How the Once-Struggling Pittsburgh Is Reinventing Itself as an Innovation Hub

New book from urban experts Bruce Katz and Jeremy Nowak outlines where the real power to create change lies.

A self-driving Uber car stops at a red light on Liberty Avenue through the Bloomfield neighborhood of Pittsburgh. (AP Photo/Gene J. Puskar, File)

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The following is an adapted excerpt from “The New Localism – How cities can thrive in the age of populism,” published by Brookings Institution Press.

Pittsburgh, Pennsylvania, has become a bit of an urbanist darling — it’s a magnet for educated millennials and with Uber, Google and Ford’s Argo all working on autonomous vehicles and artificial intelligence in the city, it’s quite possible that the future of urbanism is being invented here.

But as recently as a decade ago, Pittsburgh, like Detroit, was a stand-in for the dozens of cities across the U.S. that suffered greatly in the second half of the 20th century, as globalization and technology eroded the manufacturing industries that once defined the Midwest. Between 1970 and 1990, this city lost an estimated 100,000 steel jobs, shed nearly one-third of its total population, and unemployment hit a high of 18 percent.

The path from then to now hasn’t been straight or smooth, but Pittsburgh has lessons to share. The city’s leadership embodies what we call New Localism, the idea that problem solving is local and multi-sectoral and requires long-term investments in the future. The result is a city that’s becoming the best 21st century version of itself.

Pittsburgh’s Second Act

The first scene of Pittsburgh’s second act emerged in the rubble of a nuclear disaster.

On March 28, 1979, reactor 2 of the Three Mile Island Nuclear Generating Station in Dauphin County, Pennsylvania, experienced a cooling malfunction and a partial meltdown of the reactor core. A complicated combination of stuck valves, misread gauges, and poor decisions led to the discharge of a small amount of radiation into the atmosphere. It also precipitated a mini-tsunami: Thousands of gallons of water rushed into the basement of the reactor, carrying fuel pellets, radioactive materials, debris from the damaged core, and water from the Susquehanna River. In an eerie coincidence, the situation mirrored the plot of “The China Syndrome,” a movie that had been released just 12 days prior to the Three Mile Island disaster.

The Three Mile Island nuclear power plant near Middletown, Pennsylvania, as seen in 1979

The plant remained shuttered for four years as a group of companies, including Bechtel Group and Westinghouse Electric Corporation, started the dangerous process of entering the reactor’s basement to assess the full extent of the damage. The hurdles to cleaning up the disaster site were immense. No person could safely set foot in the flooded basement. And there were no sensors or cameras to record an accurate picture of the hazards.

Enter Red Whittaker, a newly minted robotics professor at Carnegie Mellon University. With Bechtel’s support, Whittaker and his team of twenty-something graduate students (what Whittaker recalls as an “army of youth”) built mobile robots that could travel the corridors of the crippled reactor under remote control. These new robots boldly went where no human could venture.

The Carnegie Mellon roboticists transformed the stationary robot used for repetitive tasks into a new class of technology and application: robots on wheels outfitted with cameras, lights, radiation detectors, vacuums, scoops, scrapers, drills and a high-pressure spray nozzle. Sealed and submersible (the basement was flooded) and powered by hundreds of feet of electrical cord that snaked through the containment building, these remotely operated robots surveyed the site, sending back information and drilling core samples to measure the radiation level of the basement walls. The most expensive machines cost $1.5 million to build, which was considered “low cost and low risk” by the global companies in charge of the project. The robots worked for four years inside the reactor building, playing a major role in the cleanup.

The robotic heroes at Three Mile Island galvanized the fledgling robotics industry in the United States and the world. The foundation of technological expertise, however, was local and regional.

Carnegie Mellon had just established the Robotics Institute as part of the university’s School of Computer Science, funded in part by a $3 million grant from Westinghouse. The institute’s driving force was Raj Reddy. Born in Madras, India, and the holder of engineering and technology degrees from universities in India and Australia, Reddy received his doctorate in computer science from Stanford and arrived at Carnegie Mellon in 1969, attracted by Nobel laureate Herbert Simon, who, along with Alan Newell, was a pioneer in the field of artificial intelligence.

Reddy encouraged researchers at the Robotics Institute to tackle both the development and commercialization of increasingly complex technology. As Red Whittaker recalls, “There was nothing else like it that had the undiluted, unbridled commitment to the future of automation. Robotics was envisioned as a bold future. At the time, it was the stuff of fantasy and science fiction.” By 1986, Whittaker had a Field Robotics Center that was deploying mobile robots into active volcanoes in Alaska, searching for meteorites in Antarctica, and surveying an 1,800-acre area of Nevada for buried hazards.

Ten years of invention led to the establishment of the National Robotics Engineering Center (NREC) as an operating unit within Carnegie Mellon’s Robotics Institute in 1996. Initially funded by NASA, NREC pioneered the brave new world of autonomous vehicles. From the flooded basements of Three Mile Island to the city streets of Pittsburgh, the farms of California, and the surface of the Moon and Mars, the roboticists at Carnegie Mellon married theory and practice, basic science and applied research, wild dreams and practical realities. A convergence economy emerged: a fusion of academia and industry with electrical and mechanical engineering, computer science, and multiple other fields. When disciplines collide, magic happens.

Pittsburgh’s robotics ecosystem increased its capacity to commercialize and productize new research rapidly in 2010 when the NREC’s John Bares assumed the role of CEO of Carnegie Robotics, a new spin-off dedicated to scaling up the commercial design and manufacturing of robotics systems and components. Bares’ professional move showed the evolution of robotics from the laboratory to the market. Pittsburgh was ready to compete.

The 10th Street Bridge in Pittsburgh

Today, Pittsburgh wears the well-worn moniker of “Roboburgh”. Dozens of companies with thousands of jobs formed a cluster, drawn by the gravitational pull of Carnegie Mellon’s campus in the Oakland neighborhood and the NREC in the Lawrenceville neighborhood, along the Allegheny River. Fittingly, the center is housed in a renovated, 100-year-old foundry building on a reclaimed industrial brownfield site.

The emergence of co-working spaces, incubators, and accelerators encouraged more entrepreneurship. Innovation Works, for example, is now the most active seed-stage investor in the Pittsburgh region, investing $72 million in more than 300 local companies. Those startups have gone on to raise another $1.8 billion in follow-on funding. Innovation Works also operates two accelerator programs, AlphaLab and AlphaLab Gear (for hardware companies). AlphaLab was ranked the sixth best accelerator in 2014 by researchers at Rice University, the University of Richmond, and MIT.

RE2 (Robotics Engineering Excellence) offers a good example of how robotics clustering in Pittsburgh helps build an ecosystem for entrepreneurs. RE2 Robotics develops robotic arms to help the military dismantle explosive devices in far-off wars or local bomb squads to do the same closer to home. “These arms are put on robots to do the dull, dirty and dangerous,” says president, CEO, and founder Jorgen Pedersen, a graduate of Carnegie Mellon.

RE2 Robotics, a spin-off from Carnegie Mellon, has garnered multiple grants from the U.S. military, seed funding from Innovation Works, and venture funding from Draper Triangle. Located less than a mile from the NREC, RE2 Robotics recently expanded its purview to work with the University of Pittsburgh and the Veterans Administration to develop what it calls a Patient Assist Robotic Arm to “help people with disabilities better navigate the logistics of a world not designed to accommodate them.”

The depth of talent, companies, and new ideas has attracted global attention. Google, Uber, and Ford are moving here because in order to compete in the global race for AI and automation supremacy, you have to be in Pittsburgh.

From Rust Belt to Brain Belt

The story of robotics emerging in Pittsburgh can sound like the lucky product of a few exceptional people. But the city owes their presence here and the cluster’s success not to an accident of history, but to a distinct change of thinking about what kind of economic activity belongs in cities — from a disproportionate focus on subsidizing consumption to technology-based economic development intent on accumulating and leveraging durable productive and innovative assets.

That type of change, quoting Matthew Taylor of the U.K.’s Royal Society for the Arts, requires a city’s leadership to “think like a system and act like an entrepreneur.” Thinking like a system requires a long and broad view of the regional economy — identifying and cultivating innovative assets and core regional competencies; investing in education, workforce development, and talent attraction; and maintaining quality places, maximizing historic downtowns, distinctive neighborhoods, a confluence of rivers, a unique topography.

To Taylor’s second point, entrepreneurs have certain personality traits — tenacity, passion, flexibility, the ability to tolerate risk — that are crucial to a successful venture. Cities, of course, are not individuals but collections of people. Still, there are cultural norms and modes of behavior in leadership groups that make them more or less likely to undertake bold and transformative efforts. Successful cities are characterized by a culture of “positive reinforcement” where networks of institutions and leaders celebrate individual and collective wins and are small, agile and opportunistic enough to move quickly to leverage market and demographic dynamics.

Both sides of Taylor’s advice are crucial: Without a system view, cities pursue a reckless course to be the next Silicon Valley; without the spirit of an entrepreneur, even cities with a solid economic foundation could be left behind in the modern economy. Through a decades-long, iterative process, leaders from government, philanthropy, academia and business have brought a systemic and entrepreneurial approach to Pittsburgh’s economic evolution, providing fertile ground for the growth of sectors such as robotics and automation.

The Pittsburgh ecosystem is built on a foundation of innovation assets that had been cultivated in the region for decades and whose presence is deeply rooted to the city’s history and culture. This was no accident. As Don Carter, director of Carnegie Mellon’s Remaking Cities Institute has noted: “There is a DNA of the region from 100 years ago. Being ahead of the curve is the key. Carnegie was all about reinvesting profits and automation. The key was to keep investing in technologies.” Carnegie himself said a successful businessman in any industry must “lead in it; adopt every improvement, have the best machinery, and know the most about it.”

Durable, long-term investments in this innovation capacity are core to the Pittsburgh experience and flow from across sectors.

Carnegie Mellon was founded in 1900 as the Carnegie Technical Schools to make engineers out of the children of low-skill workers in steel factories. When it merged with the Mellon Institute of Industrial Research in 1967, it retained the ethos of innovation in manufacturing and industry that defines it today. From initial funding from these titans of local industry, large-scale public investments have since provided a platform for basic research. In 2014, the year before Uber arrived in the city, roughly one half of Carnegie Mellon’s Robotics Institute’s funding came from the Defense Department. These federal investments in robotics is a small portion of the federal research largesse that is invested every year. Together, Carnegie Mellon and the University of Pittsburgh receive over $1 billion in federal research dollars.

A project at the Robotics Institute at Carnegie Mellon University (Credit: NREC) 

The direction of these institutions owes much to the regional philanthropic sector. Sheer size has made philanthropy powerful: The metropolitan area benefits from $9,126 in foundation assets per person vs a United States average of only $2,857. But beyond that, foundations in the city view technology-based economic development as a critical component of their social missions and invest accordingly. According to interviews at Carnegie Mellon University, foundation grants were instrumental in starting fields of study such as machine learning, computational finance, and robotics. And support for all kinds of supportive institutions — incubators, co-working spaces, technology councils, accelerators — is routine.

This system has delivered big wins for the region: Local philanthropic investments were critical to attracting the Advanced Robotics Manufacturing (ARM) Institute — a Department of Defense-awarded institute funded by a collection of over $200 million in public, private, and civic capital.

The end result is that Pittsburgh has evolved from another dot on the Rust Belt into the quintessential “brain belt city.” As Antoine van Agtmael and Fred Bakker detail in their 2015 book “The Smartest Places on Earth,” “[A] brain belt is a tightly woven collaborative ecosystem of contributors, typically composed of research universities, community colleges, local government authorities, established companies with a thriving research function and startups, usually supported by a variety of supporters and suppliers, including venture capitalists, lawyers, design firms and others. These different types of entities establish their own unique identity as they share knowledge, interact, form a community, grow and improve.”

Brain belts don’t develop overnight; history shows that Pittsburgh’s emergence has been decades (if not a century) in the making. But the city’s story also shows that some investments are better bets than others. Pittsburgh’s slow accumulation of engineering talent and expertise and its continued investment in research and development assets has paid off in a big way.

That payoff is the flexibility to act like an entrepreneur — to leverage assets opportunistically and to make big bets. Today, Pittsburgh is positioned on the ground floor of new general purpose technologies. Robotics or automation may not be large sectors at the moment, but it’s a fair bet they will have a large economic footprint in the future. A 2013 McKinsey Global Institute study identified roughly a dozen disruptive technologies — such as robotics, autonomous vehicles, genomics, energy storage, and cloud technology — that were moving from the laboratory to testing to prototyping to ubiquitous adoption. McKinsey predicted that the economic ramifications of this transformation would be substantial, a potential impact by 2025 equal to one third of global GDP.

Technology shapes economies in long-waves of innovation. It often takes decades for scientific discovery to translate into new products and services, but the transition from niche markets to global ubiquity can occur rapidly. For example, it took over 50 years to move from basic semiconductor research to the modern smartphone, but less than a decade from the first iPhone to 2.16 billion smartphone users. As with all disruptive technologies, there will be winners and losers.

University officials in Pittsburgh had seen how a small group of cities in the 20th century got in on the ground floor of technology platforms — industrial centers like Detroit, finance centers like New York City and London, or information technology hubs like Silicon Valley and Boston — and were determined to be at the forefront of new economy-shaping technologies.

The thesis is that first movers will attract the global capital and talent that will allow firms to grow and scale-up within the region. This growth and investment will in turn lead to more and better paying jobs — with varying skill-level needs and across multiple sectors of the economy. These jobs will be in the tech sectors for sure, but also other parts of the economy — finance, insurance, real estate, retail — that intersect with technology. The cumulative effect would be higher gross metropolitan product, and increased city and county tax revenues that can be reinvested in education, workforce development, infrastructure, and neighborhood revitalization.

A disruptive moment re-scrambles the playing field to benefit those communities that not only have the chops to invent technologies but deploy them in the market and (literally) on the street. The supply of communities that have the ability to play in this new period is not infinite but it is substantial, more substantial than has been recognized or realized. To compete, communities need to personify the entrepreneur — acting with flexibility, vision, and a willingness to fail. Pittsburgh has shown itself to be willing to adapt and change in response to economic upheaval — oftentimes by necessity. The smart federal and philanthropic investments were part of a broader political, business, civic and university alliance which came together in the 1980s and 1990s. The slow rise of robotics followed the fast collapse of the steel industry and the radical depopulation of the city.

The entrepreneurial culture in the city is exemplified by the culture at Carnegie Mellon and the University of Pittsburgh where there is a highly productive “revolving door” between the academy, government, and industry, ensuring that knowledge gained in one sector is used to facilitate the invention and deployment of products, to catalyze the growth of entrepreneurs and companies, and to extend the boundaries of scientific application. Andrew Moore’s move from Carnegie Mellon to Google and then back again to Carnegie Mellon has been noted as well as John Bares’ move from Carnegie Mellon to Uber (with an interim stop at Carnegie Robotics).

The city’s “revolving door” extends way beyond its boundaries. Subra Suresh, the president of Carnegie Mellon until June of 2017, was the director of the National Science Foundation from 2010 to 2013. Patrick Gallagher, the Chancellor of the University of Pittsburgh, was the director of the National Institute of Standards and Technology from 2009 to 2014. Significantly, several of their top aides have served in senior government positions at the national and state level. Today, Pittsburgh has become a veritable playground of innovation. The community retains the wonder, awe and excitement that was once associated with technological improvement and powered iconic moments like the 1939 World’s Fair. Peter Thiel, the co-founder of PayPal, has achieved notoriety for remarking that “We wanted flying cars, instead we got 140 characters.” In many respects, Pittsburgh has become the land of flying cars (or at least driverless cars).

(Photo by Gumilang Aryo Sahadewo)

Even a cursory visit to Pittsburgh exposes this cultural embrace of continuous innovation. Many cities describe their research prowess and commercial applications in nondescript meeting rooms via Powerpoint presentations. In Pittsburgh, visitors tend to go right to the source — university labs and startup companies — where the innovators describe what they are researching or inventing with a passion and enthusiasm that is truly infectious.

Pittsburgh’s ethos is equal parts system and entrepreneur — a deep appreciation for legacy paired with a willingness to compete for the next technological breakthrough. “The big point is that we are not going against our core brand,” says Ilana Diamond, founder of Alphalab Gear, the nonprofit that provides workspace, funding and network opportunities so students can turn high-tech hardware inventions into start-up companies. “We have always made stuff here … That’s what the mills were, right? It’s in our genes — we don’t have to argue with anyone that Pittsburgh is a place where stuff gets made.” Or as Whittaker says, “I like this city because it has blood in its veins.”

Aiming for Inclusive Growth

The caveat remains that the success of these clusters does not guarantee anything for the rest of the city. Perhaps Pittsburgh has become an urbanist darling because it really is still the emblematic Rust Belt city — with hope and optimism coexisting with serious challenges. At the same time that it converts its legacy into a future of robotics, the global unraveling of the industrial base continues apace and the vaunted workforce in the greater metro region faces headways in both demographics and skills.

Pittsburgh’s success has been concentrated in its core: The Greater Oakland district, home to Pitt and CMU, occupies roughly 5 percent of the city’s land area but represents 12.8 percent of residents and 23.6 percent of jobs, which are concentrated in the city’s growing education and health care sectors. The 1.7-square-mile district accounts for more than one-third of the entire state of Pennsylvania’s university R&D output. And the roughly 5,000 jobs created in the nascent robotics sector hardly make up for the tens or hundreds of thousands lost across manufacturing. It’s clear that the research ecosystem is carving out a distinct competitive advantage in the global economy; it remains to be seen if these strengths can be translated into broad-based economic growth.

But the city’s star shines brightest on the Rust Belt because it is in position to compete. Decades-old investments are starting to bear fruit. Leaders from universities, industry, and government know what Pittsburgh is good at and are committed to playing their hand the best they can. Most importantly, they are willing to put up the capital needed to maintain their advantage and push ahead. If the city’s leadership remains true to the ethos that put Pittsburgh where it is today, the future remains bright.

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Bruce is the inaugural centennial scholar at the Brookings Institution and the co-author of The New Localism and The Metropolitan Revolution. He regularly advises on policy reforms that advance the competitiveness of metropolitan areas. Katz is a member of the Next City Board of Directors, a graduate of Brown University and Yale Law School and a visiting professor at the London School of Economics.

Jeremy Nowak is a Distinguished Visiting Fellow at Drexel University's Lindy Institute for Urban Innovation. He created The Reinvestment Fund, one of the largest community investment institutions in the United States, and chaired the Board of the Federal Reserve Bank of Philadelphia. He is also the chief strategist for Spring Point Partners and a Non-Resident Senior Fellow at the Brookings Institution.

Tags: pittsburghtech hubsrust belt

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