strengths are innovation and high-technology—where ‘high-tech’ is a stage of development, the creative, experimental, research oriented, front-end phase of the life cycle, not a particular industry or list of industries. The firms and industries in the state’s high tech sector will change over time. What will NOT change is our dependence and need for a well-educated and highly skilled workforce, and on  R&D and venture capital.

The Index is a tool. It gives us benchmarks and guidelines to have the critical conversations about what Massachusetts should be doing with its scarce resources to support and foster its Innovation Economy. 

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