How to build innovation clusters in Europe, Part I

After taking a look at how USA fosters Innovation at regional level, click this for more details, I’ll be here reporting on an European study being led by Science|Business and supported by Microsoft Corp. investigating on how Europe can challenge USA in terms of innovation generation.

EU flag in the Guinness Book of Records 14.04.2009

Science|Business is an independent news and events service being focused on R&D investment and policy in Europe. To encourage public dialogue about innovation policies in Europe, it created together with Microsoft Corp. in 2007 a panel of leaders in industry, academia and policy: The Science|Business Innovation Board. Over the 2008, it had been meeting to find the answers how Europe can create high-tech clusters challenging those of the USA.

The conclusions of these events were:

  1. a review of leading clusters,
  2. a manifesto for action and
  3. a proposal, Special Innovation Zones for Europe or SIZEs.

I’ll being then review the 3 points and close with my own takeaways in 2 separated parts. Part I will deal with the cluster review and Part II with the manifesto and the so-called SIZEs.

Let’s start with Part I.

Europe has based its future on Knowledge Economy and the primary physical manifestation of a knowledge economy is probably high-tech clusters; 6 different clusters across Europe and USA will be here reviewed.

  • Sophia Antipolis is the oldest European high-tech park, it is located between Nice and Cannes in glamorous Southern France Riviera. It was born back in the 1970s as pure product of French public policy, but it has been able to create a sustainable dynamic that no longer needs to be supported by public founding. Early industrial support was probably fundamental to its development. It came in the shape of two USA based IT blue chip corporations: IBM and Texas Instruments, which helped to pull in 70 other IT companies. IBM, however, made the presence of a university a condition of its expansion. In fact, the esteemed Ecole des Mines in 1976 and INRIA in 1983 set up in the vicinity affiliated labs for their PhD students.  | Sophia Antipolis is now home to 5 ,000 students and 4,000 publicly funded researchers. In the mid-1990s the park started to grow its own companies. It is believed that a further success key reason has been the development of Nice Airport as a low-cost hub in 2000, probably a benefit for high-tech start-ups that can reach 60 destinations within Europe in a relatively cheaply way. Nowadays, more than 150 large international companies, including Toyota and Nortel have subsidiaries there. Nevertheless, with the average number of employees standing at 21, SMEs are definitely dominant. | The park, despite this impressive growth, maintains its two-thirds as green areas, creating a nice site where office rental prices are relatively low too. What Sophia Antipolis tends to miss is an entrepreneurial culture. Venture capitalists travel to Sophia Antipolis instead of moving there.
  • Florida have attracted Max Planck and MIT life science labs, respectively based in Germany and Massachusetts, thanks to trade mission by Florida’s governor and eventually financial incentives. However, the MIT lab shortlisted quite a requirement in addition to the cash: a research university, a clinical hospital, a medical school, a job pool with the right people and a place near its potential partners. Part of Florida strategy is then to attract businesses that will be catalysts for other businesses to partner with.
  • Maryland has recently risen as a technology investment destination, giving hard time to Silicon Valley too. Surely being a relatively cheaper option has helped. But the concentrations of specialist resources, such as having the most federal laboratories of any US state, make a huge difference. In fact, one of the state’s strengths to offer to the newcomers is the multitude of potential civilian uses from military technology they can, sort of, easily access.
  • The Cambridge/Boston (aka Route 128) cluster in Massachusetts is acknowledged as one of the leading in biotech. However, several reports show that Massachusetts no longer has a monopoly in life science and is facing increased local and global competition. High housing costs and earlier legislation, that let California take a lead in stem cell research, caused an outflow in talent from the East to the West coast. In addition, there is indeed a brilliant scientific community out there and the cluster will need to partner with that in the future. The public–private initiative is expected to serve as a model. As an example, a group of Massachusetts life sciences entities focusing on clinical research said they would seek alliances with similar groups around the world. The health ministry of the Lombardia region of Italy has been an example. | Of course, there are still optimistic signals. In a recent survey 70% of people were confident that, if they lost their job today, they could find a new opportunity again in Massachusetts, at an equal or even higher level. Moreover 66% of people consider themselves to be entrepreneurs, and 69% expect their next position to be in a start-up company.
  • Clusters can be trans-national, too. Back in the mid-90s, development agencies in Copenhagen, Denmark and the Skåne region at the southern tip of Sweden decided to pool their strengths in life sciences and present a common face under the name of Medicon Valley. The roots of life sciences research in the region are very deep though, dated back to the 19220s. Among the pioneers there is Astra, now part of AstraZeneca and Danisco, now the parent company of US industrial biotechnology firm Genencor. | Medicon Valley Alliance CEO said that  Medicon Valley is now one of the top three or maybe top two clusters in Europe. It is believed that crucial to its success was the physical connection between the two countries: the Oresund Link, a 16-kilometre bridge and underwater tunnel system linking Copenhagen with Malmö. | Here you go some figures:  40,000 workforce, around 100 biotech companies, 70 pharmaceutical companies and 130 medical technology companies, 15 contract research organisations and 13 contract manufacturing organisations. The development of a unified biotechnology cluster under two jurisdictions is still an issue, however.
  • The Cambridge cluster in Great Britain, also known as Cambridge Phenomenon or Cambridge Technopole, is one of the UK’s first and most successful innovation hubs. It is the home base of a quite a number of high-tech start-ups, more than a few of which have surprisingly nothing to do with the famous university. | The first visible seeds of it were sown in the 1970s, with setting up of one of the UK ’s first science parks. In 1978 there were around 20 high-tech companies and by 1985 this reached about 360. Now, there are over 1,400 high technology ventures employing something like 43,000 people. In the first half of 2004, the Cambridge Cluster was able to get more than 25% of the UK ’s venture capital investments and more than 8% of the European total, by value. Some of that growth has come despite local shortcomings: lack of transport and telecom infrastructures and rather high housing prices. It seems that there are clouds on the horizon since other clusters are catching up: in the first half of 2007 the Berlin activity matched that in Cambridge for the first time. | Over the years there have been various attempts to study what makes Cambridge tick. One recent analysis suggests that a lot is down to the individuals. Actually, the cluster itself was not due to central planning neither by regional administration. On the contrary, it was born thanks to uncoordinated actions of a strict number of key individuals. The analysis also shows that Cambridge entrepreneurs tend to work together in different organisations repeatedly over time. That’s probably why it generates relatively little wealth and employment for the region. In other words, it seems that the successes of the hub have generated real wealth just for their founders, it has had little overall effect on employment and on average salary in the region.

Well, thanks for getting to the end of this very long post. Now, let’s sum up with my own takeaways:

  • The best seeds to make your cluster just rise are a couple of big names in university or industry
  • A couple of big names in university or industry are not enough to make your cluster grow and survive
  • Act to give your big names business opportunities too, not just your cash. Sooner or later its flow will come to an end.
  • Last but not least, act to create a nice place to be and  you will have chance to create a faithful community around your cluster.
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About Floriano Bonfigli
Floriano Bonfigli, husband and father. European rather than Italian. Educated at University of Bologna, Strathclyde University and Imperial College of London. Already worked as Research Engineer, Composite Engineer and Structural Analyst in the automotive, aerospace and marine sectors. Also spent some years in IT Product Management. Gerson Lerhman Group Council Member and Educator. Studied Innovation Technology & Management at ISTAO. Currently taking buzz out of Innovation at We Innov8! Last but not least, soccer player and basketball viewer...

2 Responses to How to build innovation clusters in Europe, Part I

  1. Floriano, interesting analysis.

    I’d like to link it to http://www.siliconvalleystudytour.com.
    The Silicon Valley Study Tour seeks to create and maintain an important bridge between young graduates, researchers, business angels, and “start-uppers” from Italy with the many successful Italian and Italian American high tech, biotech and venture capital executives in the Silicon Valley.
    Here the shortened url of the great discussion going on about what you reported: http://bit.ly/cKTw42.

    Paolo.

  2. Pingback: RedShot Blog » Blog Archive » Innovazione in Europa

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