Feature Story

How Hubs Succeed in Fostering Innovation

by Jason Deign

Innovation hubs are all the rage as policy makers look to boost local economies and employment. But it takes a special environment to really foster innovation.

A dog lives in a kennel. A chicken lives in a coop. And innovation, it seems, lives in a hub. Innovation hubs are increasingly a feature of urban development as planners work to spice up economic and employment prospects with an environment dedicated to fostering invention. These environments can range from company departments or single, multi-tenant buildings, often termed incubators, to entire geographical regions, called clusters.

Most, however, are "dense webs of interconnected technology companies, customers, and suppliers," to use a definition from the Massachusetts Institute of Technology.

#88: How Hubs Succeed In Fostering Innovation by The Network Podcast

What makes these environments a success? Unlike manufacturing, where the raw materials are usually easy to identify, the basic ingredients for corporate creativity are hard to pin down. But putting people together appears to be critical.

"Ideas are like germs. The closer you are, the more likely they are to transmit," says Patrick Hussey, the chief communications officer at Crowdrooster, a hardware creation platform based at Makerversity, a technology hub in London, England. 

Professor Vikas Shah, the co-president of TiE UK North, which runs a technology incubator called Founders Dock in Manchester, United Kingdom, agrees. "Entrepreneurship is not an island," he says.

"You have to create an ecosystem that fosters entrepreneurship and also allows for the cross-fertilization of ideas and skills."    

It is also useful to be close to academic centers with creative talent. Louize Clarke, co-founder of Connecting Thames Valley Tech, which supports innovation hubs in the south of England, says this has been pivotal in four regional clusters close to London.

"A big part of the success of the region's tech hubs is due to an ecosystem where academic and research institutions intersect with a strong business community," she says.

Similar to those in the San Francisco Bay area, the Thames Valley hubs also no doubt benefit from their proximity to a major urban center, London. But being close to a major city is not always an advantage.

Just ask John Williams, chief technology officer at Amplience, a multi-channel media startup that shunned a London location in favor of a hub called Digital City, in Teesside, northeast England.

"Access to technical talent is crucial for a digital start-up, but this can be difficult in London," he says. "Fierce competition for developers combined with the cost of London living means that wages are inflated and the best candidates are more expensive and harder to reach."

No matter the location, it helps to be close to sources of funding, such as venture capital and private equity partners, and professional services firms, covering areas such as accounting, law, and public relations.

As Didier Hoch, executive chairman of Biovision, a global life sciences forum based in Lyon, France, says: "Our experience leads us to believe that the main requirement for a successful hub is the ability to combine technical, managerial, and investment expertise in one location."

Three Places to Watch for Emerging Innovation

Where might tomorrow's innovators be based? Patrick Hussey of Crowdrooster tips these three locations as ones to watch for emerging innovation.

  • Berlin: with a vibrant design community and bags of culture, creativity in the German capital is "not just about technology," says Hussey. 
  • Tel Aviv: Israel's financial center "already has an exciting startup scene," comments Hussey, with valuable connections to China.
  • Lagos: Nigeria's most populous city might seem a strange choice but, says Hussey: "I'm interested in emerging hubs and would like to work with people who are not just in the so-called first world."

There could be one further important ingredient. Hussey, of Crowdrooster, says: "You've got to have founding, anchor companies with people who are really good. A technologically competent and socially competent pollinator figure is crucial."

It also goes without saying that any innovation hub needs to offer an attractive working environment and top-notch infrastructure, particularly in terms of network connectivity.

But ironically, the spread of high-speed broadband connections is perhaps the main thing that could one day render innovation hubs obsolete.

"Things like WebEx bring the world closer," says Guy Mucklow, chief executive of the postal address application firm Postcode Anywhere, an online business which has achieved global success from a base in Worcester, England, far from any innovation hub.

"I can see the benefit of clustering, don't get me wrong," he adds. "But often these hubs become very expensive. Rents in Shoreditch, near Tech City, have gone up 40 percent since 2011. With network technology, now you can run your business from just about anywhere."


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