Why proximity matters for innovation

Despite the proliferation and ease of Internet-based communication tools, experts say geographic proximity remains vital for the growth of regional industries.
Written by Christina Hernandez Sherwood, Contributing Writer

One San Diego business launched after two acquaintances chatted over drinks during a football game. Another was formed by parents who met through their children's school. As the community and its entrepreneurs thrived on real-world -- rather than online -- interactions, several local business owners sought to make regional connections even stronger.

They launched the non-profit San Diego Sports Innovators to help turn local links into successful companies. The networking group helps fledgling sports inventors -- more than 40 since 2010 -- grow their businesses by connecting them with mentors. "It's just the nature of life," said John Sarkisian, a board member of the nonprofit and the chief executive of a sports training equipment manufacturer. "It's those chance encounters that don't happen over Skype."

San Diego is hardly the first region to be known as an industry hub: California's Silicon Valley is synonymous with technology companies. Detroit is ground zero for all things automotive. And Los Angeles is the capital of cinema. These and other regional industries across the United States, where success seemed dependent on close proximity to collaborators, got their starts long before the dawn of the Internet Age.

But even now, when face-to-face interactions with far-flung colleagues are as simple as saying "Skype," experts say geographic proximity is still important to the growth and development of regional industries. Even newer networks, such as the burgeoning sports equipment industry in San Diego, depend at least partially on the nearness of innovators.

"As much as [online] communication makes the world a lot smaller," Sarkisian said, "business is still done face to face."

On the other side of the U.S., in New York, Cornell University is preparing for the construction of a new $2 billion engineering campus in Manhattan. Details of the plan focus on keeping key players local. To immediately attract young innovators to the city, the program will begin offering classes this year -- five years before the campus is complete. The plan includes $150 million for start-ups that stay in the city for three years. And the city estimated the new campus would lead to the creation of 600 new companies over the next 30 years.

Despite the ubiquity of the Internet and social networks, why does geographic proximity remain a key factor in innovation? The answers can be found by studying regions that defined American industry: the Silicon Valley, the Motor City and Hollywood, said Stuart Leslie, professor of the history of science and technology at Johns Hopkins University. What led the word Hollywood to become synonymous with films? "It reached a critical mass of small, medium and large-size [movie] companies faster than anyone else," Leslie said.

In the early days of Silicon Valley, Leslie said, the biggest misconception was that Stanford University built the cluster of tech companies. While the proximity to Stanford and its academic programs helped the start-ups, he said, the university didn't create the regional tech industry. Instead, smaller tech companies were drawn to the Silicon Valley -- even before the region got its nickname -- by the success of others. Hewlett-Packard and other microwave companies were flourishing without being overshadowed by larger corporations, Leslie said, and benefiting from the collaboration with other small businesses.

"You can't know everything, and you can't hire everyone who knows everything," he said, "but if you can tap into a network of people, you're a lot smarter."

Once a critical mass of companies in a particular field is located in one region, Leslie said, their rivals aren't sure they'll succeed elsewhere. Silicon Valley "became a place where everybody had to have some presence."


Decades after the birth of Silicon Valley, a Harvard professor set out to determine just how much geographic proximity matters to collaboration. Isaac Kohane, who teaches health sciences and technology, was alarmed when a Harvard dean proposed splitting up his research group at different campus locations. The dean's reasoning: computer scientists didn't need to be next to each other to communicate. When the dean challenged Kohane to prove the importance of proximity, the professor launched a new study.

Kohane's team analyzed 35,000 research articles, pinpointing the locations of thousands of authors and calculating how many times their papers were cited by others. When research concluded in 2010, the team reached a surprising conclusion: despite the study being conducted firmly within the Internet era, the ease of online connectivity didn't seem to matter to a paper's success. Researchers found that the shorter the distance between a paper's first and last authors, the more frequently the research was cited. "The closer they were," Kohane said, "the more impactful their publication was."

Geographic proximity was deemed important to collaboration and innovation -- but why? One reason, Kohane said, might be the comfort level that comes from regular face-to-face interaction with colleagues.

But a more important component might also be at work. "The closer you are to one another, the more likely you are to talk to each other in non-regimented, non-orchestrated moments," Kohane said. Arranged meetings are generally focused on a specific agenda, he said, rather than on brainstorming and generating innovative ideas. "A lot of the interesting ideas happen during conversations when there's no agenda."

Leslie, who studied the Silicon Valley, agreed. One of the reasons Google has such an attractive cafeteria, he said, is to encourage face-to-face chats among employees. "There's a lot to be said for talking to someone serendipitously," he said. "There's an awful lot of talk that goes on at little restaurants."


In-person communication is integral to Sarkisian's business, SKLZ (pronounced "skills"), which creates products and programs to improve athletic performance. Sarkisian encourages East Coast inventors to visit SKLZ in San Diego and he sends company representatives to meet with collaborators in Asia. "As much as I could do videoconferencing," he said, "I still need people face to face with our factories and partners overseas."

As Sarkisian built his business on the strength of local connections, the San Diego area was solidifying its position as a region key to the sports industry. As the home of the triathalon and with its enviable climate, San Diego "is a great place to be if you're active," Sarkisian said.

"Companies focused on endurance sports are now based in San Diego. A lot of professional athletes are making San Diego their second home," he said. Once innovators start frequenting the same local restaurants and chatting with the same people, "you get all those synergies starting to happen inside one community."

Businesses can learn how to make their work environments more innovation friendly, Kohane said. On widespread campuses like Harvard, teams that need to collaborate should be in the same building. Managers should determine which employees are important to keep together. "Who are the equivalents of the first author and the last author in the enterprise?" Kohane said. "Is it the CEO and her lieutenants?"

Geographic proximity -- even with the tools of the Internet -- is especially important when the collaboration focuses on innovation and problem solving, Kohane said. "Right now, social networking is about chat and sharing interesting Web sites and talking about various events," he said. "It doesn't have this impromptu interaction that you find in a very relaxed, water-cooler kind of setting."

For Leslie, the problem with online communication replacing face-to-face chats is that it leaves out the possibility of finding what you didn't know you wanted. "When you're searching [online], you already have an idea of what you're looking for," he said. "When it's serendipitous, you don't."

Leslie isn't sure if planned industry centers like Cornell's engineering campus will be as successful as those that have grown organically. "The market usually knows better than a government or university," he said.

The next innovation to watch is the evolution of the regional industry model as Internet communication catches up. The next great place, Leslie said, will be built on some other model better suited to the network -- perhaps a virtual space that connects us in ways we can't yet fathom. No one has yet explored in practice the idea of a virtual science region or city.

"That's where I would look for the next innovative space," he said. "We don't know yet what its virtual geography will look like."

Illustration: Relatedness of places as similarity of hue, San Francisco Bay Area. Based on original by Eric Fischer.

This post was originally published on Smartplanet.com

Editorial standards