CONVERGENCE: For Science & Technology Policymakers and Practitioners

The Index findings this year point to some troublesome, persistent negative trend lines:

Job growth lags other leading technology states on a consistent basis. In the five-year wake of the “dot-com” collapse, Massachusetts has fallen behind its competitors with negative job growth in key industry clusters, including financial services, healthcare technology, and software and communications.
New start-ups have fallen, indicating that Massachusetts is not capturing the full potential of downstream benefits of the innovative ideas and inventions coming from the Commonwealth’s universities, research institutions and teaching hospitals.
Lack of affordable housing is contributing to an ongoing population loss, with the most recent U.S. Census figures indicating that Massachusetts maintains the smallest percentage of affordable housing stock among the leading technology states.
An exodus of young workers—more than 22,000—between the ages of 22 and 34 left Massachusetts between 2003-2005, many of them college graduates. Overall, between 2001-2005, there was a net migration loss of population of more than 84,000 residents.
Massachusetts ranks lowest in converting inputs of R&D dollars into downstream economic outputs, creating only $20 of economic output (GSP) per $1 of R&D funding, 20 percent of the rate in California and Connecticut

The 10th edition of the Index features both an analysis of data and an in-depth look at the keys to increasing Massachusetts’ competitiveness in the global Innovation Economy. It also features commentary from industry and policy experts, examining their “take” on the issues. The findings and benchmarks are divided into three categories: economic impact, innovation process, and innovation potential.

The sponsors of this year’s Index include: Choate, Fidelity Investments, Genzyme, Mass Development, Mintz Levin, Monitor Group, and NEHI.

“The troubling irony posed by this year’s Index is that even with strong performance in R&D, robust venture capital investments, and an efficient process for commercializing innovations, we simply may not have the workforce of the size and skills to take full advantage of these positive economic conditions,” said Patricia Flynn, professor of Economics at Bentley College and Chair of the 23-member Index Advisory Committee.

Echoing her concerns, Mitch Adams, the Executive Director of the Massachusetts Technology Collaborative, said that “the very troubling signals around workforce development must be addressed to position the state to capitalize on its strengths in the knowledge economy.”

In his address, Larkin called the Innovation Economy “the pillar that provides us with our economic competitive advantage as a Commonwealth, the pillar that ultimately provides prosperity for our children and our grandchildren.” The dialogue posed by the issues raised by the Index, he continued, seeks to address the question: “What will it take to preserve, enhance and increase the assets of our Innovation Economy?”

Remarks of Patrick Larkin, Director of Massachusetts Technology Collaborative John Adams Innovation Institute on the occasion of the rollout of MTC’s Tenth Anniversary Edition of the Index of the Massachusetts Innovation Economy

Let me begin my remarks by indicating what a special honor it is to speak before this distinguished gathering.

When I look around this room, I am in awe of what I know to be countless individuals whose collective energies have raised awareness and drawn attention to the need for changes in the ways we approach the economy, and whose individual ingenuity and creativity have served to improve conditions for economic growth in Massachusetts.

We gather today as an eclectic group of what one might call “science and technology practitioners and policymakers.” Both Senator Hart and Representative Bosley should be applauded for their persevering leadership in enacting stimulus legislation in the face of severe fiscal constraints and competing priorities.

We can all admire the achievements of Ranch Kimball in the way he has organized the Business Resource Team and worked with the legislative branch to create some useful tools to help attract and retain businesses.

Lita Nelsen has written the book on how a great research institution can work with industries and generate economic wealth from discovery. Kevin O’Sullivan is helping to expand life sciences beyond Boston & Cambridge working closely with UMass Medical WPI and the emerging life sciences enterprise in the Worcester region. And Paul Harrington and his folks at NEU Center for Labor Studies are widely recognized as thought leaders on trends around talent, and what it means for our economy.

What we have in Massachusetts is a rich tradition of resource organizations and individuals, both public and private, who make integral contributions toward growth in our economies.

I would be remiss, as we begin to discuss long term trends, if I didn’t provide some “order of magnitude” with regard to what the so-called “Innovation Economy” means to the Commonwealth.

Conservative estimates reveal that our Innovation Economy accounts for nearly 800,000 direct jobs in sectors as diverse as IT hardware and software, the life sciences, precision manufacturing and others. Sales revenues in these key industry clusters are estimated at well over $100 Billion in 2005.

We have a robust industrial and academic research enterprise in Massachusetts with 5% of our Gross State Product the result of direct R & D activity, the largest percentage of any other economy on the planet!

Notwithstanding the strengths of our research institutions and resource organizations, and the volumes of economic activity represented by our key industry clusters in Massachusetts, the clear message of this year’s Index is—there is much work to be done if we are to shift critical trend lines that signal trouble for our future and that of our children.

When one reflects upon the work of the Index study group, and looks at the key messages from this year’s Index, one cannot help but visualize our Innovation Economy in Massachusetts as a fragile eco-system.

Never was this made more apparent to me than when I was sitting two weeks ago with Juan Enriquez, author of As the Future Catches You, Founding Director of Harvard Business School’s Life Sciences Project, and one of the leading figures in understanding the Innovation Economy, particularly in the area of life sciences.

This visit took place in a small non-descript conference room, halfway up the Prudential Tower. Professor Enriquez methodically articulated what I will charitably characterize as his grave concerns for life sciences in Massachusetts—and the nation.

Enriquez began by describing lost opportunities for life sciences in Massachusetts. Have you looked at the numbers of researchers and professors at our great institutions like Harvard and MIT, and I will add UMass, who have chosen either to move personally or to move their discoveries and ideas to other states to build companies? Have you looked at the conditions that support company growth at places like Stanford vis-a-vis the conditions here? Do you know what a demoralizing and in some cases next-to-impossible process it is to get physical infrastructure—buildings built—for life sciences and other industries and institutions?

He talked about conditions for our graduate students where the cost of living makes it nearly impossible to make ends meet, and the immigration and security policies that in effect take down our welcome sign to the world and alienate our local citizens of diverse origin and color.

He talked about the homogenization of structures and retail enterprise in our cities which erase our unique character and undermine our region’s attractiveness; he discussed the inefficiencies of our transportation infrastructure; and the inequality and ineffectiveness of our educational systems as real and compelling constraints to growth in the life sciences sector.

At the end of the day, what Professor Enriquez was saying is that the future of our innovation economy is about people. It is a fragile ecosystem built and advanced in large measure on the achievements of some real pioneers like Henri Termeer, Ray Stata and Eric Landers; and the critical sustaining roles that the rest of us play.

It is a fragile system because it does not take much for a critical actor on this stage to decide to go left rather than right and change the delicate balance.

The Massachusetts Technology Collaborative started the Innovation Index 10 years ago in order to establish some common language and some common understandings for us to have these dialogues. This document helps enable us to at least understand our competitive constraints, and it empowers citizens to engage in the conversations and to help build both the understandings and the will necessary to provide for our futures.

The Index is a tool that allows us as a Commonwealth to engage in dialogues and to ask: why is it so difficult to grow, attract and retain talent in Massachusetts? Why is it so difficult to capture larger shares of the down stream economic benefits from our research enterprise? And what will it take to preserve, enhance and increase the assets of our Innovation Economy?

The answers to how we shift persistent, negative trend lines do not lie in any single state agency, interest group or association; they do not lie in a committee; or in a state program, or even in the genius of individuals.

Like the economy itself—our fortunes lie in the collective ingenuity of hundreds of private and public policymakers and risk-takers working in their own venues, understanding the barriers to growth and effecting change.

What is called for is a “movement” in Massachusetts that, at its core, recognizes the inevitability of our Innovation Economy as that pillar that provides us with our economic competitive advantage as a Commonwealth. It is the pillar that ultimately provides prosperity for our children and our grandchildren!

This movement is made manifest in the offices of good government and good citizenship!!

It is about everyone in this room; everyone in this building; everyone in this city; everyone in this region (including across the river!!); everyone in this Commonwealth understanding our fragile Innovation ecosystem and the component parts of our precious System of Innovation; understanding its connectedness, AND understanding the implications of this system on the availability of quality employment and prosperity for all our citizens. From the bus driver to the bench scientist.

The Index of the Massachusetts Innovation Economy is about advancing these understandings and about advancing the dialogue that creates the will for change based on our shared desire for that change.

As I introduce our next speaker and the Chairperson of MTC’s research and analysis advisory committee, let me take a moment to share some background on the Index.

Now in its Tenth year, this publication has established itself both nationally and internationally as the benchmark for how regions think about measuring and evaluating performance of their innovation economies.

Its most compelling feature is the way in which it tracks performance against our competitor states—what we call the nations Leading Technology States or LTS. For Massachusetts and these competing states, the Index tracks ten industry clusters and twenty key indicators to provide a 360 degree view of our innovation economy and to comprehensively assess our strengths, weaknesses, opportunities, and threats.

This thoroughly holistic view is possible only with the guidance of the Research & Analysis Advisory Committee. This integral group, made up of business executives and leaders from the academic and legal communities, provides a critical rudder to MTC’s Index work and affords our research unequaled breadth and depth. The amalgamation of these varied and diverse perspectives, backgrounds, and bodies of expertise allows the Index to distill various data points and sources, in order to paint as complete a picture as is possible about the state and nature of the innovation economy.

We are fortunate to have had at the helm throughout the decade, Patricia M. Flynn, Trustee Professor of Economics and Management at Bentley College, where she served as Dean of the McCallum Graduate School of Business for many years. Pat has written extensively on high technology and economic development and on women in business.

Most recently Pat was selected by the National Science Foundation to assist them with research on how states can better track and implement innovation-driven and technology-based development strategies. Pat also is conducting research on Ireland’s transition to an innovation-driven economy.

As we transition now to Pat’s overview of Index findings, let me leave you with the following thought.

Similar to what great companies face every day, when they want to introduce a new product or service in the marketplace—Massachusetts’ top competitor, indeed its greatest threat to growth and prosperity, is the “status quo!”

The historical achievements of our Innovation Economy have been so profound; and because many of us find such comfort and satisfaction in the current strengths of our industry clusters; we are often blind to what some current trends represent for the long-term viability of our economy.

This year’s Index allows us to look at the underpinnings of our Innovation Economy and allows us the opportunity to do something about it!

I encourage everyone to read the document, participate in the dialogues, and do whatever you can to improve conditions for growth in the Massachusetts Innovation Economy.