Trends in the World’s Leading Innovative Ecosystems
There is no singular Holy Grail for developing innovative urban ecosystems. This is because cities are not machines that can be built with programmable outcomes. According to Juval Portugali, cities are complex and relentlessly changing systems where “external forces acting on the system do not determine/cause its behavior, but instead trigger an internal and independent process by which the system spontaneously [organizes itself]”. In other words, cities are complex systems that are both unpredictable and self-organizing. Within this hypermodern era of city-building, the role of policymakers has evolved to involve observing and responding to the forces shaping cities. Even within the space of smart cities, policymakers use data to gain deeper observational insight to improve their response to urban complexity. The same perspective of observing and responding to urban systems can also be applied to developing robust innovative ecosystems.
ATTRACTING PEOPLE
It was in 2014 when Harvard economist Edward Glaeser stated, “the most successful economic development policy is to attract and retain smart people and then get out of their way.” According to Glaeser, in order for cities to compete, they need to attract people while not becoming an impediment to turning ideas into reality. According to a City Observatory report, cities that are able to attract and retain talent are also the cities successful businesses are choosing to set up operations. For this reason studies show that graduates are also choosing to live in urban centres at increasing rates. In the U.S., graduates that prefer to live within three miles of urban centres has increased 37% since 2000. In 2006, just over 80% of Canadians lived in cities with more university graduates choosing to live in high density neighbourhoods.v According to UC Berkeley economist Enrico Moretti, for every graduate that takes up innovative-centric employment, five jobs in other industries are created (e.g. teachers, waiters, trades, etc.). As such, cities that are striving to develop innovative ecosystems should support policies that attract the best and brightest talent.
In 2009, a report was tabled at the International Regions Benchmarking Consortium that outlined how cities can attract and retain talent. The study showed that graduates tend to choose a city based on economic opportunity and lifestyle. For those making their decision based on lifestyle, geography played a significant role. This included a desire for natural environments, diversity in social experiences, good urban design that supports multi-modal transit, interesting architecture, historical preservation, community amenities, and affordable housing. The study also revealed that when given the choice between economic opportunity and lifestyle, graduates chose economic opportunity. With that said, cities that were ranked the highest excelled in offering both economic opportunity and appealing lifestyles. Due to companies increasingly choosing to locate where graduates are choosing to live, quality of life and economic opportunity exist within a symbiotic relationship. This view is supported by a Brookings Institute study, which found that cities in the U.S. with the greatest job proximity also had the highest median income and number of college graduates living in the area.
ATTRACTING BUSINESS
In his conversation with business executives in Boston, General Electric’s CEO, Jeffrey Immelt shed light on why his company is moving its headquarters from Fairfield, Connecticut to Boston, Massachusetts. He stated that he did not care much for being stuck 20 years in the past. He is not interested in seeing deer run across the field at their suburban Fairfield location. Instead, he said that GE is looking ahead to the next 40 years as he praised Boston’s startup culture and innovative and diverse workforce that’s being trained at MIT, Harvard and other local universities and colleges. As cities create the environments necessary to attract and keep graduates, the most competitive cities are also constructing the environments necessary to attract and keep businesses such as GE.
A 2015 study of 500 companies across 170 industries by Smart Growth America and the Center for Real Estate and Urban Analysis examined what attracted businesses to urban centres. The study found that companies were moving to cities for a variety of common reasons including attracting and retaining top-notch talent, being close to customers and business partners, supporting creative collaboration, and centralizing operations in urban centres. The study also found that companies chose vibrant mixed-use communities that had amenity rich environments and public space where employees could live, work, play and also have access to multi-modal transit. Companies that had moved downtown chose locations that scored high in walkability, transit, and biking. Further studies by Richard Florida have found that this increasing shift to city centres is also attracting startup activity and venture capital in high tech industries.
INNOVATION ECOSYSTEMS
The corporate shift to urban centres for the purpose of being more competitive and innovative is not a new phenomenon. In her study that examined the relationship between density, transportation improvements, and innovation in the 18th and 19th century, Boston University economist Elisabeth Perlman also found a strong relationship between high numbers of registered patents (i.e. innovation) in clustered areas that had access to canals and railway (i.e. multi-modal transport) and an agglomeration of people (i.e. urbanizing communities).What Elisabeth found was that innovation was grouping within densely populated areas. Michael Porter coined this manifestation of urbanization as clustering. Clustering is, “a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities.”
In their study of Italy’s economy during the global recession of the 1970s and 1980s, Schmitz and Musyck had similar outcomes. Schmitz and Musyck found that while some regions of Italy remained productive, others were driven into an economic downturn. They found that, in these productive regions, specific business sectors were located in close proximity to each other. They were not only in close proximity to other primary companies, but also to suppliers, subcontractors, and component producers. They also found that, despite being highly competitive with each other, these companies shared a culture of trust, cooperation and innovation between each other. This study is significant not only because it examined the importance of clustering in innovation, but it also asserted that geographical proximity is not the only ingredient to creating innovative ecosystems.
Despite being competitive with each other, Schmitz and Musyck shed light on the culture of trust and cooperation shared by the Italian companies. Ron Boschma further advanced this position when he developed four new types of proximity to enhance innovation in clusters: cognitive proximity, organizational proximity, social proximity, and institutional proximity. Cognitive proximity refers to the level of competency and skill needed for participants to understand each other. Organizational proximity focuses on the relationship between participants within or between organizations. Do they have the capacity to freely participate without constraints? Social proximity encourages the need for social relations between participants to foster friendship and connection. Finally, institutional proximity refers to the institutions that build and support the conditions necessary for interactive learning. Institutions could become a hindrance or active facilitator in creating the environment necessary for collaboration and innovation.
The research of Happy City, led by Charles Montgomery, examines the connection between urban design and happiness. They bring to light that great cities are not simply built out of a decision to support density and multi-modal transit. They focus on emerging research that is demonstrating the impact of urban design on human psychology, neuroscience, public health, and behavioral economics to improve quality of life in cities. Boschma’s critique of innovative ecosystems is similar to Montgomery’s critique of urban design in the sense that they bring the success of both systems down to a human level. They stress that the “if we build it they will come” mentality is inherently flawed. Boschma makes a strong case that, although geographical proximity plays a role in innovation, innovative ecosystems need to be nurtured through institutions and organizations that enable interactions between members of the ecosystem. Intentional nurturing will help create meaningful relationships for the purpose of learning, collaboration, and innovation.
In his book The Signal and the Noise, Nate Silver argues that decisions should no longer be viewed within the lens of right or wrong. Instead, he states that decisions need to be viewed within the lens of probability. For instance, cycling is not the definitive solution to avoiding obesity, but those who cycle reduce the probability of obesity. This is the same approach that should be taken when developing innovative ecosystems. By using available research, we can improve the probability of developing a successful ecosystem. This approach respects that cities are hosts of significantly complex systems that are relentlessly changing. Despite that, common trends in leading cities have shown to improve the probability of developing successful innovative ecosystems. This includes attracting and retaining people and businesses by constructing sustainable human-scale urban design. Beyond the built form, it also involves supporting institutions and organizations in developing the environment necessary to build meaningful relationships that encourage the learning and collaboration needed for innovation.
PROGRAMS & SERVICES SUPPORTING INNOVATIVE ECOSYSTEMS
Web-Based Applications
Web-based applications provide real-time data and insight to support companies, investors, and entrepreneurs. They are also used to provide information about events, courses, and incubators. These applications also allow for real-time assessments of the ecosystem by interested parties such as governments.
Examples: Startup Amsterdam & Digital.NYC
Entrepreneur-In-Residence Program
Entrepreneur-In-Residence programs are voluntary programs that bring together entrepreneurs and City departments to develop innovative solutions to urban challenges. These programs have also been developed by public institutions to foster the creation of more startups.
Examples: City of San Francisco & Massachusetts Technology Collaborative
Meet-Ups & Conferences
These events bring together like-minded professionals interested in being part of the entrepreneurial community. The purpose of these events is to allow companies to demo their new ideas, listen to speakers and panellists discuss leading-edge thinking on entrepreneurial ideas, and allow professionals to build their network.
Examples: NY Tech Meetup & SXSW
Innovation Centres
Physical spaces that bring together entrepreneurs who are developing new products and services that can be put to market. These centres help foster trust and collaboration, as indicated by Schmitz and Musyck, as being pinnacle for sustainable innovation. The support provided by the centre could include mentorship, educational programming, facilities, networking, and access to funding.
Examples: District Hall & Accelerator Centre
Living Labs
Living Labs allow governments and businesses to test technology within specific geographical areas in the city. This user-centred approach allows for more thorough exploration, experimentation and evaluation of products and services. Examples: UK Smart Mobility Living Lab & GOVLAB
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