Dr. Carlos Martínez-Vela

Innovation: a crucial process for the Massachusetts economy

Continued from front page

On our journey from pioneer of the industrial revolution to pioneer of the knowledge economy, whole industries have come and gone to reinvent the Massachusetts economy time and again. One word captures what we admire about the ability of the Massachusetts economy to reinvent itself: innovation.

Since October of 2007, I have had the honor of being the inaugural John Adams Innovation Institute Fellow at the Massachusetts Institute of Technology.  In this role, I have become a participant/observer of how some aspects of the state’s innovation policy are implemented. 

We have been thinking about how the John Adams Innovation Institute, the economic development arm of the Massachusetts Technology Collaborative, can become a world-class and cutting-edge innovation policymaking entity acting on behalf of the state’s executive and legislative branches. 

In the face of national and global competition, the future ability of the state’s economy to reinvent itself can no longer be taken for granted. I believe that the Innovation Institute, through the design and implementation of innovation policy and acting within its mandate, can play a strategic role in enhancing the competitiveness of the Massachusetts Economy.

We are in the process of creating a framework – a vocabulary and a set of concepts – that will enable the Innovation Institute to think about the innovation process in a nuanced way.  This will be the starting point of more effective policy action.

The Innovation Institute is moving beyond simplistic notions of innovation that focus solely on technology commercialization.

What follows is a discussion of where we are at this moment.  This is neither definitive nor prescriptive, but we believe it is important to share with the Innovation Institute’s stakeholders and put it out there for other interested parties to see and react to.

Our starting point is a simple question: What is innovation? I choose a definition that guides our thinking in our work at the Industrial Performance Center at MIT: Innovation is the ability to apply new knowledge to create value. Note that this definition does not focus on a specific kind of industry. It applies to emerging fields that are not yet an industry as well as to high-tech industries such as the life sciences, and it does not exclude traditional industries.  The innovation process starts with the creation of new knowledge.

Innovation is a process unfolding in time. Think of it as a river, as a flow of interacting ideas, people, things and businesses. Although we often think of the innovation process as being about technology, let us remember that this flow of innovation is a social process in its essence.

When we look at the river of innovation, at any point we may see a new medical device or a solar energy start-up. But its origin is in the past; it came from the minds, conversations, interactions and actions of creative human beings. In this sense, while having technology in mind, innovation policy targets people.

The innovation process is inherently oriented towards the future because the effects of today’s ideas and actions are the freshets that join to form the river downstream. The effects of innovation policy are never immediate, they are always in the future.

When observing innovation, we often find that human beings coalesce around a specific set of ideas or technologies, forming communities of innovation. Members of such communities often know each other, have a sense of belonging, attend the same conferences and work on similar problems. They speak a similar language and share a set of values. We know that these communities are rich sources of innovation.

The members of a community of innovation share an identity. Often, the most exciting new ideas and technological and business opportunities emerge when distinct communities talk to each other and knowledge and identities blend giving rise to something entirely new. Think of systems biology.

We cannot know with precision what the outcomes of the ideas and actions of individuals will be and where communities of innovation will lead.  In this sense, the outcomes of the innovation process are inherently probabilistic. 

New knowledge sometimes yields practical applications; applications sometimes translate into products and processes. Some may become the seeds for new or better business opportunities; some businesses grow and flourish and survive in the marketplace. Some. But many ideas, products, and businesses never make it. Many sink along the way or disappear into oblivion. 

Creative individuals and communities of innovation are immersed in a set of institutions.  This institutional framework affects the process of innovation through its effects on how people think, act, and interact.

One way to think about this framework is along a spectrum of distance from the marketplace. Farther from the market, we have the organizations in which individuals act primarily guided by non-market criteria. These include universities, research laboratories, technology advocacy groups, industry lobbying organizations, and government agencies.

Closer to the market we find organizations guided primarily by market principles and the profit motive, such as start-ups, established firms, and venture capital.

We know that non-market institutions are essential elements of an innovation system.  Universities and research laboratories are important arenas for the creation of new knowledge – and sources of innovation.

When creative individuals, communities of innovation, and market and non-market institutions concentrate in a region and revolve in orbit around specific technologies and industries, we observe industry clusters.

But clusters are also hubs of innovation.  Individuals in businesses and academia are connected to communities around the nation and around the world. Markets are national and global.  People, ideas, technology, and firms flow in and out of the state and its clusters over time. These connections and flows are essential for the innovation process. 

Where does the Innovation Institute fit in this picture? Let me suggest a few vision points. The Innovation Institute:

• Designs and implements innovation policy to enhance the process of innovation and help build in a future orientation in our economy.

• Enhances innovation industry by industry and region by region. It works in arenas that are not yet industries, in emerging and established high-tech industries, and in traditional industries.

• Plays a key role as a neutral convener to help create communities of innovation, to build industrial identity in emerging fields and industries, to faciliate the joint exploration of new ideas and opportunities, and to assist in the combination of ideas at the intersection of separate communities. 

• Assists universities and industry advocacy groups to bring together the academic and business communities to discuss, explore and identify novel research and market opportunities.

• Strengthens the non-market institutional framework with specific industries and regions in mind. It enhances the capabilities in universities, technology and industry advocacy groups, and works in concert with other government agencies. 

• Works with research groups in universities to enhance experimentation, exploration, and discovery in the front-end of innovation and promotes university­-industry interactions. In doing so, the Innovation Institute increases the probability that discovery and exploration may translate into future economic prosperity.

• Recognizes that the innovation process varies across industries and regions. It works closely with the innovators in business and academia, as well as with other interested parties, to develop bottom-up and fact-based industry-specific initiatives with a long term horizon.

• Continues to develop industry clusters, but will also work to develop a more dynamic view of the Massachusetts economy and its industries. This calls for a better understanding of how connections and flows affect the performance of the state’s industries.  The Innovation Institute can play a key role to affect connectivity, strategically increase inward flows, as well as act to decrease outward flows are worth decreasing.

The Innovation Institute already works along these lines. Building on this experience, we know how this translates into practice, investments and initiatives. 

What the Innovation Institute is doing now is framing its work in a coherent set of concepts and a vocabulary, becoming itself a policy innovator to better fulfill its mandate.
Does this resonate with your experience? We welcome your insights, questions and critiques as we continue to refine our thinking. Let us know what you think.

Dr. Carlos Martínez-Vela is the John Adams Innovation Institute Fellow at the Massachusetts Institute of Technology. He can be reached at camv@mit.edu.