Fostering the Innovation Ecosystem

This week I had the opportunity to travel to Boston as part of the Indy Chamber’s Leadership Exchange (LEX) program. The goal was to better understand the Boston innovation ecosystem with particular focus on Kendall Square, which is known today as “the most innovative square mile on the planet.” Until the 1970s, this square mile was just another piece of land in Boston. There had been plans to develop a space center that never materialized. A series of fairly uncoordinated developments followed.

As our own Professor Phil Powell in the IU Kelley School of Business explains in Naptown and Beantown: Insights on Prosperity for Central Indiana, Boston was the first city to regulate but allow genetic research. In 1978, biotechnology innovator Biogen was founded in Boston. Genzyme, another biotech innovator, followed. In 2011, Harvard Innovation Labs was created with the goal of helping Harvard innovators—students, faculty, alumni—turn ideas into impact. In 2013, thanks to a grant funded by the Massachusetts Life Science Center (which in turn was funded by the Commonwealth of Massachusetts via a $1.5 billion commitment in capital over ten years), LabCentral was created. LabCentral provides a robust infrastructure for early-stage startups via labs and connects innovators to investors. In short, they help startups focus on the science while they handle the operational issues.

Massachusetts provides a range of incentives designed to strengthen the workforce and stimulate business growth, including the Economic Development Incentive Program (EDIP), which offers credits to lower taxes in exchange for job creation. While incentives like the EDIP help, the real driver of innovation, economic growth, and transformation is the powerful combination of talent and education. In listening to all the speakers who represented different parts of Boston’s innovation landscape, it was clear that the concentration of universities in the region attracted the talent that led to the growth of this ecosystem. As Yvonne Hao, Massachusetts Secretary of the Executive Office of Economic Development, explained, Boston has no oil or other significant natural resources. What they have is talent and talent, she explained, was the “secret sauce.” This message was reinforced in several sessions during our visit.

If we compare Boston and Indianapolis, we can see the difference in living expenses, but the high cost of living in Boston compared to Indiana has not slowed the development of the innovation ecosystem. In fact, Massachusetts is the 14th highest taxed state in the nation compared to #37 ranked Indiana where the cost of living is significantly lower as well. Additionally, in 1970, Indianapolis and Boston were nearly equal in terms of per capita personal income. By 2022, Indianapolis per capita income had slipped to less than three quarters of Boston’s.

Talent trumps taxes, skills count, and a degree matters. We can achieve parity with Boston if we graduate the workforce and human capital that Indiana needs. IU Indy can lead the way in grooming Indiana talent.

Go Jags!

Latha Ramchand
Chancellor