Last month I had the pleasure of sharing a panel at the Global Peter Drucker Forum on “Cultivating Innovation Hotbeds” (see video) hosted by Curt Carlson together with Tony Tan, former President of Singapore, and industry leaders Young Sohn (Samsung), Patricia Neumann (IBM) and Georg Kopetz (TTTech). Long associated with federal government funding that sparked innovations like the internet, I thought I would share my notes on how cities came to take an active role in innovation ecosystems over the past 20 years.
How local government got involved…
Around 20 years ago innovation ecosystems started to change physically. They began to move from greenfield technology parks like the North Carolina Research Triangle into cities and towns by combining physical, economic and networking assets into creative places.
It turned out that it wasn’t enough to measure and optimize just technology transfer, investment or collaboration. A growing number of city halls began to provide urban planning and economic development incentives tailored to help the knowledge economy along. The quality of the space, walkability and the proximity to the wider city economy began to mattered also. My friend Anthony Townsend reminded that bringing such ecosystems into inner cities enabled new models big and small.
Among these new models are places like Newlab an innovation-ecosystem-in-a-building serving hundreds of companies large and small in Brooklyn, as well global corporations and the New York City government. It is highly productive and made possible by tapping into the richness of the city surrounding it. Along the way, local government and public institutions began to get more involved.
Innovation ecosystems in all things urban
Today, innovation ecosystems get baked into all kinds of projects. Corporate campuses are tailored to provide a home also for partners and acquisitions. Major urban investments like Edinburgh’s City Centre Transformation, bake climate, innovation, economic opportunity, research, experimentation and community engagement right into their 5–10 year delivery plans.
Toward the end of the financial crisis that crippled its small businesses, Long Beach (CA) re-built their innovation economy around small business and entrepreneurship. The city refocused its spending, programs and incentives. In 2012 we helped Barcelona go a step further by pulling money out of generic startup accelerators to prioritize its investment and tax incentives to companies that solve urgent community problems.
In the UK, 3Space, a non-profit real-estate operator went from keeping shop-fronts alive between uses to operating thousands of square meters of innovation facilities in cities where corporate tenants like IBM subsidize accessible terms for startup and community entrepreneurs to share spaces.
What happens when city halls also become users?
How do you know that an innovation becomes mainstream? A good indicator is when even local governments get around to actually using it.
This year in US and the UK alone, more than 300 local governments have tapped into the talent & technology provided by their innovation ecosystems to reinvent their own operations and community outcomes. We have helped an additional 100 governments in another 33 countries do the same. This is some momentum. With local government buying $4.5 trillion worth of goods and services each year (=10% of world GDP), they have ample resources to claim a seat at the table.
One surprising insight that came out of this: as local government leveled the playing field for innovative ideas, small, minority and women-owned businesses won 50% of the contracts.
And by providing both the urban platform and becoming a customer, local governments are beginning to play a role in setting the agenda .
What’s next: Bringing society into the boat.
There is much soul-searching as policy-makers and society take stock and formulate their expectations going forward. Many now look at the Bay Area as a reminder that a successful business ecosystem holds no guarantees for happiness, progress and creating jobs for those most in need. Whilst they cannot plan for specific outcomes, they can promote alignment around certain values and problems.
Santa Monica concluded that the major tech disruptions in retail, transport and AI pose an existential threat to its economy. To plan ahead, it first began to invest in capacity building with support from experts to help elected officials as well as the community understand these trends and participate in decisions going forward. Then, it went ‘glocal’ with it by publishing an RFP open to anyone:
Future success will depend on bringing along society as a whole: whether through more meaningful innovation, community engagement, impact investing or simply better return on investment for our communities.
I, for one, hope to see more intentional problem-framing as in Santa Monica, and efforts to bake meaningful innovation ecosystems into major urban projects. As government is embracing agile methods not just in tech, but also in infrastructure and public service their ability to cultivate learning communities that can problem-solve appears to be only growing.