Jonah Lehrer: One of the really interesting mysteries of our age is why people keep on moving to cities. You know, more people are going to move to cities in the next 100 years than have moved to cities in all of human history. Urbanization is, in many respects, the great theme of twenty-first century life. But it’s not quite clear what makes cities so valuable, what it is about cramming ourselves together, especially because we live in this age where we can exchange so much information remotely. Like why is urbanization still taking place even when we’ve got Skype and e-mail and all sorts of ways of communicating on screens?
That's the thing that gets back to the real magic of a city, which is that it fosters serendipity, that it forces us to mix and mingle, that we’ve got knowledge spillovers, that even in this age of so many wonderful gadgets, we still get smart being around other smart people. We still have new ideas when we are immersed in a density of ideas. We still make new knowledge when we are just drowning in spilled knowledge, that there is no better model for the virtue of a city than that conversation you have on the sidewalk or in the subway, that cities smash us together. And that's what makes them so valuable. That is simply how innovation and creativity takes place. It just happens when people bump into each other a whole lot.
I think their secret is their freewheeling, chaotic nature. So Jeffery West, a theoretical physicist at the Santa Fe Institute, he works with Luis Bettencourt at the Santa Fe Institute, and he makes this very provocative comparison between cities and companies. And he points out that from a certain perspective cities and companies look very similar, right? They’re both big clusters of people in a fixed physical space, and yet cities and companies exhibit one very interesting difference, which is that cities never die. Cities are indestructible. You can nuke a city, it comes back. You can flood a city, it comes back. You can have a devastating earthquake, levels the entire metropolis, we still have San Francisco. Companies, on the other hand, look very different. Companies die all the time. The average lifespan of a Fortune 100 company is 45 years. Only two companies in the original Dow Jones Index are still around. So companies are very fragile and fleeting.
And West’s question is, well, what's the difference? Why do cities live forever and why do companies die all the time? And by gathering vast tracts of data from stock indices and the Census Bureau and the Patent Office and governments all across the world, West has found a very interesting difference between cities and companies, that as cities get bigger, they exhibit what he calls superlinear scaling, which is as a city gets bigger, everyone in that city becomes more productive. They’re going to make more money, invent more patents, invent more trademarks. By every metric we have, those people are going to look better, smarter, more creative, more productive and so on. And that's because cities smash us together. Cities force us to interact, and interaction is good. That human friction is very, very healthy. So this is called superlinear scaling. You know, the productivity of a city looks like that. And this is what's driving urbanization. This is why we keep on moving to big cities and why those big cities keep on getting bigger.
Companies, on the other hand, look very different. As a company gets bigger, everyone in that company becomes less productive. They bring in less profit per capita, fewer patents per capita, fewer trademarks per capita and so on. This is called sublinear scaling. Now, over time, this becomes very dangerous, right? Because Wall Street’s saying, "Grow the bottom line; keep on getting bigger," and so that's what companies do. But they end up becoming less innovative and so they become more reliant on their old ideas. Eventually those old ideas don't work anymore, so then they’ve got to invest in expensive acquisitions, and sometimes those acquisitions don't pay off. And that's when the company goes belly up. That is why companies die and cities live forever. It gets back to superlinear scaling versus sublinear scaling.
Now the question becomes, well, what's the difference? Why are cities superlinear and companies sublinear? And what West argues is because companies get in the way, that cities, they just let us go about our business. They let us have all those random chats. Mayors can't tell us where to live or who to talk to who or what problems to work on. We choose that ourselves. Companies, on the other hand, try to micromanage the innovation process. So CEOs tell us who to talk to. They tell us what to work on. They tell us to brainstorm, when brainstorming very clearly doesn't work. They erect these vertical hierarchies which stifle interaction. They discourage horizontal conversations. They silo knowledge. All these things, many of which are done with the best of intentions, they actually hold us back.
So West’s advice is simple: when in doubt, imitate the city.
Directed / Produced by
Jonathan Fowler & Elizabeth Rodd