Nav

Boston Innovation Culture — 1

Last month (June) was Boston innovation month, a series of events, conferences, and seminars focused on innovation in the New England tech community.

This is important.  I had occasion last winter to take a serious look at the performance of Massachusetts versus Silicon Valley as innovation centers.  This culminated in a presentation to the Oasis Group, a discussion group of senior Boston-area professionals of which I am a member.  You can find the full presentation here

A few key conclusions.

1. In Mass we realize that we have been outperformed by Silicon Valley, but we’re in denial about how badly we have lost.  Fifty years ago New England was the premier IT innovation region in the country, and Silicon Valley was best know for fruit trees, notably prunes.  Today, if you look at the stock market value of tech companies in each region, Silicon Valley outscores Massachusetts ten-fold!  Even in biomedical innovation, which we think of as our fortress, Silicon Valley is about equal to Boston in equity value creation.  At the Xsite conference, the culminating event of the month, the most disappointing part was the panel of leaders from major institutions.  The tone was self-promoting and complacent (“we’re doing great things here”) and did not call for much change.  I sincerely doubt we will gain ground on Silicon Valley this way.
2. While we remember best the companies that are highly successful, it turns out that Silicon Valley has had a full share of failures.  Remember all of the disk drive companies?  What Silicon Valley has done incredibly well (and much better than Boston) is “recombination”:  quickly refocus resources to pursue new opportunities, adapt to changing economics and market realities.  Boston area resources did not flow from the minicomputer companies to the PC companies in time to make a difference; Boston got a small share of the Internet.
3. Recombination is enabled by three things:  
   
   • An entrepreneurial community
   • An “open systems” philosophy
   • An equity culture
     

Entrepreneurship is the dominant theme in Silicon Valley, and the valley is a finite place, hemmed in by mountains to the southwest and water in most other directions.  Density and critical mass of entrepreneurial community happens naturally there.  Not so in Boston, where there are other major themes:  education, business consulting, money management, clinical medicine.  And, Silicon Valley had good leadership and something to prove, having been under the thumb of GE, RCA, Raytheon, and the like before World War II.  We need to work harder to create community.

This is why innovation month was important.  It’s one of a number of initiatives to foster community.  Several universities, especially BU and MIT, are actively supporting entrepreneurship (Harvard too, but it seems to be a lower priority there).  Venture funds like General Catalyst and North Bridge regularly gather entrepreneurs .  Cambridge Innovation Center, the principals of which are partners in our fund, has become a terrific focal point for innovation in Cambridge.

So thanks to the organizers of innovation month:  Scott Kirsner, the folks at Xconomy, and no-doubt others of whose role I am unaware.  It’s a great start.  But just a start; we have a lot of work to do.