Thursday, September 27, 2012

There Will Be Graphs: Part Five of a Series

By Evan D. Robertson. 

I’ve long believed that, at the end of the day, innovation occurs in place. Whether it’s a bar, R&D lab, college classroom, or tech incubator the ideation, the exchange, and the pursuit of an innovative idea must become existent at a specific place. However, one cannot escape the fact that the speed and ease at which we transmit ideas across a web of interconnecting fiber optic networks (endearingly referred to as “tubes” by some) has allowed individuals to exchange complex information with relative ease, potentially untying innovation from place.

For today’s blog, I sought to explore whether innovation remains attached to place, and what better business sector to explore this idea than telecommunications. After all, since this sector is ground zero for email, text, telephonic, and other electronic communications, shouldn’t they also be the early adopters of innovation by electronic communication?

What better region to give us insight into this question than Georgia’s Metro Atlanta region where we are currently working on a holistic, regional economic development strategy. As indicated during numerous public meetings, stakeholders frequently pointed to the region’s strength in the telecom sector and its strong fiber optic infrastructure as major assets to the community. However, Metro Atlanta’s strength in telecommunications transcends infrastructure, its telecom inventor network is second to none.

Metro Atlanta’s telecommunications inventors have produced 431 telephonic communication patents since 1979, more than any other metro area in the United States. Patent titles range from thrilling topics such as “call screening method and apparatus” to “methods, systems, and computer program products for rule-based direction of customer service calls.” As you may have guessed, these patents almost exclusively deal with the telephone. While this technology maybe on its way out, the question remains, are these telecommunications innovations researched and created in a place? Or, does the telephonic communications sector utilize a much diffuse network of inventors from across the nation, and even the world?

As with most of the initial social network analysis graphs, the first output is a little chaotic. The graph shows the connections (edges) between individual inventors of telephonic patents in Atlanta. The edges represent co-invention, inventors were said to be connected if they produced a patent with another inventor. The general order of the graph is that those inventors closer to the middle of the graph tend to be more “connected” than those towards the edges of the graph. Another way to view the initial graph is to calculate (electronically of course!) metrics that determine the overall structure and connectedness of the network.

As stated in last week’s blog, we can also identify the overall density of the network, that is, how connected inventors in Atlanta’s telephonic communication’s field are to other inventors in the network. The overall density of Atlanta’s telephonic inventors is fairly low (.0086), where 1.00 would equate to a world where every inventor connected to every other, and 0.00 is a network where none of the inventors are connected (i.e. not a social network).

The overall density is extremely low because, inventors of Atlanta’s telephonic communications patents are almost solely connected by where they are employed. That is, there are few connections in which inventors are connected across firm boundaries. An inventor working at AT&T tends not to co-invent patents with individuals from IBM (or, Sprint Communications). Those connections which transcend firm boundaries usually entail either individuals who spun off from the parent firm, or, in the case of Atlanta, was a byproduct of a major corporate merger. Thus, the most numerous inter-firm connections occur between AT&T and BellSouth, the latter of which was acquired by AT&T (formerly SBC Communications) in 2006.

The above graphic groups the individual inventors by their home firm. Since the data transcends a large period of time, home firm is defined as the last firm in which the inventor produced a patent. Two firms, AT&T and BellSouth, accounted for a large portion of the social network. Combined, these two firms produced 305 of the 431 telephonic communications patents between 1979 and August 2012. Or, roughly 71 percent of all patents of this class in the Atlanta metro area. Given the fact that patent production is dominated by two large firms, it should be no surprise that inventors in these firms are highly connected to one another and the broader social network.

The preceding graph filters out inventors with a low betweenness centrality (also described in last week’s blog) leaving those individuals who are highly connected within the social network. Betweenness centrality gives a general impression of how connected an inventor is within the context of the larger network. Filtering for a high betweenness centrality leaves only those individuals who are extremely connected, and serve as an important role of bridging other inventor groups within the social network. The results left only a few individuals from three different firms, BellSouth, AT&T, and Dono Technologies (a company with strong ties to AT&T).

Interesting also, is that AT&T has more individuals serving a network role. That is, there are more inventors acting as bridges between other inventor groups in AT&T than in its previous company BellSouth. This may indicate a shift in the way AT&T manages its inventor groups, pointing to a more fluid innovation structure. But, without actual interviews with AT&T inventors and managers, it’s hard to say whether this is actually the case.

Finally, only a handful of the 550 inventors that produced a telephonic communication patent in Atlanta were from outside the Metro Atlanta area. Those inventors that were from outside the Metro Atlanta area tended to be from non-local firms such as Sprint Communications (with connections to Overland Park, Kansas), and Research In Motion (via California and Toronto, Canada). Inventors who produced patents for AT&T and BellSouth, by and large, were from the Atlanta metro area. Some evidence, at least in Atlanta’s telephonic communications sector, that innovation has remained a regional affair.

To conclude this lengthy blog (bordering on treatise), social network analysis, while potentially time consuming, can give great insight into your local regional innovation system as well as how this innovation system has evolved over time. It can isolate those connections that are critical to a fully functional innovation system along with identifying external ties from outside the region that firms are reliant upon to produce a patent. If your region relies heavily on such ties, than it would be extremely helpful to understand how external forces shape patent production in your local area, and may potentially require you to forge close relationships with those regions that are crucial to the success of your innovation system. 

Tuesday, September 25, 2012

CEGNAs and the 2012 Election

By Ellen Cutter, Director of Research. 

How many young people do you know are stuck in a house they can’t sell, underwater on their mortgage, unemployed, underemployed, living with their folks or with roommates (when they’d rather not be), saddled with educational debt, or are just too jaded for being 20, 25, or 35 years old? It seems like the Great Recession sapped not only jobs and savings, but the optimism of my generation as well.

Student loan debt in the U.S. recently passed $1 trillion – that is more than the market value of taxable properties in all of New York City. Even as other forms of debt continue shrink, student loan debt grows quarter after quarter. According to a recent analysis by Bloomberg Businessweek, this debt affects everything. Consider the following:

  • 40% of young borrowers delayed a major purchase
  • 27% of young borrowers moved in with parents
  • 27% of graduates who took out loans are behind on their payments
  • 24% of students say debts have affected career choices
  • 14% of young borrowers delayed marriage

As Romney’s campaign seemingly makes one flub after another, Obama has pulled ahead in the polls. Yet, there’s one group that could be a fly in the ointment for the President.

In August, I heard author and pollster John Zogby give his two cents on the demographic groups that could win or lose the election for each candidate. One of the fascinating predictions he had was the power that so-called CEGNAs would have in determining the outcome. Who are the CEGNAs? They are the “college educated, not going anywhere” demographic. According to Zogby, 66 percent of 18-34 year olds supported Obama in 2008 and they represented 19 percent of the vote. The CEGNAs are a subgroup that have emerged in recent years and, according to Zogby, have an across the board lack of confidence in cornerstone civic institutions like government and church. Frustrated with the promises of change, continuing economic uncertainty, and the resulting personal stagnation in their own lives, CEGNAs tend to poll with greater support for libertarians, like Ron Paul and Gary Johnson. Because of this, Zogby noted that the President’s lead among younger voters could be less secure than in 2008.

However, Zogby’s latest polls show Obama up by 36 points among 18-29 year olds and up by 11 points among 30-49 year olds. As others have wondered, have Romney’s various comments these last few weeks, from dissing the London Olympics to telling young people to borrow money from their parents to start a business or go to college fallen more than a little flat with younger voters?

Regardless of which candidate wins the election, the emergence of the CEGNAs and hopelessness among young adults is a real issue. A sizable portion of an entire generation (my generation) is being left behind. Worse, many wear a yoke of tremendous student loan debt around their necks, which makes personal wealth creation an even more challenging, longer term proposition. If we don’t figure this out, Generation Y might more aptly be called Generation Why Me.                

Friday, September 21, 2012

There Will Be Graphs: Part Four of a Series

By: Evan D. Robertson, Project Associate.

So far this series has used social network analysis techniques to analyze a variety of different economic data sets that are decidedly not social networks. The next few parts of this series will transition to using social network analysis for its intended purpose, to examine social networks. Before delving into social networks crucial to our local economy, it seems prudent to give a brief introduction into the concepts underpinning social network analysis.

At its most basic components a social network is comprised of actors and relational ties. An actor is an individual within a social network while a relational tie is something that connects two or more actors together. While networks can become increasingly complex as you add more actors into the analysis, it is important to keep in mind the simple composition of the network, a social network merely represents connections between individuals. Or rather, it is an elaborate game of connect-the-dots. However, to handle the increasingly large nature of these data sets social scientists have added a myriad of terms and analysis techniques to simplify their investigations. We’ll go through a few of these now, but first a graph!

The preceding graph represents a fictitious social network. The network is composed of seven actors (also called vertices) with eight rational relations (also called edges). The actors are arranged in two cliques highlighted in the following way: Clique 1 indicated by blue squares and Clique 2 represented by lime green circles. A clique is a subgroup of actors who are all directly connected to one another and no additional member exists who is also connected to all members of the clique.* Think high school, with the various groups coalescing in the halls. The clique used by social network analysts and the clique that we intuitively know is nearly the same. Another important concept shown in the graph is the network bridge, displayed by the red triangle. This individual, fictitious as he or she is, plays a pivotal role within the social network.

The network bridge plays a vital connecting role within the context of the social network. For example, let’s imagine that the above network represented a group of doctors attempting to cure a disease of a patient. The two cliques might then represent two different specialty groups that need to communicate with one another in order to diagnose an illness. The network bridge would represent the patient’s primary doctor coordinating the patient’s care by relaying information between both specialty groups. Without this connection, this network bridge, the two different specialty cliques will almost invariably (as has been my experience) come up with two different illnesses plaguing the patient. The diagnoses would almost inevitably be related to the specialist’s area of expertise. If the clique is a group of Nephrologists then something is wrong with your kidneys, if they happen to be Neurologists then it’s all in your head.

While the example network is composed of a relatively few number of actors, most social networks consist of a much larger number of people with a myriad of connections between them. For instance, Facebook had 955 million active users at the end of July 2012. Attempting to understand this social network (i.e. individuals who use Facebook) would be a complex task, especially if you were trying to develop conclusions about the Facebook community. Social network analysts have developed a few tools to describe and generalize large social networks.

Density and betweenness centrality are two measures aimed at inferring the overall structure of the social network as well as the importance of individual actors within the boarder social context. Network density measures the connectedness between all actors in a social network. The above graph has a network density of 0.38 where a value of 1.00 would indicate that every individual is connected to every other individual and a value of 0.00 would have indicate that all the actors in the social network aren’t connected to one another. Thus, the overall structure of our example network is rather divided since less than half of the networks total possible connections have been made.

Whereas density measures the overall structure of the social network, betweenness centrality measures the position of an individual actor in the network. More specifically, betweenness centrality is the degree to which an individual is able to tie various actors in the social network together. The network bridge, highlighted by the red triangle above, has a high betweenness centrality (9.00) compared to other individuals in the social network because he or she links two cliques together, thus, all actors in either clique must go through this individual first in order to communicate with members of the other clique.

No matter how large a social network can get (say one-seventh of the world’s population), the tools for analyzing a social network and the concepts behind the analysis are relatively straight forward. You have individuals (actors), you have the connection between actors (relational ties), and you have tools to measure the overall connectedness of the network (density) and an individual’s connectedness in the overall network (betweenness centrality). With this in mind, the following blogs will utilize these concepts and tools to draw conclusions regarding various social networks.

* Hawe, P., Webster, C., and Shiell, A. (2004). A Glossary of Terms for Navigating the Field of Social Network Analysis. Journal of Epidemiology and Community Health, 58 (12), 971-975.                

Wednesday, September 19, 2012

A State of the Arts Event

By Alex Pearlstein, Director of Projects.

As I’ve mentioned often, it’s tough for a community to get the word out about its competitive assets and advantages in the cacophonous world of modern media and multi-platform marketing. Only a few places – most notably, Las Vegas – have really entered the national mindset via a community-focused marketing campaign. This includes major population centers and high-profile regions with built-in name recognition. What can a small to mid-sized community possibly do to get its brand out there and capture the attention of companies and talent? One answer is to think outside the traditional boundaries of what constitutes “marketing” and develop something awesome that may or may not ever result in a spike in external perception. At the end of the day, you might just have another cool thing for locals (or folks in adjacent communities) to do, and that ain’t nothing.

What I’m thinking of specifically in terms of this topic is an event called ArtPrize in Grand Rapids, Michigan.  This is the fourth year of the competition, which involves the placement of art pieces in various venues in Downtown Grand Rapids (the details are all worked out between the artists and venues themselves) for viewing by the public. At the end of the competition, the public votes on their favorite art installation and the winning artist gets a couple hundred thousand dollars in prize money. Over 1,500 artists from 39 states and 46 countries will be showing their work in more than 160 venues for this year’s ArtPrize. Even better, over 300,000 visitors will likely head to Downtown Grand Rapids to view the art during the two-week-plus competition.

Analysts have estimated the economic impact on Grand Rapids’ economy from ArtPrize at around $15 million. What’s almost more important – and something you can’t put a price tag on – is the national and international attention the contest has drawn to Grand Rapids. Akron, Brooklyn, and Los Angeles are just three of the communities that have launched their own versions of ArtPrize.

A caveat here… ArtPrize was founded and funded by a scion of a local billionaire; most communities cannot count on such largess to advance their attempts to do something awesome and become known for it. So why not start small and build from there? Or so something online that’s less cost-prohibitive. Or leverage social media to make an impact (another Grand Rapids effort I’ve blogged about before, the Grand Rapids LipDub, fits into this category).

Bottom line – you are not going to get people’s attention about your community in the traditional ways anymore. Sure, site selectors will probably find you if your competitive dynamics are right and your website is effective. But grabbing the eyeballs and earlobes of John and Jane Skilledperson or an entrepreneur looking for the right place to launch his or her cool new tech startup will take some moxie, creativity, persistence, and, yes, funding to accomplish. The ultimate “prize” will be sustained the success of your economy, residents, and businesses.

Thursday, September 13, 2012

More Proof that Education is Vital

By Ranada Robinson, Senior Project Associate.

How many times have you heard that education is vital to getting a good job? How many times have you heard that in this day and age, a person needs at least an undergraduate degree to make it? Well, a new report from the Brookings Institute provides more evidence that these assertions are true.

Key findings include:

  • Metro areas with higher levels of educational attainment have experienced lower unemployment rates.
  • There are a lot fewer job openings for the average unemployed worker with a high school diploma or less than there are for the average unemployed worker with a college degree or higher.
  • Across the board, (understandably due to the Great Recession) there are fewer job openings for the average unemployed worker regardless of educational attainment in 2011 than there were in 2007.
  • The increase in supply of highly educated workers lags behind the increase in demand for those workers.
  • Metro areas with larger education gaps have experienced lower rates of both job openings and job creation.

These statistics just underscore the importance of evaluating workforce development and the talent pipeline in communities in which we work. Here at Market Street, when we assess the competitiveness of a community, we include indicators such as educational attainment, number of degrees conferred, the types of degree and certificate programs available, high school programs that guide students into fields that support the existing job base in the community, workforce development programs available (which may include retraining programs for workers who need to shift their skill sets), and even what we call workforce sustainability—where we look at the ratio of young professionals (25-34) to experienced professionals nearing retirement (55-64) in a given business sector. Communities have to be cognizant of what it takes to not only attract and retain workers with the skills needed to perform the jobs present in that community, but to also be proactive in developing homegrown talent. Now, more than ever, we need to make sure that the supply of workers better match the demand for them.                

Tuesday, September 11, 2012

In Which We Tell Manufacturing’s Future

By Matt Tester, Project Manager.

Have you heard? Manufacturing is the future. No wait, it’s the past. It’s definitely still going to China. Oops, I mean it’s coming back to the U.S. Well, only high-tech producers can make it here. That is, unless it’s a product with a short shelf life. Yeah, but…you see…it’s…well…uhh…impossible to bottle in a sound bite.

Let me now shock you with the revelation that no grand, unified prediction for manufacturing is forthcoming – this post will disappoint those devoted readers (Mom?) who bought the title. The enigma that is manufacturing in the American economic landscape has too many facets and too many caveats for a single theory. Instead, let me just point you toward some of the most interesting developments shaking up the sector:

Robots! My colleague Ellen Cutter has already blogged about this one, but it’s one of those stories that seems like it could change everything. There is a new breed of robots being installed in factories and warehouses all over the country, and they are so fast, precise, and versatile that human skills are being encroached upon at an unprecedented pace. Increased automation could play to an American competitive advantage in the sector, but it could also marginalize factory workers without advanced degrees. Naturally, experts disagree on the limitations of robotics and the prognosis for the American industrial worker, but none are ignoring the ascension of new robotics.

Story: Skilled Work, Without the Worker (The New York Times)

Solar Panels! After the high-profile bankruptcy in 2011 of Solyndra and a flurry of articles on the downturn in solar panel production, the future of the industry in the U.S. has seemed dismal. Low-cost Chinese competitors have been dominating the market, crippling many American and European companies. However, the winds may be changing. Accusing China of selling subsidized solar panels below the cost of production (“dumping”), American and European governments are moving to level the playing field – imposing antidumping and anti-subsidy tariffs on Chinese solar panels. Recent evidence suggests that Chinese competitors cannot sustain high volume, low-cost production indefinitely – China’s largest solar panel manufacturers are struggling, with some reporting a loss in the most recent quarter. As costs rise and solar installations continue at an unprecedented pace, American companies may be the beneficiaries.

Story: U.S. Slaps High Tariffs on Chinese Solar Panels (The New York Times)

Story: U.S. Solar Installs More Than Doubled in Second Quarter (Bloomberg Businessweek)

Printed Cars! Since happening upon an article in the Economist earlier this year on disruptive potential of “additive manufacturing,” I’ve been keeping an eye on this emerging field. Additive manufacturing, also known as 3D printing, is a process that uses a materials printer to make three dimensional objects. As in, using a machine to print your stapler. The capabilities of 3D printers have rapidly expanded over the last twenty years, and the technology seems to be moving closer and closer to large-scale production facilities. The potential applications are almost limitless. Both the White House and the Department of Defense have taken notice, and jointly launched the National Additive Manufacturing Innovation Institute last month. If you’re looking for innovation, keep your eyes on this field.

Tuesday, September 4, 2012

College football is back, but that’s not the whole story

By Jonathan Miller, Project Associate.

Finally, college football is back! The season for questionable body-paint decisions and flying team colors from moving vehicles, is officially upon us. College students and alumni across the nation will be flung into an exciting season where anything can happen. However, while many beers and cheers may suggest that football is king on campus, it is clear that universities are choosing a different starter – R&D.

Having gone to an SEC school (Anchor down!) the conference has a special place in my heart. The following table shows SEC universities, by division, with their corresponding per student expenditures on research and development and football.


Source: Equity in Athletics Data, U.S. Department of Education; AUTM U.S. Licensing Activity Survey, 2010

The overarching story is that even though SEC schools are known for their athletics, every school spends more on research and development than on football. On a per student basis, Vanderbilt expenditures on both research and development ($72,161) and football ($2,423) are the largest of all SEC schools. The only other school with football expenditures exceeding $2,000 per student is Auburn, and they won the national championship in 2010 (the year of the data). The University of Alabama has the most parity between per student R&D and football expenditures, with R&D about three times as high as per student expenditures (Auburn had the largest football expenditure in 2010 in the SEC, $39 million).

Just so my colleagues who also attended Division I FBS schools don’t feel left out, the following shows the corresponding figures for Georgia Tech, University of North Carolina – Chapel Hill, and Florida State.


Source: Equity in Athletics Data, U.S. Department of Education; AUTM U.S. Licensing Activity Survey, 2010

The economic development implications of R&D and football expenditures underscore the importance of universities in economic development. University spending on R&D is integral to American innovation, technology commercialization, and creation of new economic opportunities. Cities and towns that have universities are much more able to attract knowledge-intensive companies and talented workers. University spending on football, while having fewer national implications, improves quality of life, strengthens community, and attracts droves of people each year. The economic stimulus from nonresident dollars sustains many small operations through a consistent customer base.

So, even though those in the lab may not wear pads or team colors, let’s be sure to give them a shout – and then head to the stadium.