Innovation in New York: How Can the State Do Better?

Web Sites

East River Science Park
A new state-of-the-art research and development campus of the New York City Bioscience Initiative. Opening late 2009.

The Levin Institute
The Neil D. Levin Graduate Institute of International Relations and Commerce is an independent graduate institute of the State University of New York (SUNY), focusing on globalization. Globalization101, a project of the Levin Institute, includes a blog post on the first Forum on International Relations, Science and Technology, "Why Isn't New York a Capital of Innovation: How Can it Become One?" and a prompt for comments regarding the event. Go here to add your own comments.

NYC Seed
A partnership providing funding and mentoring to jump-start promising New York City-based technology companies.

New York Loves Business
The Empire State Development Web site has links to many State efforts to promote business, including high-tech research and development.

The Partnership for New York City
A non-profit organization of 200 CEO's from New York City's top firms, focused on enhancing the economy of New York and the city's position as a world leader in commerce, finance, and innovation.

Reports

The Future of New York City as the World's Business Hub: Global Business in the 21st Century City. 2008. An Economist Conference in partnership with The Levin Institute, held October 2, 2007.

A.T. Kearney, Inc. 2007. Delivering on the Promise of New York State. A Strategy for Economic Growth & Revitalization. Report prepared for Empire State Development.

Articles

Graham P. 2006. How to be Silicon Valley. (May).
Essay by Paul Graham based on his keynote presentation at the 2006 XTech Conference.

The National Academy of Engineering. 2008. Grand challenges for engineering in the 21st century. (February).
Fourteen areas identified by the National Academy of Engineering as needing solutions in the 21st century.

Sexton J. 2007. Fire and ice: the knowledge century and the urban university. (August 10).
Essay by John Sexton, president of New York University.

There is no doubt that New York City is innovative. World-class theater, entertainment, fashion, and art all testify to the creative fiber of New York. But when people think of innovation, they think of advanced technologies, and of places like Boston, Berkeley, and Silicon Valley. So why does New York not feature prominently on the map of science and technology innovation?

New York is already a capital of innovation, but nowhere near where it could be, given its strengths.

On June 10, 2008, the Neil D. Levin Graduate Institute of International Relations and Commerce and the New York Academy of Sciences cosponsored the inaugural Forum on International Relations, Science, and Technology (FIRST). Moderated by Garrick Utley, president of the Levin Institute, the event drew over 100 participants eager to discuss where New York stands relative to its competitors, and approaches that could capitalize on New York's strengths, shore up its weaknesses, and plant it firmly on the map as a capital of innovation. The sentiment in the room was immediately apparent—New York really is a high-tech nexus, but nobody outside of New York seems to know it.

But before assessing the innovation quotient of New York, Utley challenged the panel to define innovation in one sentence. Innovation encompasses discovery, the improvement of products and life, and a risk-taking attitude, explained James H. Singer, partner and New York office leader at A.T. Kearney, and lead author of a recent report on economic growth and revitalization in New York State. When discussing innovation we need to consider "invention, innovation, and entrepreneurship" together, as all three activities are needed concurrently.

The Knowledge Age

"In the past, we were only able to think of technology related to physical things," said Irving Wladawsky-Berger, chairman emeritus of the IBM Academy of Technology and visiting professor at MIT, "and what New York does is much more knowledge-based." Healthcare and finance, for example, are knowledge-based technologies. We have not traditionally thought of New York City as a center of technology-based innovation because it was not one in the industrial age, he said. But now in the knowledge age, New York is very much a technology center.

Jerry MacArthur Hultin, president of Polytechnic University, agreed that New York is in the process of moving out of the industrial age. Manufacturing has left the city, and we are in a new zone, a knowledge zone, that we haven't quite captured. "Structurally," Hultin said, "we are missing pieces. There has really been no job engine in this town for some time that matches manufacturing."

Hultin offered three changes that must occur to develop a sustainable model. First, he observed, the idea people and the money people coexist in New York, but do not mesh. We need a web of interaction that is not limited to formal settings. Second, we have the science, the ideas, and access to the money, but we need fresh managerial talent that wants to run entrepreneurial businesses. And third, New York's universities need to be branded as high-tech centers of innovation.

Singer also highlighted the wealth of knowledge in the city, noting that 128 Nobel laureates have lived or worked in New York, and 27% of adults in the state have a bachelor's degree or higher—one of the highest rates in the nation, and with a higher percentage of math, science, and engineering degrees than other states. But while 250,000 college degrees are awarded every year in New York, most graduates ultimately leave the state. "The innovation economy is growing," Singer explained, "and success is happening in clusters and spikes, but it is not broad-based, and is not enough to sustain all the talent that is here."

New York State has viewed the business community as a source of revenue, rather than a partner for long-term prosperity.

Hultin pointed out that much of the technology developed at New York institutions is licensed to others outside of the city. Singer agreed that it is not just the talent that leaves, but the ideas as well. "New York State has historically viewed the business community as a source of revenue, rather than a partner for long-term prosperity," he said. The state has the second highest business costs in the nation, and is the most severe in terms of the regulatory environment for business. As a result, many of the great ideas that are born in New York institutions are eventually translated and developed outside the state.

In fact, until recently, many institutional technology transfer officers were compensated based on their licensing revenue, and not on how they developed products within the state. Over the last 25 years, the number one acquirer of patents and licenses from all of the institutions in the state of New York is the University of California system. "Clearly they have a different approach to that over there," said Singer. An effort must be made to lighten the burdens on the business environment in New York. In addition, government and business need to partner together, with government acting as a catalyst, Singer said, but innovation does not need government control or organization.

Location, location, location ... with some marketing and matchmaking

While the evidence shows that people, ideas, and companies tend to flow out of New York, Utley pointed out that IBM is thriving in the New York metropolitan area. "People like living in this area," Wladawsky-Berger said. IBM facilities are just north of New York City in Dutchess County, an area with gorgeous countryside, he said, "and on the other end you are in Manhattan, which many of us think is the center of the world." Hultin agreed, citing New York University President John Sexton's essay Fire & Ice: The Knowledge Century and the Urban University, that the "ICE," the intellectual, cultural, and educational aspects of the city, really give it a competitive advantage. But New York needs to maximize this attractiveness to be able to keep the talent that we have.

Wladawsky-Berger cited an essay by Paul Graham arguing that to create an innovation center like Silicon Valley you need to achieve "the right combination of rich people and nerds." "The business community in New York City, in general, doesn't believe in technology the way they do in the Boston area, or the San Francisco Bay area," Wladawsky-Berger said. The Churchill Club, for example, is a 5000-member, nonprofit business and technology forum in Silicon Valley that brings entrepreneurs, venture capitalists, and innovators together. But in New York, money and ideas do not seem to cross paths.

All the elements are here, but they are too dilute.

All the elements are here, Singer said, but they are too dilute. At the core of what makes a great city a great innovator is a cluster model of geography, he said. We need to get basic scientists, applied scientists, venture capitalists, and people who know how to commercialize business, all speaking the same language, socializing, going to school together, essentially "growing up" together. This is happening in pockets in New York, in places like Cold Spring Harbor and the Rockefeller University.

The new East River Science Park is an emerging cluster that will bring science and technology together and will also include service providers, intellectual property attorneys, and venture capitalists. Hultin pointed to the joint effort by the Office of the Mayor and the Partnership for New York City in establishing a venture capital fund of $2 million housed at Polytechnic University. Another approach Hultin described is a "virtual incubator" where start-ups can join and have access to the community and to services on the Web, even if they choose not be in the physical space. This cuts down on cost, and increases the number of companies that can participate in the incubator.

"New York is already a capital of innovation, but nowhere near where it could be or should be in the world order given its strengths." Singer said. Hultin referred to the 14 grand engineering challenges of the 21st century identified by the National Academy of Engineering, and suggested New York have a competition to name the 10 most powerful innovations that could add a dynamic economy to New York City, capitalizing on the city's assets. Such a list could be used as a launching pad for discussions with researchers, government, and investors.

Bullish on New York

Utley closed the discussion by asking the three panelists to gaze into the future and share what they see for New York City in 2050 and beyond.

Singer stated that he is "very bullish on New York for the next hundred years." "There is a reason that many of us choose to live and work here," he said. "It's a great cultural city. Everyone thinks it is great for a different reason." Singer emphasized that New York has the right kind of environment for greatness, and, with the right catalysts, can be an innovation capital even if the financial industry goes away.

Innovation can be the engine that drives job growth.

Hultin agreed with the bullish forecast. "We've got it all here," he said, but "we are at a tipping point," and must address the need for job opportunities for the lower middle class. Innovation can be the engine that drives job growth, creating new companies that employ people to make things. Hultin also stressed the need to brand New York better, and bring the innovation community closer together, noting that universities have a role to play here. He also cautioned that there are a lot of people working very hard to match us at this, and China and India, for example, are going to give New York real competition.

"New York will continue to be a leading city in the world, if not the leading city in the world," said Wladawsky-Berger. New York will solve its problems, and can and will do something to bring technology and business much closer together. "New York has so many good things that attract so much great talent from across the U.S. and around the world."