Regional Clusters: More Complex Than You Think

Economists have noted for over a century that similar firms tend to “cluster” near each other. In the last few decades, research on clusters has picked up dramatically, in part because they are associated with more rapid innovation. One of the best-known examples of a contemporary regional cluster is Silicon Valley and its cluster of electronics and software firms.

Clusters are often assumed to work due to openness, collaboration, loose organizational boundaries, and information sharing. A new research paper* by Simon Bell, Paul Tracey, and Jan Hiede argues that it’s often more complex than this. They call this “standard” model of a cluster “a relational model of governance based on implicit rules and understandings.” And they point out that there is a lot of evidence for another type of successful cluster: one that’s hierarchically organized, with “unilateral rules originating from a dominating firm” (they cite several examples of research showing this, from the U.S. to England to Shanghai). The problem is that most research has only focused on the relational type of cluster, within which “innovation is an interactive and collective process requiring joint action on the part of cluster members” with “organic” interaction patterns between cluster members. A hierarchical cluster, in contrast, has “centralized decision making structures, rules, and formalized interactions.”

So their research question is, how does a cluster evolve into one or the other form? What variables make one more likely than another? The authors argue for two causal variables:

(1) information tacitness: tacit information is not codified and is difficult to communicate explicitly. It often involves unspoken practices and behaviors. The authors propose that the greater extent of tacit information in a cluster, the more likely it is to be relational.

(2) transaction specific investments: Someone has to pay to build the factories, machinery, hire the workers, and build a brand. In some industries (think automobiles) this costs a lot more than in others (think creating a web site). The authors propose that the greater the degree of specific investments required, the more likely the cluster is to be hierarchical.

The authors identify four other propositions that are too complex to summarize here, but this is an intriguing paper. In many ways, although the authors don’t say it this way, it challenges the mystique of clusters as being nice, good, and collaborative. (After Saxenian’s book comparing Silicon Valley to Boston’s Route 128 came out, it undeniably made Silicon Valley look friendlier and happier and made Route 128 look old-fashioned and uptight.) For example, on p. 630 the authors note:

For many of the key players in the global electronics industry, the motivation to belong to geographical clusters stems from a desire to control information flows between plants and to reduce spillovers, rather than from a desire to create new knowledge through a process of interactive learning.

This is a long a somewhat complex academic article, but it will reward close reading.

*Bell, Tracey, and Heide. 2009. The organization of regional clusters. Academy of Management Review, Vol. 34 No. 4, 623-642.

The New Yorker Cartoon Caption Contest

Since it was founded in the 1920s, the New Yorker magazine has been famous for its one-frame black and white cartoons, each with a single one-line caption published underneath. For the last few years, the magazine has gotten readers involved in the art of cartoon humor: it publishes a one-frame cartoon, without a caption, and invites readers to come up with funny captions and submit them. The funniest caption is selected by a panel of judges and published two weeks later.

Here’s a short article I wrote after interviewing a few recent winners of the contest, after being introduced to them by cartoon editor Bob Mankoff.

How do you win the New Yorker cartoon caption contest?  Even if you never plan to enter the contest, taking the question seriously may help answer a bigger question:  where do good ideas come from?

Maybe it’s like this—the proverbial light bulb moment.  You stare at the cartoon for a while, stumped, until a caption suddenly jumps up from your unconscious mind like Newton getting bonked by an apple and thinking  up gravity. But that’s not the way it usually happens—not with cartoon captions, and not with scientific or artistic breakthroughs, either.

I’m a psychologist who studies what goes on in the mind when you’re being creative.  I found that there’s a pattern to their creativity—and this pattern provides a window onto how all creativity works for scientists and inventors and for The New Yorker caption contest as well.

The first important discovery about creativity is that ideas emerge over time, from hard work and constant revision.  The “sudden flash of insight” is largely a myth. And the same goes for the cartoon caption contest: caption winners almost never have their ideas instantly.  They think hard about the cartoon, and they keep trying new ideas and work on improving their first ideas.  One winner, John Brouwer told me, “The caption came slowly. I felt my mind would crack.” Second, creativity takes preparation: training and constant effort to get better, or what the psychologist Anders Ericksson calls “deliberate practice.” You think about what’s working while you’re doing it, and you constantly aim to improve.

Many contest winners hone their abilities by entering the contest every week  and think hard about what captions  are effective : Todd Bearson  said, “I’ve probably gotten better by watching which captions end up winning, comparing them to what I wrote and learning what seems to work and not work.” Third, cartoon contest winners usually generate lots of captions.  Studies of creativity have shown that quantity breeds quality—what I call the productivity theory, because high productivity corresponds to high creativity.  When  the famous physicist Freeman Dyson was asked how to generate good ideas, he said, “Have a lot of ideas, then throw out the bad ones.”  Cartoon caption winners are no different. Colin Nissan  said, “Keep writing until one rises to the top.”

The fourth and final feature of creativity is perhaps the most surprising of all.  The creative insight seldom comes to lone geniuses who sequester themselves from society; on the contrary, conversation and social ties enhance creativity.  Contest winners tend to bounce ideas off of friends or family. Patricia Carrington  had her  idea while discussing the cartoon with her husband. Harry Effron while talking about the cartoon with his dad. John Kinde actually gets together every week with a “humor master-mind group” to brainstorm caption ideas.

In my own research, I’ve learned that creating with a group increases people’s creativity.  It works like a jazz ensemble—everyone’s ideas build on everyone else’s, and the improvised performance is created collectively by the entire group.  To collaborate, you don’t even have to be in the same room; creativity over time flows in an improvisational river. Think of all the cartoons that include the mythical figure of death carrying a scythe.  When you connect them over the years, you notice that each new “death” cartoon invokes and builds on all the others  in what amounts to is a collaboration over time.

Consider the fact that everyone who enters the caption contest is collaborating with the cartoonist.  The cartoonist launches the contest by generating an ambiguous cartoon, one that can be interpreted many different ways. This kind of ambiguity, the kind that opens up many future possibilities, often prompts innovation.  Sometimes the best ideas are the ones that inspire good ideas in others.

Superstar Extinction

How important is collaboration in scientific laboratories? A new paper by Pierre Azoulay, Joshua Graff Zivin, and Jialan Wang* studied what happens to research productivity when an academic “superstar” dies while they’re still actively engaged in scientific research. A superstar is a brilliant scientist who teams up with others to collaboratively conduct research and who co-authors with other scientists.

The researchers analyzed the coauthors of 137 eminent life scientists. On average, each superstar had 73 coauthors. (That number alone is astonishing, and shows how collaborative modern science is.)

Following the death of the superstar, his or her colleagues suffer a quality-adjusted decline in productivity of 8% to 18%. The authors found that this decline was lasting. Furthermore, the closer you collaborated with the superstar, the more your productivity declined. Their conclusion:

These findings are surprisingly homogenous across a wide range of coauthor and coauthor/superstar dyad characteristics. Together, they suggest that part of the scientific field embodied in the “invisible college” of coauthors working in that area dies along with the star — that the extinction of a star represents a genuine and irreplaceable loss of human capital.

As Azoulay said:

Our interpretation is that superstars infuse their scientific field with fresh ideas. They replenish it periodically and when they die, the entire field contracts so it’s really about their ideas and the effects of losing them are fairly broad and diffused.

*In press, Quarterly Journal of Economics

Design Thinking

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Change by Design, the long-awaited book by Tim Brown, CEO of IDEO, has just been published. And it’s getting a lot of press: it was excerpted in Business Week’s October 5, 2009 issue, and was reviewed in the Wall Street Journal on October 9, 2009 (“The shape of things to come”).

The book’s genesis dates back to a legendary article in the Harvard Business Review titled “Design Thinking.” It’s IDEO’s approach to innovation–to focus on “new ways of communicating and collaborating.” Designers have always done these things, using a toolkit that includes user observation, brainstorming, prototyping, storytelling, and scenario building. As Brown writes,

“Design” is no longer a discrete stylistic gesture thrown at a project just before it is handed off to marketing. The new approach taking shape in companies and organizations around the world moves design backward to the earliest stages of a product’s conception and forward to the last stages of its implementation–and beyond.

Something interesting happened a few years ago, when IDEO was asked to redesign the patient health care experience at Kaiser Permanente hospitals. IDEO had previously focused on product design, but was now being asked to apply its innovation methodology to a service organization. The result is now legendary (a famous business case has been written about the project) and the result is that “innovation and design thinking [have been introduced] across the Kaiser system.”

Yes, the iPhone looks beautiful and works well, and that’s the result of design thinking. But we’re not just talking about making cool things; we’re talking about changing the way we experience the world. As Brown writes, “In the process [designers] are helping to make our societies healthier, our businesses more profitable, and our own lives richer and more meaningful.”

Child’s Play

My first book was about children’s pretend play, and was called Pretend Play as Improvisation. It was based on my Ph.D. research at the University of Chicago, where I spent one year in a preschool classroom with 3, 4, and 5-year-olds. I was studying how unstructured social pretend play helped children learn conversational skills and social skills. At the same time, I was playing piano with an improv theater group, and I couldn’t help but notice that the children’s play was strikingly similar to my theater troupe’s performances. The children collaboratively created a fantasy play scenario, and it emerged improvisationally from their conversations.

Last Sunday’s New York Times Magazine* (Sep 27, 2009) has an article about a new preschool program called “Tools of the Mind”. The exciting thing about this program is that it coaches children to help them create more elaborate and sophisticated play scenarios: complex, extended scenarios that involve multiple children and last for hours. And the surprising thing about this program is that the researchers who created it, Deborah Leong and Elena Bodrova, argue that this kind of play leads to better self-regulation. And there’s a ton of research showing that increased self regulation is associated with better learning and stronger academic outcomes in primary school.

There are some pressures in some preschools to play less and to focus on academic content more. Tools of the Mind rejects that approach, and says that if you want better academic outcomes the best thing for children to do is engage in play. Why? Here’s where the creative improvisational nature of play is important: it’s simply not the case that “anything goes,” that children just do whatever they want. When a child pretends to be a daddy, he has to follow all of the rules associated with what “being a daddy” means. Of course, the children are still learning things like “how to enact a spaceman” and “how to enact a fireman,” and they often have different ideas about how to do it. So they end up negotiating with each other about how to play. And this negotiation gets them thinking about how to act and why.

Ultimately, group improvisation is an incredibly valuable learning experience for children.

*The Make-Believe Solution. By Paul Tough, pp. 31-35