So it was this combination of sharing brainpower and smart manufacturing that was turning global competitiveness on its head and making people like David Ku shake their heads with concern. Cheap was giving way to smart. And there was no immediate response for the low-cost producers in the emerging economies because it is the “old” economies, such as those of North America and Northern Europe, that have the necessary elements in place to create brainbelts: research facilities with deep, specialist knowledge; educational institutions; governmental support for basic research; appealing work and living environments; capital; and, most important, the atmosphere of trust and the freedom of thinking that stimulates unorthodox ideas and accepts failure as a necessary part of innovation—different from the hierarchical, regimented thinking so prevalent in many Asian and MIST economies.
Which is not to say that the sharing of brainpower and the development of brainbelts looks exactly the same in the United States as it does in Europe. Indeed, there are fundamental differences that pertain to infrastructure, history, and culture. The United States is a world power with a huge defense budget, some of which is allocated to R&D activities through agencies such as the Defense Advanced Research Projects Agency (DARPA) and the National Aeronautics and Space Administration (NASA). Many innovations—including the Internet, drones, and the self-driving car—originated in DARPA and NASA initiatives. What’s more, the National Institutes of Health (NIH) has a major impact on fundamental health research through its funding of projects.
Much innovation in the United States is also driven by start-up companies, funded by venture capitalists and operating as privately held concerns until they are big and successful enough to make a public offering or are purchased by a larger, established leader in their market.
In Europe, there is no common defense budget. Some countries, such as France and Sweden, conduct research on fighter aircraft and naval vessels. But the market is fragmented and the national budgets, as a percentage of the country’s gross domestic product (GDP), are much smaller than that of the United States. Europe lives under the security umbrella of the United States, so high-tech innovation does not receive massive support from the military. Neither is there a coordinated, European Union–wide health research budget. Nor is the level of start-up activity as significant in Europe as it is in the United States, although that is slowly changing. Instead, innovation in Europe has been stimulated through national research institutes—including the Fraunhofer in Germany, the Netherlands Organisation for Applied Scientific Research (TNO), and the Swiss Federal Laboratories for Materials Science and Technology (EMPA) in Switzerland—as well as funding agencies like Sweden’s innovation agency, VINNOVA, and the Finnish Funding Agency for Technology and Innovation (Tekes), which is an organization of the Finnish Ministry of Employment and the Economy. These are little known in the United States. In an era of collaboration, Europe leverages this fragmentation in a creative way, however, by requiring the cofunding of projects. Both situations have their advantages and disadvantages, which affect how former rustbelts make their transformations to brainbelts.
Our thinking, therefore, is influenced by some of these fundamental differences. Antoine grew up in the Netherlands but has lived primarily in the United States since 1968, while Fred has lived in Holland his whole life, although he has traveled extensively around the world. The result of our own sharing of brainpower is this book, which tells the story of our journey and presents the results of our research. We also make the argument that these brainbelts can serve as models for other areas, offering principles and practices that can be adapted to the particular character and assets of cities and regions that want to gain a global advantage. Beyond that, as the model becomes better understood and the processes more defined, it will take less time for an area in decline to regenerate itself and become an innovative player in its markets and industries.
So, our message is an extremely positive one: the economies of the United States and Northern Europe are regaining their competitive edge. Not only are they reinventing manufacturing, creating new jobs, and revitalizing regions, they are—and this is perhaps most important of all—developing new products and technologies that will transform just about every aspect of our daily lives: vehicles and transportation, homes and cities, farming and food production, medical devices and health care. Everyday products such as shoes and clothing will be made competitively again in the West, and these products will not only fit, look, and feel better and be more versatile and sustainable but will cost no more to make, nor be more expensive to buy.
Ultimately, this new paradigm will do more than revitalize Western enterprise. Yes, for a time, the sharing of brainpower, combined with smart manufacturing, will shift the competitive advantage back to the developed world, and developing economies will struggle to close the innovation gap. But, in the longer run, it will bring benefits for the entire world by making smart products that help address challenges that affect us all.
With this new approach to creating smart products, then, Europe need not end up as a museum, the United States will not be pushed to the margin of the world map, and the creation of innovative twenty-first-century products need not be a zero-sum game. While Silicon Valley and Cambridge and the other established innovation centers will surely continue to thrive, the list of the smartest places on earth will look very different in the years to come.
Welcome to the brainbelt.
Chapter One
SHARING BRAINPOWER AND SMART MANUFACTURING
How a Rustbelt Becomes a Brainbelt
In the 1960s we had a space race. Today it is a robot race.
—DANISH TECHNOLOGICAL INSTITUTE
Despite all that we had heard and read about brainbelt areas such as Batesville and Eindhoven and many others, when we set off on our journey we confess that we still had the rustbelt stereotype in our minds. We expected to find crumbling industrial sites, to drive through dilapidated neighborhoods, to meet with people struggling hard to keep their heads above water, and to miss the enjoyment of a good glass of wine or a memorable meal.
What we discovered—about smart manufacturing and its technologies, sharing brainpower and the products being created in the brainbelts, as well as local cuisine—quickly blew those images out of our heads, even though the transformations are far from complete and have often created losers and gaping disparities in the process. A single conversation with Luis Proenza, for example, might have been enough to change our thinking (although we had many more like it). Proenza was then president of the University of Akron and had been instrumental in revitalizing the city, indeed, the whole region of Northeast Ohio, turning it into a center of excellence in the field of new materials. We met him and his group of international colleagues for dinner at a trendy restaurant in the renovated downtown area. Akron, Ohio, long the center of the global tire industry, had slipped into decline as tire production went offshore. But Proenza was brimming with enthusiasm for the region, its people and organizations, and the work they were doing, and he had a glowing vision of its future. He proudly told us that the 1,000 start-ups in the area employed more people now than the four big tire companies had in the region’s manufacturing heyday.
In Sweden, we visited Lund and the nearby city of Malmö, which had taken a serious blow in the mid-1980s when the major shipyard in the area went bankrupt, another victim of the low-cost advantage of manufacturers in Asia and elsewhere. In response, local politicians, entrepreneurs, and Lund University came together to create Ideon, Scandinavia’s first technology park, in Lund. Ericsson brought its research group to the park, as did many pharmaceutical companies. Today, the leaders of the cities of Malmö and Lund meet regularly, and Lund University is the engine that drives the corporate spin-offs that create cutting-edge products for the life-sciences industries.
In North Carolina, we visited the Research Triangle Park (RTP)—surrounded by the three university cities of Durham, Raleigh, and Chapel Hill—the first park of its kind in the
United States. In its early days, the RTP had been a roaring success, attracting 170 companies and creating employment for over 40,000 people. But they operated in ways that were customary at the time—in isolated buildings hidden among trees, guarding their ideas, working in secrecy, keeping disciplines separated. As the emerging economies zoomed forward, the inevitable happened, and the RTP lost some of its cachet. What we found in 2013, however, was evidence that the new brainbelt model was spreading its wings right next door to the RTP. In Durham, Duke University had set up an incubator in the renovated buildings of the old Lucky Strike factory. In Raleigh, North Carolina State University’s Centennial Campus had become a whole new type of research campus where promising start-ups, big companies such as the Swedish-Swiss ABB and German Mann, have labs and offices right on campus, working jointly with university researchers on projects around new materials, clean energy, and smart grids. We could see young entrepreneurs everywhere.
What Sharing Brainpower Looks Like
The brainbelts of course look to leaders such as Apple and Google, Stanford University and the Massachusetts Institute of Technology (MIT), and the iconic innovation zones of Silicon Valley and Cambridge for inspiration and models, but each one develops in its own distinct ways. From our two years of research, we learned that every brainbelt—including those we visited and the many others we did not travel to—share a number of characteristics. In particular, they:
• Take on complex, multidisciplinary, and expensive challenges that could not be handled by any single player (an individual or organization) alone. The lone, iconic innovator is an outdated concept.
• Are driven by a connector, an individual or group with vision, relationships, and energy that is largely responsible for establishing and building the ecosystem.
• Operate in a collaborative ecosystem of contributors, with research universities at their center and typically composed of start-ups, established companies with a thriving research function, local government authorities, and community colleges or similar vocational institutions. Health-care institutions, such as teaching hospitals, are often a part of the ecosystem, as well.
• Focus on one, or just a few, particular disciplines or activities.
• Are open to sharing knowledge and expertise. To facilitate openness, the organizations are de-siloed. The walls between academia and industry and public governance have been taken down. The sharp separations between academic disciplines, such as chemistry, physics, mathematics, and biology, have been removed.
• Contain physical centers, such as incubators and start-up spaces, often within modernized factory or warehouse complexes, that house and encourage collaborative efforts.
• Foster an environment that acts as a magnet for talent. The area offers not only an existing talent pool in universities, research institutes, and start-ups but also non-work attractions and benefits, such as affordable housing, a variety of cafés and restaurants, good schools, and recreational activities.
• Have capital available. There is sufficient money available for investment in start-ups and spin-offs, as well as for facilities and incubators.
• Have an understanding and acknowledgment of threat. Unlike the days when corporate researchers did not worry much about outside competitive forces, people in brainbelts recognize that the region has been hit before and could be threatened again. This leads to a strong sense of identity, regional pride, and activities of continuous improvement.
Ecosystem: A Network of Organizations and Individuals, Linked by a Connector
A brainbelt is more than a collection of entities conveniently co-located in an appealing region. Each brainbelt is a tightly woven, collaborative ecosystem of contributors, typically composed of research universities, community colleges, local government authorities, established companies with a thriving research function, and start-ups, usually supported by a variety of supporters and suppliers, including venture capitalists, lawyers, design firms, and others. These different types of entities establish their own unique identity as they share knowledge, interact, form a community, grow, and improve.
Besides a major research university, a brainbelt ecosystem usually includes a major corporation, a global player, such as Intel in Portland, Oregon. Big companies bring a special and necessary ingredient to the brainbelt because they feel the cold wind of global competition more keenly than start-ups, and certainly more so than regional, technical, and educational institutions. Therefore, they understand that regional collaboration is often crucial to gaining a competitive advantage. Furthermore, researchers in big private-sector companies, like Intel, know viscerally that conducting research for its own sake is no longer tenable and their development efforts must lead to marketable products. They can no longer sequester themselves, as they once did, in the safety of well-funded R&D enclaves, devoting their careers to fascinating lines of inquiry that don’t create value for the company. The bottom line is top of mind for them, and R&D budgets are not what they used to be. These companies understand that corporate R&D, with its internal bureaucracy and hierarchy, is often stymied in developing unorthodox ideas, and thus the necessity arises to partner with outsiders that lack the capital and global organization to bring new products to market but also have fewer disciplinary barriers and bureaucratic complications. A company like Intel can offer its superfast computing in analyzing the new knowledge created by university researchers, who, in turn, are able to give them access to unique, massive data sets.
As a result, these big companies, ones that in earlier times might have worked in glorious isolation, come to feel a genuine connection with the brainbelt area. They invest in its facilities and people, which further strengthens both the company and the region. For example, Intel’s Portland campuses comprise the company’s “largest and most comprehensive site in the world—a global center of semiconductor research and manufacturing and the anchor of Oregon’s economy. The company has nearly 17,500 employees in Oregon, making it the state’s largest private employer.”1 During our tour, we saw firsthand how important the presence of global players is to all the brainbelts we visited.
The big company, however, is just one player in the brainbelt ecosystem. There is always a connector—usually an individual but sometimes an organization—with vision, relationships, determination, clout, diplomatic skills, convincing power, and energy who is largely responsible for catalyzing the sharing of brainpower among multiple entities. The style of that connector influences the way a brainbelt will develop. Sometimes the individual connector is an entrepreneur, sometimes a scientist, sometimes a local politician or administrator. Whatever background connectors may have, they have a vision for the region and the ability to take heroic action to realize it.
In Zurich, for example, the connector was Michael Collasius, CEO of the Swiss branch of the German company Qiagen Instruments.2 There were several companies in Zurich working in the field of laboratory equipment, but they did not collaborate extensively and no one of them alone could conduct the research needed to distinguish the area as a leader in the lab-equipment field. That changed when forensic researchers—major clients of the lab-equipment producers—wanted better, faster, and cheaper ways to do their work on DNA. In 2003, Collasius convinced the companies to join forces to create a research institution called ToolPoint. Today, more than thirty companies, all focused on some aspect of the creation of lab equipment (although not direct competitors), are part of the ToolPoint ecosystem. “Trust between all the participants is high,” Hans Noser, director of ToolPoint told us, “which is promoted by their proximity.”3
So, when big companies reach out, connectors bring groups together, and companies join forces in new initiatives, a community begins to develop. People start to feel a sense of identity and pride in the brainbelt. In various ways, they define a set of values and establish rules, some explicit and some tacit. Members of the brainbelt live by them in the knowledge that they can only succeed together.
Intriguingly, the
strength of community often derives in part from an acknowledgment of threat. Unlike the days when corporate researchers did not worry much about outside competitive forces, people in brainbelts recognize that the region has been hit before and could be threatened again. Residents of Akron, Eindhoven, Portland, and elsewhere remember the good old days and also the troubled ones that followed. As things improve, the brainbelt comes to see itself as resilient and more able to take on new challenges as they arise.
Collaboration: Diverse Players Share Brainpower to Address Complex Challenges
The members of a brainbelt form connected ecosystems for a very particular reason: to take on complex and often expensive challenges that demand a multidisciplinary approach and cannot be handled by any single player alone. This requires a form of intensive collaboration that goes well beyond the kind of joint ventures and project partnerships we have seen in the past. These collaborations bring together people and organizations from the academic and business worlds—big companies and start-ups—with participation from government agencies as well as other players, such as philanthropists, venture capitalists, law firms, design studios, cultural institutions, incubators, public-private trade and industry organizations, and others.
This depth of collaboration between academia and commercial enterprises, in particular, is a relatively new phenomenon. Traditionally, academics and business did not mix. There were some important exceptions—most notably Bell Labs, NASA, and the US Department of Defense collaboration with industry in aerospace—but, as a rule, academics disdained entrepreneurs, and businesspeople distrusted anything that smacked of public-private partnerships.
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