One impact of gigabit connectivity and enhanced processing power deriving from the digital revolution is that algorithm-led innovation is increasingly driving the global knowledge economy. This technology requires less physical aggregation than 20th Century technologies, so innovation can occur wherever innovators choose to base themselves. Consequently urban districts are again important drivers of the economy as other factors determine the location of innovation ‘places’. This is why some of the most advanced knowledge-based industries are now clustering in small areas in big cities – in thriving Innovation Districts, or Knowledge Quarters.

As light appears at the end of the pandemic lockdown tunnel, the future of city centre life is the subject of significant debate and speculation. Successful pre-pandemic city economies attracted investment from knowledge businesses selling beyond local markets and these acted as a driving force for local economies by increasing demand for other businesses selling locally. A recent review by Centre for Cities suggested the employment split across exporting and local services businesses exhibited a ratio of 28:72. Indeed as Covid-19 emptied corporate offices this dependency ratio has been all too apparent with the loss of clientele and associated closures of local cafes, bars and restaurants. Observing this, pundits argue that the way we worked in 2020 could be a true glimpse of the future; but, as we address an economy based on sustainable but fast-moving knowledge-intensive businesses, can we afford to let this be true?

Trends that were slowly emerging have been accelerated by the viral intervention. It seems new hybrid models of in-person and remote working are likely to become common practice; but sounding the death knell for the office is premature. There are a number of reasons for this. Issues around retaining a company’s culture, peer-to-peer support and juniors learning from senior staff by osmosis are key obvious factors. These views are supported by recent statements from two of the global tech-giants. Amazon has told its staff that it plans to return to an office-centric culture as the baseline; believing that it enables invention, collaboration and learning together most effectively. Apple has also said it wants its staff to return to the offices by September, with ‘in-person’ working for 4-5 days a week being the norm.

However, in this piece I am focussing on the need for continuous innovation in a world where consideration of the status quo is no longer relevant nor may ever exist. Given the speed of the digital revolution and the ever-greater importance of data in all aspects of our lives, continuous innovation will be essential for stability and growth of the economy – in this ‘place’ matters. In the words of Joseph Schumpeter ‘the creative destruction wrought by entrepreneurs in close proximity to one another [is] the driving force for progress’.

Proximity of communities during the 18th and 19th Centuries led to the growth of the UK’s industrial cities. These manufacturing clusters, connected to transport infrastructures around ports, canals and rail promoted efficient movement of materials and products. Thousands of small firms created employment for people living in surrounding communities who were able to walk to work. The firms organised into local supply chains as the industrial cities generated the necessary scale, access to resources, raw materials and connectivity to succeed.

Reflecting Joseph Schumpeter’s view, most of these manufacturing centres were driven by key entrepreneurial individuals. Most notably in Birmingham pioneering engineers, industrialists and entrepreneurs led the way coming together under the guise of the Lunar Society. Cities became crucibles (of innovation), places in which different elements interacted creating something new through the translation of creativity and invention into marketable products and services. The importance of place in this is that change is catalysed by effective communication; even as advances in digital technologies augment human ingenuity it remains the case that innovation is stimulated by bringing creative minds together.

Today with the return to city centre living and the concentration of knowledge-intensive industries, cities are again acting as crucibles of innovation. This change is being reflected in the shift away from high street retail, driven by the rapid advance in e-commerce, again accelerated by the pandemic, to streets and centres that focus on work-space, food, leisure services and culture. Such places matter to our wellbeing – so our cities must continue to thrive. We are looking to the knowledge economies to drive the Covid recovery and as we move back into the physical world, ‘place’ will again drive the necessary innovation chemistry; something that has been largely missing during the last year in our video-linked worlds.

Promoting today’s knowledge hot-spots, requires intervention in ways that go beyond driving local sector-defined clusters – specialisation arguably misses the importance of serendipity in the innovation process. Top-down interventions assume that innovation can be created by edict but in reality a local areas’ component strengths need to be augmented by holistic interventions that enable today’s ‘Lunar Men’ to succeed.

There is a tendency to define drivers of success through the lens of definable metrics that are too often based around the physical attributes of ‘place’. The character of a physical space does influence how things happen; it is striking that many successful districts are characterised by 19th Century buildings that encourage conviviality and active street-life. But the major intangible, which is much harder to create by design or intervention, is the magic deriving from the legacy culture of the location and the knowledge creators it supports – in other words, it’s all about who is there and how they mix. 

Today’s Innovation Districts comprise a diverse mix of people in communities drawn together through common interest and approaches to life. Perhaps even more so after the pandemic, there is a new generation of innovative “collaborateers”; those who, rather than accepting long commutes and daily congestion, choose to work and live in places that are walkable and connected by public transport. In other words, they are returning to the ways of living/working seen in our 19th Century industrial cities.

These creators/innovators are also showing signs of doing things differently – in terms of the way they want to live and deliver to make a difference. They exhibit a much greater desire to collaborate than their forerunners as they come together in the more bohemian and cheaper margins of cities. Instead of inventing on their own in bedrooms or garages, they are starting their companies in common spaces, where they can mingle with other entrepreneurs and have efficient access to everything they need. This culture promotes experiential innovation through contact which is less readily achieved remotely and/or indeed digitally.

As we look to enhance these places through interventions the first thing to note is that there needs to be a reason for the places to exist in the first place. ‘Build it and they will come’ is not the answer because if the magic mix of people does not find a reason to be there then it will not catch fire. It goes significantly beyond the physicality of the place and this is reflected in the fact that many Innovation Districts build organically, through happenstance and alignment of opportunities.

To enhance outcomes the role of intervention is to catalyse the innovation reaction. Activities need to be curated to overcome innovation entropy and ensure innovators are visible to each other and can interact serendipitously. They promote knowledge gain, exchange and application ensuring individuals do not find themselves isolated or uncertain as to where to turn to secure the support they need to deliver their commercial aspirations.

Innovation Districts need to be intrinsically inclusive, diverse and dynamic. They must not be islands or bounded parts of any given urban environment. Their boundaries need to be permeable, promoting two-way transfer of knowledge and neurodiverse talent. Such spill-over must penetrate surrounding communities, especially those characterised by low levels of economic activity. The aim should be to inspire where aspiration is low and in this way curation of Innovation Districts is to be seen as an active post-Covid 19 response, contributing to the city’s wider socio-economic condition.

There is nothing linear about this in terms of geographies, technology field or sector, skills, communities or indeed product – a hub-and-spoke model is not what is required, there needs to be a web of connectivity across the city to and from the relevant communities of interest. 

The curated creative power of thriving innovation districts will increase the impact of our cities. The ways and means of curation will differ in the different cities as legacy drivers and impediments in each geography will be different. Siloed activities must be avoided, then intra- and inter-connected locations will provide the necessary critical mass and cities will again be important crucibles of innovation.         

Author: Dr David J Hardman MBE is Managing Director – Birmingham for Bruntwood SciTech which manages and develops the Innovation Birmingham Campus in the Birmingham Knowledge Quarter and, in association with the University of Birmingham, the Birmingham Health Innovation Campus