Economists tell us that productivity growth in the United States has declined sharply since 2004, all the while advances in digital technology have been growing. Now if that is not a head scratcher, I don’t know what is.
These same economists have various explanations for declining productivity growth but there is no consensus, leaving policy makers and supposed economic development gurus like me in a bit of a lurch.
This much we know and can agree upon -- our economy depends on productivity improvements for long-term economic growth, and innovation is the fuel to the engine.
For companies, innovation means staying abreast of the digitalization of everything and investing in new technologies that give them a competitive advantage.
For communities, innovation means advancing the skill levels of its people, investing in physical infrastructure (roads, pipe, broadband data transmission) and, yes, betting on and helping young companies that have great potential to grow.
I have to think that innovation makes for damn good economic development. Now the question is how do you bottle and sell that.
A Neighborhood Approach
One strategy being propagated and pushed by the Brookings Institution is that of “innovation districts.” The word “district” implies a small defined geographic area, like a neighborhood.
And that’s precisely what we’re talking about, areas within cities where research universities, medical institutions, and companies cluster and connect with start-ups, accelerators, and incubators.
In a May 2014 paper entitled, “The Rise of Innovation Districts: A New Geography of Innovation in America,” Bruce Katz and Julie Wagner with Brookings wrote:
“In recent years, a rising number of innovative firms and talented workers are choosing to congregate and co-locate in compact, amenity-rich enclaves in the cores of central cities. Rather than building on green-field sites, marquee companies in knowledge-intensive sectors are locating key facilities close to other firms, research labs, and universities so that they can share ideas and practice “open innovation.”
“Instead of inventing on their own in real or metaphorical garages, an array of entrepreneurs are starting their companies in collaborative spaces, where they can mingle with other entrepreneurs and have efficient access to everything from legal advice to sophisticated lab equipment. Rather than submitting to long commutes and daily congestion, a growing share of metropolitan residents are choosing to work and live in places that are walkable, bike-able, and connected by transit and technology.”
Katz and Wagner are speaking to shifting market and demographic dynamics and a reevaluation of the natural strengths of cities, namely proximity, density, walkability, and livability.
Now this won’t work everywhere. It probably only works in urban settings in cities of some size. Essentially, this is clustering but with a new urban twist to essentially attract young people and young companies to create an ecosystem.
Having the Anchor Institutions
Recently, I have spent time in Oklahoma City and Birmingham, Ala., two communities that Brookings says have all the makings for an innovation district. In both cities, there are medical academic centers – the Oklahoma Health Center and the University of Birmingham at Birmingham.
Brookings says these two cities can build an innovation district by connecting their leading-edge anchor institutions to companies, particularly start-ups, in a physically compact, transit-accessible, and technically-wired mixed use area offering housing, office, and retail.
This means remaking the physical landscape, which will be no easy task. Both OHC and UAB have a traditional campus look and feel to them. While their health care institutions are fairly close to one another, they have spread-out physical layouts that are car centric, which hinders people walking to gathering spaces to exchange ideas and build collaborative networks.
So there is a design element that has to be overcome to increase density by bringing in housing, office and retail. The elements are there in Birmingham and OKC, but a lot of planning and execution has to happen if an innovation district, as envisioned by Brookings, is going to become a reality in either city.
So what are the odds? Hell, I don’t know. (How many times have you heard a consultant say that?) I see things in both cities that indicate that they could pull it off. Of course, it will take political will and lots of money being spent for it to happen.
OKC Has MAPS
In Oklahoma City, there is a history of the electorate giving city government the green light to make transformative change. The latest of example of that occurred in September when voters authorized elected leaders to raise and spend an estimated $1.5 billion over the next decade on municipal needs.
The vote provides for a 27-month extension of a 1-cent MAPS sales tax, for street resurfacing and related improvements.
After being told by United Airlines in 1992 that is was in essence an ugly town unworthy of investment, then-Mayor Ron Norick proposed the Metropolitan Area Projects (MAPS) initiative in 1993.
The program featured defined capital projects that would be funded by a penny sales tax. The tax would have a start date and an end date and the projects would be paid for in cash, without incurring debt.
Bricktown, Whitewater and Streetcars
In 1993, the first MAPS vote proposed the construction of a 20,000-seat, indoor sports arena; construction of a 15,000-seat downtown ballpark; construction of a new downtown library; construction of the Bricktown Canal; development of a trolley transit system; development along the North Canadian River; and renovations to the Civic Center Music Hall, Cox Convention Center and Oklahoma State Fairgrounds.
MAPS 2 was approved by voters in 2001. Dubbed “MAPS for Kids,” the $700-million initiative included more than 100 Oklahoma City-area school projects, which included new school construction, extensive renovation to existing schools, technology upgrades, and other improvements.
In 2009, OKC voters approved MAPS 3, an ambitious $777-million plan that continues to change the face of downtown Oklahoma City. MAPS 3 features a 70-acre central park linking the core of downtown with the Oklahoma River; a modern streetcar system; a new convention center; miles of new sidewalks and hike-and-bike trails; river improvements, including a public whitewater kayaking facility; senior health and wellness centers throughout the city; and improvements to the State Fair Park public buildings, meeting halls and exhibit spaces.
All this is happening in Oklahoma City because the vision is there to make things happen, and the voters see the wisdom of that vision.
Can an innovation district happen in OKC? Based on history of making things happen, I would give it a pretty good shot.
Railroad Park, Beer and NIH Funding
Now let’s look at Birmingham, a city that I lived in for more than 20 years. When I left Birmingham in 2007, I thought the city was going nowhere. Since I’ve been gone, great things have happened. (I reject the idea that there is a correlation between the two.)
Railroad Park, a 19-acre green space in downtown Birmingham that celebrates the city’s industrial and artistic heritage, opened in the fall of 2010. In April of 2013, the Birmingham Barons Baseball Club played their first game in their new ballpark, Regions Field. The state-of-the-art 8,500 seat facility in the heart of downtown.
Avondale, what used to be a neighborhood on the skids, is now a hipster haven, featuring cool bars and restaurants and a craft brewery.
Birmingham now has Good People Brewing, Avondale Brewing, Cahaba Brewing, Trim Tab Brewing, Red Hills Brewing, and Ghost Train Brewing, all very good indicators that this is a very civilized place.
More importantly, UAB ranked 25th nationally in 2016 funding from the National Institutes of Health, which is essentially the federal government’s medical research agency. Grants to UAB’s six health- and medical-related schools totaled more than $238 million last year.
Tailor-Made for the 21st Century
Adding to the picture, you have Innovate Birmingham, a $6 million federal grant program to train people for innovation jobs. The program will be administered in the UAB Innovation Lab (UAB iLab) at Innovation Depot, a business incubator that’s home to more than 100 startups. Innovation Depot will connect participants in the program with its tenants and other partner businesses.
Katz said Birmingham has “got the geography that essentially is tailor-made for the 21st century,” in an interview last year with Alabama NewsCenter.
“Proximity, density, vitality, authenticity and you’re beginning to see entrepreneurial startups, scale-ups either off of research from the universities or people just want to be here,” Katz said.
Can an innovation district happen in Birmingham? There is not the voter-approved MAPs tradition as there is in Oklahoma City, but pieces are falling into place, and Birmingham has surprised me as a much-improved city that is very livable.
Of course, I am an aficionado of craft beer, and my views may be colored by that. But it’s a quality of life measure that doesn’t hurt any place. Indeed, I believe craft beer only enhances it.
Real or Hype?
Innovation districts are still an early trend if they are a trend at all. There has yet to be a systematic analysis to prove whether districts characterized by a diversity of institutions, companies, and start-ups can live up to the hype.
That hasn’t stopped a slew of cities from jumping on the innovation district bandwagon. They include Cambridge, Philadelphia, St. Louis, Detroit, Seattle, Boston, and Raleigh-Durham, among others.
The potential for innovative growth appears real, even if most of it is organic rather than planned. One thing is certain. We need ideas, whether they are hatched in universities, startups or mature companies. We need innovation to keep going and growing.
And, of course, we need more craft beer. That’s a given.
I’ll see you down the road.