The Smartest Places on Earth

Why Rustbelts Are the Emerging Hotspots of Global Innovation

Antoine van Agtmael and Fred Bakker

Copyright 2016 by Antoine van Agtmael and Fred Bakker
310 pages
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Rating Take-Aways

8
8 Importance • Rust belt towns can revive themselves by becoming “brainbelts” – hubs of innovation
and “smart manufacturing.”
9 Innovation
8 Style • Transforming a rust belt into a brainbelt requires at least one college or university.
• “Brainsharing ecosystems” produce products and technologies using robotics, 3D
printing, the Internet of Things and other advances.
 
Focus • These collaborative ecosystems foster the creation of “smartfactories.”

• Albany, New York, became a brainbelt for developing “chips and sensors.”
Leadership & Management
Strategy • Akron, Ohio’s history of tire manufacturing led to its success as a “new materials”
Sales & Marketing
brainbelt.
Finance • Wearable sensors and advanced medical devices developed in Minneapolis, Minnesota,
Human Resources are changing life sciences such as biotechnology.
IT, Production & Logistics
• Measuring a brainbelt’s viability and productivity will require developing new metrics.
Career & Self-Development
Small Business • The United States needs a national set of “innovation guidelines.”
Economics & Politics
Industries
Global Business
Concepts & Trends

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getabstract

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Relevance
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What You Will Learn
In this summary, you will learn:r1) How failing rust belt towns can become revived “brainbelt” towns instead, 2) What
types of collaboration yield successful innovation and revitalization, and 3) What stakeholders should consider before
embarking on a brainsharing project.
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Recommendation
Residents can transform languishing rust belt towns into thriving hubs of innovation, according to authors Antoine
van Agtmael and Fred Bakker. They depict communities worn down by economic decline that reinvent and
revive themselves as “brainbelts.” Community leaders and those who provide adjunct services – attorneys, cultural
resources, designers, marketers and investors – will appreciate these local sagas. Inquisitive readers should flip back
to the “notes” section, where the authors include data and background materials. This insightful guide is a big hand up
for anyone who believes in the productivity of the “multidisciplinary sharing of brainpower,” including entrepreneurs,
inventors, higher education administrators, local government officials, and managers or owners of established and
start-up companies.
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Summary
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Of Rust Belts and “Brainbelts”
The town of Akron, Ohio, once the world leader in tire manufacturing, suffered as jobs
moved overseas. It became a rust belt town, one of many declining “former industrial
citadels…hit hard by offshoring.”
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“In every brainbelt
and innovation zone… To revitalize its commercial life, Akron launched a major turnaround, becoming a hub for
we caught glimpses of
the new way of making
polymers and new materials. Akron now boasts 10,000 manufacturing businesses, including
things: smart, fast, 1,000 start-ups, that employ more people than the four major tire producers did during the
cheap, customized, city’s glory days.
creative, complex,
amazing.”
getabstract Akron and other towns and regions in the United States and Europe have become “centers of
innovation and smart manufacturing" called "brainbelts.” Each one demonstrates practices
and principles other regions can adopt and tailor to their own strengths to re-emerge on
the global stage. “Brainsharing ecosystems” can revitalize stale areas and generate income,
jobs and positive attention.
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“The brainbelt Brainbelts are tightly knit ecosystems that “involve specialized technical research and high
phenomenon involved
connecting people complexity.” Each focuses on a single – or just a few – economic goals and builds a culture
in a new process of sharing. The presence of universities differentiates brainbelts from “industrial clusters.”
(brainsharing) as
well as connecting the For example, Rensselaer Polytechnic Institute is a crucial partner in the Hudson Tech Valley
digital world of IT, data brainbelt in the Albany, New York area. Its companies focus on the semiconductor industry,
analytics and wireless
communications with using contemporary technology to gather an abundance of data and working together to
new and old ways of make the most of it.
‘making things’ to
create new technologies
and products (smart Each cohesive brainbelt has a “connector” who unites its participants. Luis Proenza, then
production).” president of the University of Akron, was the connector in Northeast Ohio. When he came
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to the university in 1999, he wrote visionary plans for economic development. He tapped
the area’s existing base of knowledge about rubber, synthetics and steel, and he united the

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 region’s universities, hospitals, businesses and government agencies to create successful
polymer industry initiatives.
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Companies cite “Smart Manufacturing”
“another important
reason…for the move Smart manufacturing, another essential component of a brainbelt’s success, depends on
toward collaboration robotics, the Internet of Things and 3D printing. The robotics industry is entering a
with outside partners:
to keep abreast of generation of versatile, affordable customization and automation. Rodney Brooks, founder
what is happening of Rethinking Robotics and a former MIT professor, designed Baxter, a versatile “humanoid
in their industry and
in adjacent fields of robot.” Baxter’s $22,000 purchase price and 6,500-hour work capacity make it and other
activity.” “smart robots” affordable options for small businesses. The Internet of Things – built on
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the interconnectedness of suppliers, producers, customers and products – can reduce waste,
increase productivity and speed up production.

The growth of 3D printing – or “additive manufacturing" – reduces waste and enables

people to produce prototypes and components. “Digital design” templates guide these
machines as they stack layers of material to make three-dimensional objects without seams
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“We should focus on or weak points. This process may eventually enable the “microfabrication” of ultra-precise
the emerging skills products customized for multiple uses in medicine, in heavy industry and across multiple
gap and the growing
demand for workers fields.
with strengths in the
STEM – science,
technology, engineering “Smart matters” beyond revitalized cities and manufacturing. Agriculture, for example,
and math – areas.” could benefit from collaborative efforts to improve its productivity, sustainability and
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energy efficiency. Smart manufacturing can lead to improved technology and products in
three main fields:

1. “Chips and Sensors”

SUNY Polytechnic Institute president Alain Kaloyeros is the connector for the Albany area
brainbelt, which focuses on semiconductors. He spearheaded the founding of its NanoTech
getabstract Complex, an “advanced research campus,” to help the United States challenge Asia as the
“Smart products world’s primary chipmaker. Kaloyeros also created the Global 450 Consortium, uniting
developed through
brainsharing are…more companies such as Nikon, Samsung and Intel to bring next-stage research efforts to Albany.
likely to offer solutions Working with angel investors, this incubator helps launch start-ups. Its regional impact
than those created by
entities working in
includes the GlobalFoundries (GF) semiconductor facility in nearby Malta, New York. GF’s
traditional, siloed and 3,000-plus employees earn an average salary of about $90,000. GlobalFoundries also has
isolated models.” facilities in another brainbelt – Dresden, Germany’s Silicon Saxony.
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2. “New Materials Development”

A brainbelt grew in the towns of Lund and Malmö, Sweden, thanks to Nils Hörjel, then
governor of the southern part of the country. In the early 1980s, with shipbuilding and other
industry in decline, Hörjel envisioned a park – now called Ideon – where a university and
corporations would work together on research and business development. He secured the
academic involvement of Lund University, brought in corporations and gained financial
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support from IKEA founder Ingvar Kamprad. Eindhoven in the Netherlands and Research
“Smart innovation, Triangle Park in the Raleigh-Durham-Chapel Hill area of North Carolina join Akron and
rather than cheap other brainbelts that focus on new materials.
labor, would be the key
competitive edge.”
getabstract 3. “Bioscience and Medical Devices”
The Minneapolis, Minnesota, area became a brainbelt in life sciences, encompassing
medical devices and biotechnology. Pacemaker manufacturer Medtronic – as well as
individual doctors, investors and researchers – drove the region’s success. The “father of
open-heart surgery,” Dr. C. Walton Lillehei and electrical engineer Earl Bakken developed

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 a prototype of the pacemaker in 1958, following a period when National Institutes of Health
(NIH) funding for research into heart disease created a crop of “entrepreneurial doctors.”

getabstract Medtronic, founded in 1949, eventually formed a partnership with the University of
“Unlike the low-
cost, just-in-time Minnesota (UMN). The two organizations developed various devices, such as an insulin
factories of the past pump, through the UMN’s Medical Devices Center. Their partnership anchored the
several decades, smart
manufacturing focuses incubation of similar businesses near Minneapolis, where the number of life-sciences
on customization, companies grew from 450 in 2000 to 2,500 in 2014. Former researchers at Medtronic went
localization, complexity
and quality.” on to found St. Jude (the world’s largest heart-valve company) and Cardiac Pacemakers.
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Portland, Oregon, home of the Knight Cancer Institute and research center, is a bioscience
brainbelt success. The state’s $4 billion bioscience industry employs 15,000 people, about
40% of whom work in the field of medical instruments. Charles Weissmann, the academic
and entrepreneur who founded Biogen in 1978, served as the connector who helped spawn
the Zurich, Switzerland, bioscience brainbelt. Its collaborating organizations include the
Swiss Federal Institute of Technology.
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“Factories can be
small, clean and Brainbelt Characteristics
great places to
work for people Brainbelts evolve uniquely, with distinct participants, relationships, support and outcomes.
with creative minds, They share nine traits that help them develop and thrive:
genuine contributors
to a positive urban
environment.” 1. Brainbelts address “complex, multidisciplinary and expensive challenges” –
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Contrary to the concept that innovation comes from geeks in garages or from solitary
wunderkinds, brainbelts take on tasks that are too unwieldy for a single firm or person.
2. A connector drives the group – The connector is usually an individual, but can
be a group. A connector launches a project by infusing the brainbelt with energy,
vision, diplomacy, networking and relationship building. The connector’s working style
influences the growth of the brainbelt.
3. The “collaborative ecosystem” relies on a network of contributors – Research
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“The medical-device universities often form the core of these alliances. Other participants include established
industry would not exist and start-up businesses, governmental agencies, vocational schools, community
without the sharing of
brainpower between
colleges, and teaching hospitals or related health care groups.
top-notch universities 4. “Focus” is essential – A brainbelt usually targets a single activity or sector.
and world-renowned 5. Each participating body shares knowledge – Participants foster openness by knocking
hospitals.”
getabstract down walls and breaking silos to dissolve the traditional walls between industry and
academia or even among areas of academic focus.
6. “Physical centers” provide a central location that facilitates collaboration – Towns
often establish incubators and start-up spaces in renovated warehouses or factories.
7. A brainbelt creates “a magnet for talent” – The area pairs local business and
institutions with attractive “nonwork” resources, such as quality schools, viable housing,
and dining and entertainment offerings.
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“Utility companies 8. Brainbelts “have capital available” – Towns need money on hand for initial
will…have to re- investments in “start-ups and spin-offs…facilities and incubators.”
evaluate their missions,
structures and
9. The leaders of each center understand their area’s past economic hardships –
processes…to survive Brainbelts arise in regions that have been hit hard economically in the past. Participants
in a world in which recognize that threats may arise again and create brainbelts to foster economic stability.
their consumers are
also their business
partners.” The Resources of Your Region
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Globally, almost all countries have “a set of innovation guidelines and objectives,” designed
to support and promote innovation. Surprisingly, the US lacks such a policy. An attempt at
crafting a national innovation policy foundered, despite support from the National Science

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 Foundation, the 2012 Presidential Task Force on Advanced Manufacturing, think tanks and
federal agencies. However, “while Congress dithered and debated over policy, governors
and mayors found ways to take action on their own, supporting innovation initiatives in
their states and cities, and collaborating across party lines.” As state and local agencies
took up the reins to knock down barriers to innovation, the US federal government did
support initiatives to develop the Internet, the space program, transistors, robots and other
innovative technologies. Ideally, a national-level framework would:
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“Tolerance of failure
is necessary to • “Develop guidelines and articulate best practices” so local areas can welcome
the brainsharing
approach to technology brainsharing ecosystems.
innovation.” • Offer “incentives and rewards” for organizations that use collaborative and
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interdisciplinary techniques to develop technology and services.
• Foster and enable public-private partnerships.
• Give funding preference to “open innovation platforms.”
• Transform rust belt areas, facilities and infrastructure into “innovation districts” by
providing fiscal support, incentives and knowledge.
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“New technologies • “Remove regulatory barriers.”
are bringing the once- • Provide awards and praise to recognize brainbelts that share knowledge and smart
separate worlds of
product design and manufacturing techniques.
planning, production
engineering and
execution, and services New Metrics
together in exciting Measuring the success of brainbelts may require developing new metrics. For example,
ways.” (Siemens
Industry Sector North
when you buy a coffee, your purchase has a known price. But if you perform a web search,
America CEO Helmuth that action doesn’t have a price and can’t be measured – even though you value what you
Ludwig) learn. This is one manifestation of the “productivity paradox” – the disconnection between
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investment in IT and its output. Such outcomes as improved materials, waste reduction,
fresh discoveries and the growth of local talent represent a “residual value” that’s hard to
getabstract measure but provides the real benefits of innovation. A qualitative approach to measuring
“The members of
a brainbelt form a brainbelt’s success would consider such factors as areas of specialization, levels of
connected ecosystems collaboration, incubator success rates, integration of the “local supply-value chain,” and the
for a very particular
reason: to take on viability and density of start-ups and spin-offs. Academic considerations include university
complex and often licensing activity, research funding and corporate support.
expensive challenges
that demand a
multidisciplinary Whether you’re working in a brainbelt or want to foster one in your local region, consider
approach and cannot be how you can develop or expand a framework that supports innovation. Providing brainbelt-
handled by any single
player alone.” level education and job training requires a new approach, like new ways of pairing job
getabstract seekers’ abilities with skills new workplaces need. This may include community college or
university programs or on-the-job training. The ability to secure government allocations,
venture capital or other private funding is another important measure of success. A
developing brainbelt’s future relies on innovative, effective use of “talent, knowledge, ideas
and new technologies."
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About the Authors
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Antoine van Agtmael, the principal founder and CEO of Emerging Markets Management, is now senior adviser at
the public policy firm Garten Rothkopf. He coined the phrase “emerging markets.” Fred Bakker recently retired
from the Dutch financial newspaper Het Financieele Dagblad, where he was deputy editor, editor in chief and CEO.

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