Size mattersOn his blog, Richard Florida has passed along a very compelling concept from the Santa Fe Institute published in Harvard Business Review's breakthrough ideas of 2007. It makes a great case for why city size - and therefore growth - matters. Here are the key quotes/excerpts:
"By almost any measure, the larger a city’s population, the greater the innovation and wealth creation per person."Lessons?
Executives talk about their companies’ “DNA” and roles in “business ecosystems,” but the analogy to living organisms is more than metaphorical. Like the mathematical laws governing how organisms’ metabolism, growth, evolution, and mortality depend on size, there are rules that appear to govern the growth, performance, and even decline of cities and other social organizations. Although we can’t yet predict how specific cities or companies will evolve, we’ve found general mathematical relationships between population size, innovation, and wealth creation that may have important implications for growth strategy in organizations.
In biology, different species are in many ways scaled versions of one another. Bacteria, mice, elephants, sequoias, and blue whales may look different, but most of their fundamental characteristics, including energy and resource use, genome length, and life span, follow simple mathematical rules. These take the form of so-called power-law scaling relationships that determine how such characteristics change with size. For example, metabolic rate increases as the ¾ power of mass. Put simply, the scaling law says that if an organism’s mass increases by a factor of 10,000 (four orders of magnitude), its metabolic rate will increase by a factor of only 1,000 (three orders of magnitude). This represents an enormous economy of scale: the bigger the creature, the less energy per pound it requires to stay alive. This increase of efficiency with size—manifested by the scaling exponent ¾, which we say is “sublinear” because it’s less than one—permeates biology. These ubiquitous scaling laws have their origin in the universal properties of the networks that sustain life, such as the cardiovascular and respiratory systems.
Social organizations, like biological organisms, consume energy and resources, depend on networks for the flow of information and materials, and produce artifacts and waste. So it would not be surprising if they obeyed scaling laws governing their growth and evolution. Such laws would suggest that New York, Santa Fe, New Delhi, and ancient Rome are scaled versions of one another in fundamental ways—as, potentially, are Microsoft, Caterpillar, Tesco, and Pan Am.
To discover these scaling laws, Luís Bettencourt at Los Alamos National Laboratory, José Lobo at Arizona State University, Dirk Helbing at TU Dresden, and I gathered data across many urban systems in different countries and at different times, addressing a wide range of characteristics including energy consumption, economic activity, demographics, infrastructure, intellectual innovation, employment of “supercreative” people, and patterns of human behavior such as crime rates and rates of disease spread.
We did indeed find that cities manifest power-law scaling similar to the economy-of-scale relationships observed in biology: a doubling of population requires less than a doubling of certain resources. The material infrastructure that is analogous to biological transport networks—gas stations, lengths of electrical cable, miles of road surface—consistently exhibits sublinear scaling with population. However, to our surprise, a new scaling phenomenon appeared when we examined quantities that are essentially social in nature and have no simple analogue in biology—those associated with innovation and wealth creation. They include patent activity, number of supercreative people, wages, and GDP. For such quantities the exponent (the analogue of ¾ in metabolic rate) exceeds 1, clustering around a common value of 1.2. Thus, a doubling of population is accompanied by more than a doubling of creative and economic output. We call this phenomenon “superlinear” scaling: by almost any measure, the larger a city’s population, the greater the innovation and wealth creation per person.
Organismic growth, constrained by sublinear power-law scaling derived from the dynamics of biological networks, ultimately ceases, with the equations predicting what size organisms will reach. In contrast, our equations predict that growth associated with superlinear scaling processes observed in social organizations is theoretically unbounded. This would seem to bode well for organizations. Unfortunately, however, the equations also predict that in the absence of continual major innovations, organizations will stop growing and may even contract, leading to either stagnation or ultimate collapse. Furthermore, to prevent this, the time between innovations (the “innovation cycle”) must decrease as the system grows.
- In some ways, it should seem obvious: if you have more people that can interact in an urban economy, there's more potential for win-win transactions and deeper specialization of labor (and therefore higher productivity). People are more likely to find jobs that better match their skills, education programs to increase their skills, and have greater opportunities for upward social mobility. It's fundamentally why people continue to migrate to cities globally.
- The unmentioned factor is transportation mobility. Obviously, to get the benefits of size, you actually have to have the ability to interact with those people (transactions, jobs, etc.), and mobility levels determine whether that's likely or not. As just one example, the average person is willing to commute a half-hour to work, so their job opportunities are limited to that range. The farther they can go in that time, the more opportunities they can access. It also helps to have more people/jobs/density in that commute/mobility/opportunity zone, which is an argument against anti-density regulations or public processes (i.e. "NIMBYs insert sand in gears here").
- Lends more importance the regional megapolitans model, of which the Texas Triangle should compete very well.
- Cities that try to slow, stop, or restrain growth are ultimately penalizing themselves and their citizens.
- Throws some cold water on the idea of smaller, elite, "creative" cities having an advantage over larger metros.
- It means growth is also more sustainable and better for the environment, since resource use scales sublinearly with population, i.e. a single metro of 5 million is more resource-efficient than five metros of one million.
- So sprawl is ultimately good, because even though it consumes some land and infrastructure resources here, on a net basis, it's ultimately saving more of them from somewhere else. It may not be the best of all possible use of resources, but as long as it represents consolidation from rural and smaller metros to larger metros, it's a net win. And don't forget that the kids of those suburban sprawlers will probably want to live in a dense core (well, at least for a while), so the long-term progression is towards more efficiency.
This also means we should be more excited than fearful about the prospect of growing to over 8 million people in the metro area over the next 25 years. According to this model, we should end up much better off not just in total, but on a per-person basis. Houston is truly on a trajectory that's just getting better and better.