THE LONG VIEW
boston’s recovery from the last recession has been slow and uneven. Some sectors of the region’s economy have crept back to pre-recession employment levels, while others—notably, information technology—remain below early 2000 peaks. More importantly, the road back has been marked by worrisome signs of ground lost to other regions, with a number of major hometown institutions acquired by out-of-state buyers. Just as painful are certain byproducts of the good times, such as high housing costs and property taxes, that linger like a hangover from a drinking binge.
What to do about this situation has already become a staple of the campaign trail, with candidates vying to offer solutions. Anxious politicians, public officials, and residents have fixated on the housing issue, for instance. Hundreds of gallons of ink have been spilled on stories analyzing the lack of affordable housing and its impact on the state’s economic future, and a search of local newspaper headlines found that housing grabbed the headlines 321 times in 2005. Rarely is it noted, though, that other areas considered our competitors—the San Francisco Bay area, New York, Los Angeles/ San Diego—have equally expensive housing markets but far less angst about it. Inhabitants of those cities seem more secure in the knowledge that folks will pay a premium to live in San Francisco or Manhattan, and that housing costs alone will not determine their economic futures.
Maybe it’s our New England pessimism, but we seem to be stuck in a self-doubting moment. Almost daily we wince our way through articles and reports about unaffordable housing, out-migration, and our struggling job market. What we don’t read much about is the attribute that has seen Greater Boston through 400 years of housing bubbles, depopulation, recession, war, and industrial revolutions: its ability to innovate its way to economic prosperity. Our region has the longest-running record of success of any major urban region in the US, and it is one of the leading centers of innovation in the world. Yet you would never know it from our current public discourse. In the same search of local papers from last year, “innovation” made the headlines a scant 17 times.
Fortunately, we do not need to face these questions alone. There are hundreds of innovators from our past four centuries who can coach us through our present and future trials. They all experienced challenges of comparable import in their day. They fought to reshape the world they lived in. And they are eager to talk to us, to share their lessons, and to offer their unconditional advice. All we have to do is listen and learn.
Boston’s history can be divided into nine eras (see timeline sidebar). Over the past year, the Boston History & Innovation Collaborative (BHIC), in partnership with the Massachusetts Technology Collaborative’s John Adams Innovation Institute, has analyzed this nine-era history through the lens of innovation, both economic and social. Our analysis builds on the groundbreaking work by Harvard’s Ed Glaeser (“Mother of Reinvention,” CW, Fall ’03). Glaeser’s analysis and our own research point us toward four major episodes of economic and social reinvention that characterize Boston’s history:
- 1630s-1640s: Boston evolves from a failed farm town to a community with a strong maritime-based economy.
- 1780s-1805: The city loses 85 percent of its population and access to trade routes during the Revolution. The China Trade, transportation breakthroughs (major canals and bridges), and financial innovation drive a recovery.
- 1850s-1860s: Boston’s sailing expertise is made obsolete by steamship improvements. Shoe and textile manufacturing become mainstays of a stronger regional economy.
- 1950s-1980s: The manufacturing sector declines. Research universities, hospitals, high-tech companies, and financial services lead the region back.
In sum, Greater Boston’s economy was devastated four times and came back stronger each time.
Looking at the nine eras of Boston’s history, each had a particular character, with a distinct economic and cultural profile. Often, a cluster of related-industry innovations characterized each period.
For example, when the Great Migration of British Puritans to Boston ended in 1641, the Massachusetts Bay colony experienced what economists call a stochastic shock. Until that point, economic growth depended on perpetual immigration. The influx of new colonists drove up the prices of land and cows in the possession of early Boston farmers, creating a land-and-cattle bubble in the 1630s. However, Oliver Cromwell and the Puritan Revolt brought an abrupt end to the Great Migration, along with the Ponzi scheme driving the growth of the colony.
Similar collapses of immigration-fed growth had driven Roanoke and Jamestown to extinction, but Boston did not disappear. Rather, a resilient and creative Massachusetts colony built a sustainable shipbuilding and shipping industry within a few short years, the result of a series of key innovations. Merchants seized on a locally abundant product, salt cod, and sold it to Iberian markets, where it was in great demand, and the Winthrops expanded this trade to the West Indies, where the fish became a staple of the slavery-based plantation colonies. Local artisans and craftsmen provided the labor and expertise for a new shipbuilding industry. America’s first ironworks was imported to Saugus from England in 1646. It was a cutting-edge facility that produced iron parts for shipbuilding, as well as nails, kettles, and fences for domestic use and export. By 1720, Boston was the third busiest port in the British Empire, after London and Bristol, and the largest town in North America. Boston’s first major reinvention, from farm town to maritime power, was complete.
Approaching the start of Boston’s fifth century in 2030, we must ask whether the region would be prepared to make a similar transformation if it were necessary. Would we be tripped up by the smug provincialism that centuries of visitors have noted and mocked, or would we demonstrate the Yankee ingenuity celebrated by America’s own greatest mocker, Mark Twain, in A Connecticut Yankee in King Arthur’s Court? The answer is not clear, but it is certain we will face future reckonings and cannot hope to take refuge in a glorious past. As MIT professor Fred Salvucci, father of the Big Dig, has observed: “Our smug belief that our history will protect us from change ignores four centuries of cyclical socioeconomic birth, death, and renewal.”
THE HISTORY OF INNOVATION
To test our hypothesis that the interplay between social and scientific innovation has a role in the region’s peculiar ingenuity when faced with adversity, we included social innovations (such as those in the realm of education, civil rights, and community development) among our cases. We wished particularly to understand what Mark Twain called “Yankee ingenuity” in light of the region’s enduring ability to attract and incorporate human capital from other cultures and races, despite notable periods of intolerance, and to elicit an outsized number of innovative contributions from this diverse talent pool.
For example, social and scientific interplay figured strongly in Alexander Graham Bell’s invention of the telephone in 1876. Having taken his father’s study of deaf-mute communication on the road, Bell lived in Edinburgh, London, and Canada before coming to Boston. His father, Melville Bell, set up a meeting with Rev. Dexter King at the Boston School for Deaf-mutes. Together they visited the State House and witnessed an anti-KKK rally in 1871. Taken by the degree of social, educational, and technological progressivism he saw here, Alexander decided to stay, becoming a professor at Boston University. Many collaborated with Bell on his invention: lawyers from downtown, financiers in Cambridge, and scientists at MIT—as well as one Lewis Latimer of Chelsea, a skilled draftsman and the son of runaway slaves.
We evaluated all 60 innovations against 24 possible “drivers” of innovation, rating each driver on a scale of 1 to 5 according to its importance in explaining why the innovation took place. Leading economists and historians were asked to offer their own analysis of each case. The responses were run through a statistical engine to determine which drivers were most critical for each era, and which were critical to the overall history of economic growth in Boston.
Our conclusion: There have been five recurring drivers behind the great majority of significant technological and social innovations in every era of Boston’s history. These “High Five” drivers include:
- a driving entrepreneur or team of leaders;
- a local network of people and groups sharing information across sectors;
- local funding;
- local demand that the entrepreneur can use to perfect a new idea or product; and
- national or global demand for the innovation.
Historical examples help to give life to these descriptors. In 1813, the Boston Associates (i.e., driving entrepreneurs) came together to develop the Waltham-Lowell factory system. A group of powerful civic leaders of the time, including Francis Cabot Lowell and Nathaniel Appleton, mapped out a system of textile production that differed from its predecessors in size, process, and labor structure. The American Industrial Revolution was born from it. In 1901, King Gillette invented and developed the safety razor with technological assistance from local chemist and metallurgist William Nickerson and financial support from local millionaire John Joyce (a local network). In 1946, the Boston-born firm Raytheon invented the microwave. While the technology was derived from their federally funded work on radar just a few years before, it was First National Bank of Boston that invested in the microwave (local funding). Dan Bricklin’s invention in 1979 of the first electronic spreadsheet got a boost from the Boston Computer Society (local demand), whose members bought up the VisiCalc spreadsheet, leading Apple to tout Bricklin’s spreadsheet nationally. And in the mid 19th century, as the lucrative trade markets moved farther and farther away, Donald McKay saw the world’s need for faster vessels and designed clipper ships in the 1850s (national and global demand).
In addition, for most of the nine eras, a sixth driver was also involved, which we call the X-Factor. This driver often helps to explain what makes each historical era unique, serving as the public face of the era and complementing the other core drivers. Let’s take a quick look at two of Boston’s most historically significant X-Factors.
Puritan ethos in the 17th century, for example, was the first X-Factor that added to the High Five. The Puritans settled the region with a vision of religious utopia, and they mapped out their civic plans according to their understanding of piety and morality. “Idle hands are the devil’s workshop” is now a common phrase, but to the Puritans it was a very real dictate, prompting a work ethic defined as 16 hours of work, six days per week. Almost all public and private decisions were based on counsel from the scriptures, including Winthrop’s settlement plan for a “City on a Hill” in 1629-30. The Puritan drive to know God by reading scriptures and sermons inspired the establishment of Boston Latin School in 1635 and Harvard College in 1636. This was a contrast with Quaker Philadelphia, where reading was viewed as a distraction from knowing God and where public schools didn’t arrive until much later. The most recent X-Factor, the research universities/teaching hospitals, has interacted with the High Five since the 1940s, helping to make Boston home to one-third of all US biotech patents as of 2000. These X-Factors complement the High Five to promote innovation at particular times in history, but they prevail for shorter periods of time, while the core drivers recur and remain critical over the long haul.
GETTING A BUMP
Perhaps the most striking aspect of the High Five is that four of the drivers are local: entrepreneurship, funding, local demand, and networking. This raises the enticing possibility that more of our economic fate is in our own hands, rather than subject to global economic forces. But is it possible to engineer the High Five into action? We don’t know, and we’re skeptical. The local nature of these key factors does, however, highlight another aspect of the innovation process, which we call the “bump rate.” Basically, the bump rate is the tendency to develop and explore relationships with others, usually across business sectors. When people are in a position to meet, whether serendipitously or by design, they are in a position to more easily share their ideas and services, leading to new products, industries, and social movements. For the bump rate, physical proximity matters.
The bump rate has also played a key role in major social innovations, such as the abolitionist movement in the 19th century. Drawing on David Walker’s Appeal, Boston’s first abolitionist pamphlet in 1829, William Lloyd Garrison published in 1831 what became America’s most widely read abolitionist paper, The Liberator, which is renowned for integrating the abolitionist movement. Attracted to the region’s many activist leaders, Frederick Douglass frequented Boston from New Bedford to deliver many of his famous orations. The bumping that took place in mid-19th century Boston had a significant impact on the Emancipation Proclamation and the ending of slavery, and later on women’s rights, beginning with the suffrage movement—both movements serving to unshackle the American economy from the constraints of archaic and unjust systems of exclusion.
In the digital age as well, biotech executives in Cambridge tout the benefits of proximity. Novartis, the world’s largest pharmaceutical firm, scoured the world, considering such sites as San Diego and Burlington, Massachusetts, before deciding on the old NECCO factory in Cambridge for its research headquarters, reasoning that its staff could rub shoulders with scientists from Longwood, Harvard, Boston University, and MIT. Even Burlington was too far away from the benefits of tight proximity, they felt. Companies in such industries are willing to pay a premium to locate here because they understand the role of Boston’s bump rate in bringing innovations to market.
Our research challenges common understandings of the region’s innovation fabric. In light of the High Five, such factors as education, research universities, and local government seem less integral to Boston’s 400-year history of innovation than most of us assume. Meanwhile the region’s persistent reputation for intolerance—religious, racial, cultural—only tells half the story.
Education and Teaching Hospitals/Research Universities. Greater Boston, along with Massachusetts as a whole, has had a long-running commitment to education, dating from the founding of Boston Latin in 1635 as the first free public school in the colonies, and closely followed by maritime trade education. Beginning in World War II, federal funds fueled the growth of the research university, with Boston-area institutions the greatest concentration in the country. It was therefore a surprise to find that none of the possible education drivers were among those considered crucial to our overall history of innovation; in most eras, they fell into a secondary category of drivers, supportive of innovation but by no means determinant. Heretical as it might seem, our conclusion is that higher education institutions are certainly important to the region, but the High Five play a more enduring role.
Local Government. Government, too, has played a key role in many important innovations, yet its role in innovation overall is modest. In judging local government leadership, policy-making, and Infrastructure against the 60 innovations, the Advisory Research Committee saw them appearing occasionally as case-specific drivers, as in Boston Mayor Nathan Matthews’s successful drive to build America’s first subway system in 1897, or in the advocacy of Boston’s selectmen to build Boston Light, a lighthouse on Little Brewster Island, in 1716. But government drivers did not account for the overall culture of success.
Intolerance and Inclusion. Another overstatement is that Boston has repeatedly cast a shadow of intolerance. We did not find that narrow-mindedness limited innovation here to the white, the male, or the native-born. Despite the infamy of Boston’s past—the banishment of Anne Hutchinson for sermonizing as a woman in 1638, Boston merchants’ active participation in the slave trade, Yankee persecution of Irish immigrants, the Sacco and Vanzetti trial that condemned Italian immigrants for their political beliefs in the 1920s, and the busing crisis in the 1970s—Boston boasts a lengthy list of innovators coming out of immigrant and minority populations. Examples include the Scottish ironmongers who made the Saugus Ironworks productive (1640s); Anne Bradstreet, who wrote the first published book in British North America (1650); Onesimus, the African slave who convinced Cotton Mather and Zabdiel Boylston to try smallpox inoculation (1721); Polish doctor Marie Zakrewska, who founded the Boston Hospital for Women (1862); Alexander Graham Bell (1876); An Wang, the region’s personal computer pioneer (1975); Alex D’Arbeloff, who co-founded Teradyne (1980); Desh Deshpande, who founded Sycamore Networks (1990s); and Supreme Judicial Court Chief Justice Margaret Marshall, who wrote the 2004 ruling that legalized gay marriage.
STATE OF THE HIGH FIVE
Our research suggests that, in order to ensure the future health of the regional innovation economy, we need to pay attention to the High Five and the bump rate. But what is the state of the High Five in Greater Boston at the moment? Here’s our analysis:
Entrepreneurs: Our 64 colleges and eight major research universities pump out thousands of potential innovators every year, members of what the Boston Foundation calls the Innovation Generation—college educated, 22-to-34-year-olds, a group that is refreshed by new grads as some grow older. There is concern that many of these young people move away after graduation, partly due to high housing costs, the weather, and or the appeal of other regions. But housing costs are secondary to a dynamic job market, weather is largely irrelevant to true entrepreneurs, and Boston scores high in all of Richard Florida’s “creative cities” criteria. The weak job market, however, is a real concern, and the tough start-up market can make Greater Boston feel like a crucible for entrepreneurs. But innovators want to be where the action is, so the best thing we can do to make entrepreneurs want to be here is to pay more attention to the High Five and less to issues over which we have less control.
Local Network: This is an area where Boston has historically been strong. But today, many fear that our networks have become anemic, whether because they admit too few (old boys’ clubs) or because, as corporate headquarters locate elsewhere, they wield less power locally. The Innovation Generation will tell you that the West Coast and New York are outperforming on this score, and that Boston’s institutions—civic and corporate—are out of touch. Some civic and business leaders are already focusing on building a modern-day version of the Vault, but we see a need for a spectrum of networking channels for future innovators, particularly for talented people of color, who often perceive Boston’s power structure as closed to them.
Local Funding: The financial backing of local institutions and investors has been a huge part of Boston’s innovation success. This strength has taken a hit recently, with major financial institutions bought by out-of-state firms and others choosing to move large parts of their operations out of the region. Venture capital firms were invented here and bankrolled many of the most significant innovations and companies of the past 60 years. However, they have become more conservative since the dot-com bubble burst, moving a lot of their money to later-stage innovations, or even offshore to Bangalore or Beijing. This is a real area of vulnerability.
Local Demand: Many may think that, in a global economy, local demand is no longer a critical factor. Historically, however, most major innovations began in response to local needs and later spread to a larger market (e.g., VisiCalc). Local demand is often what allows a product or innovation to be tested and optimized before it’s ready for the national or world market. The wealth of health care institutions in Greater Boston provides ready customers for the products developed by our biotech and medical devices industries. If these sources of local demand were to weaken or leave, we would lose a major reason for entrepreneurs to be here.
National/Global Demand: With our innovation industries of health care and life sciences reaching maturity, built on a foundation of several research universities and teaching hospitals, Greater Boston would appear to be well positioned to ride the next wave of national and global demand in industries that have high potential for future growth. This driver can never be taken for granted. At the same time, it is not one that can be greatly influenced on a local basis. It is better to focus attention on the four of the High Five that are receptive to nurturance here at home.
AN INNOVATION AGENDA
Are the bump rate and High Five things we can control? Can we translate the historic alchemy of social and scientific interplay into some sort of coherent civic policy? The short answer is we don’t know yet—but that won’t stop a scrappy little outfit like the Boston History & Innovation Collaborative from giving it a try.
We have formed a group of 40 individuals from the region’s industries, universities, foundations, media, and institutions of art and culture, called the Boston Fifth Century Trustees, who have begun to join in collective action toward sustaining Boston’s position as a center of innovation. Inspired by the belief that a strong grasp of history will help anchor the process of future planning, which can sometimes feel groundless and arbitrary, the trustees have signed on to an “innovation agenda.” Already, two trustee-led task forces are tackling the serious venture-financing gap facing early stage entrepreneurs, particularly in the life sciences, and exploring the little-understood role of diversity in driving innovation in the region’s economy. A third task force, focused on making the region a hub of wireless Internet access, or WiFi, adjourned with work completed when Mayor Tom Menino announced in February an initiative to make Boston a universal broadband city.
Finally, because the gubernatorial candidates are now jostling over who has the best ideas about how to jumpstart Boston’s innovation economy, we will be offering up our own proposals. Here are two, free to the first taker:
Reach for the Ring. The Urban Ring is the biggest of the unfilled promises made to the region’s citizenry when they agreed to endure the Big Dig. A transportation system connecting the major university, research, and hospital institutions through a new subway, an enhanced commuter rail system, and perhaps a new “West Station” in the Cottage Farm/BU area would speed up the bump rate in this city. Kudos in advance to any candidate with the vision and the nerve to call for the revenue needed for capital investment in public transportation, despite the tight fiscal environment, in order to set the stage for future growth without gridlock.
A State Ideas Competition. Let’s challenge the conservative, risk-averse financial establishment by giving local entrepreneurs the choice between creating their innovations for a government market or a private-sector one. We could be the first state in the nation to put up money for entrepreneurs and researchers to compete regularly in front of a panel of state officials for the best solution to a Massachusetts problem. By using public dollars to goose the demand side, we’ll help to energize local funding, networking, and entrepreneurship while helping to bring market-driven private sector ingenuity to bear on public problems.In the end, even if all that ends up coming out of this election year is lip service to innovation, maybe it will at least help to spread the word to more people in Greater Boston that our capacity to innovate is and has always been the fount from which all good things flow. More than any other US city, we depend on innovation to drive our periodic revivals.
Today, the nature of this reliance is even sharper: We live on the upstream idea- and product-development side of innovation, as we cannot count on competing with lower-cost areas for downstream production. Basically, we can no longer be sure of retaining the fruits of an innovation for long, so we must innovate constantly or face eventual extinction. But as any salmon will tell you, going back upstream to spawn again and again may not be easy, it’s better than the alternative.
Robert M. Krim is executive director of the Boston History & Innovation Collaborative. Full report is available at www.bostoninnovation.org.