The first funding decisions on full proposals for an exciting new 海角视频 Government programme to promote innovation and regional economic growth are imminent, and the outcomes will be of great interest to Wales, particularly the compound semi-conductor cluster in south Wales which is on the shortlist.
The Strength in Places Funding (SIPF) is led by 海角视频 Research and Innovation.
It is a competitive funding scheme that takes a place-based approach to research and innovation funding, with the objective of supporting significant relative regional economic growth; part of what has become known as the ‘levelling up of the regions’ towards the level of the best performing parts of the country.
Having had first-hand experience of the scheme as a member of the assessment panel, I think it is interesting as a policy initiative.
Alongside the place-based approach, it also takes an explicitly ‘innovation-led’ perspective and seeks to generate regional growth by identifying and supporting areas of R&D strengths that are found in ‘clusters of businesses across a range of sizes that have potential to innovate, or to adopt new technologies in order that those clusters will become nationally and internationally competitive’.
What is also of interest, particularly perhaps to a university professor who has studied the organisation of innovation for many years, is the recognition of the central importance of collaboration across the key actors of a region in delivering economic growth and innovation.
Universities, particularly in areas such as south Wales, are key economic actors and employers, as well as educators and the sources of new knowledge that can seed innovation.
Amongst the specific objectives of SIPF is that collaborations between local businesses, research organizations and local leaders are enhanced as a result of the funded proposals. Collaboration across organisations from different sectors and people with different knowledge sets is crucial to the creation of truly new and innovative products and services and indeed new approaches to well-established societal challenges in the public sector.
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This vision lies at the heart of the Social Science Park we are currently building at Cardiff University.
So far so good. But clusters are far from a new phenomenon in either our understanding of economic geography nor in industrial policy and the notion that they can be created or ‘managed’ is contested.
In particular, there is very little evidence to suggest that sustainable clusters can be created where no competitive advantage exists.
They are better understood as emerging when key actors take advantage of existing local endowments and opportunities or particular economic conditions at a particular time.
The evidence suggests clusters grow by taking advantage of proximity to resources, shared and specialized labour markets, through vibrant knowledge creation and transfer often with universities playing a key role, a network of support services and a complex fabric of social relationships (often stories of the successful emergence of firms and clusters centre on key individuals and chance interactions in social spaces like bars and coffee shops).
To learn more about how clusters function – and the role that universities play in this – I recently spent time at Sidney Sussex College, University of Cambridge to see the ‘Cambridge Phenomenon’ first- hand.
According to the university’s website, Cambridge is Europe’s largest technology cluster, employing around 61,000 people in the more than 5,000 knowledge-intensive firms in the area.
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The combined annual revenue of these firms is over £15.5bn. To put this in context, this is more than the total combined revenues of the biggest 10 firms in Wales.
During my time at Cambridge, I sought to answer two questions: how does the Cambridge cluster work, and what aspects will be of interest to the region here in Cardiff?
I met around 30 people closely involved in the Cambridge regional innovation ecosystem: academics, university innovation and enterprise professionals, entrepreneurs and investors, managers of innovation centres, and senior corporate managers. Their views provided an array of valuable insights.
Here I provide a very succinct summary of what is a complex and deeply embedded phenomenon.
First, while there were variations in the views people held of the specifics, there was a clear sense of the Cambridge cluster as an entity with its own character, history and distinct qualities.
The first feature that people tended to mention was the value of proximity: ‘Cambridge is a village’ (both physical distance and in terms of social relationships).
Participants in the cluster felt closeness made relationships and communication easier, and provided cohesiveness and coherence to activity.
However, a number of people noted the ‘politics’ of a village could make it difficult to gain entry into tightly formed social settings (‘It’s very difficult to get involved, you need to prove yourself’).
I routinely cite the ‘short lines of communication’ to English colleagues as one of the advantages of working Wales, but I can’t help but feel that the ‘politics of the village’ is too often a weakness here.
The second characteristic that came up was serendipity.
Fortune featured in discussions of the cluster’s initial development and in terms of how it functions (chance meetings, the cluster as a ‘melting pot’, etc.), but this must be matched by a capacity to be responsive and to collaborate in relatively open-ended ways in order to take advantage.
Here the maturity and capacity of Cambridge as a cluster shone through. There are multiple networks and ‘communities’ that promote and sustain this activity, most of which are relatively ‘bottom-up’ and self-organised.
One of the things that really struck me about this activity was the sense of identity that was evident.
People felt part of something bigger. Many referred to the historical development of the cluster, the central importance of scientific discovery, and the cluster’s unique qualities.
Many also identified with a proactively constructed and widely promoted ‘cluster narrative.’
The publication of the ‘Cambridge Phenomenon’, the (re-)construction of the historical narratives around the emergence of the cluster, and the continuing prominent contribution of key individuals have all helped to build and maintain this cluster identity.
The ‘story’ has influenced both how people understand and shape the cluster’s development.
This is something that I think stands consideration as Cardiff and Wales seek to develop effective economic clustering.
What is ‘our story’ and how does it provide a sense of identity and direction for people? Of course, Cambridge enjoys very major material advantages, for example, in terms of the richness and range of its knowledge creation, the abundant availability of venture capital, a host of local entrepreneurs who have ‘been there and done it’ (and now play a significant role in the cluster as investors, mentors and role models) and the presence of world-leading firms.
But other elements are not so alien to us.
Cambridge’s geographical position and where it is not (London, Silicon Valley or Oxford) was key to its identity, along with characteristics including openness, sharing, connectedness, informality, the celebration of success, self-confidence, collective endeavour, and the organic and emergent nature of many of the activities.
OK, maybe one or two of those are a little thin on the ground around here…
Given the 海角视频 policy emphasis on place-based approaches generally and clusters in particular, and taking into account what we know about clusters, what might we want to consider when it comes to supporting regional economic development in Wales?
While Cardiff and Cambridge are very different places (and universities), I think there are lessons for us to learn. In my view clusters cannot be created out of nothing, nor can they be managed.
But the evidence suggests they can be nurtured if the conditions are fertile. We need to ensure our policies and practices evolve in ways that promote and support innovation, and that we do so in ways that build from what is already emerging as a local strength.
The current example and flagship of the Cardiff Capital Region portfolio is, of course, the Compound Semiconductor Cluster.
There are a lot of eggs in that basket. But other emergent clusters may also prove to be fruitful provided that we are receptive to an openness of communication and collaboration, and that we build shared narratives and trust to guide and sustain our shared enterprise as a region.
Cluster development relies upon the creation and attraction of firms, which implies both access to capital and a positive attitude to risk.
A successful future for emergent clusters will depend upon their ability to respond to current and future challenges – and we are in the midst of the most disruptive world event most of us have ever experienced.
Indeed, recent research by our friends at Orkestra, the Basque Institute of Competitiveness, has suggested that collaboration amongst cluster organizations can play an important role in turning this crisis into an opportunity to address societal challenges and ‘accelerate the deep transitions needed for a sustainable future’.
Can we take these opportunities in Wales?
Our strengths as a region in cybersecurity and fintech may offer the bases for cluster development, though as my colleague Phil Brown’s review of digital innovation for Welsh Government makes clear, there is much to be done if Wales is to benefit from these.
There are also opportunities to build on the work in creative industries clustering that has already been undertaken through the Creative Cardiff initiative and more recently Clwstwr, in further building that network and telling ‘Cardiff’s creative story’.
Another area that intrigues me is the potential for us to use what has traditionally be seen as a weakness in the Welsh economy as a comparative strength by infusing our public sector with greater innovative capacity and creating new commercial opportunities through that process.
My colleagues in Y Lab and I have been exploring the possibilities of a Public Services Testbed with the Cardiff Capital Region.
This would be a mission-driven approach at scale with the intent of generating new collaborations and public services improvements through innovation across sectors and delivering business opportunities and economic value.
In my view, new thinking on public services innovation as a ‘market-creator’ along with creativity in public sector procurement have the potential to generate new market opportunities and commercial value that benefits the region.
Collaboration across the public and private sectors would also contribute to the ‘deep transitions’ that we need to make in the context of a post-pandemic future.
The answer to the rhetorical question of my title is ‘No’.
But whichever sectors emerge as the most promising – and that cannot be forced in my view – we will benefit from learning some of the lessons of the Cambridge Cluster when it comes to openness, collaboration, and the value of a shared narrative in building and confidently projecting a sense of identity and cohesiveness.
- Rick Delbridge is professor or organisational analysis at Cardiff Business School.