Does Location Matter for Open Innovation?

We attended an Open Innovation Research Forum yesterday at the Institute for Manufacturing at Cambridge University, which was focused around a very topical question namely ‘Does Location Matter for Open Innovation?’.

If open innovation is genuinely about tapping into great ideas and great people wherever they are located, it arguably only makes sense if it is truly global and geography agnostic. This is probably why the majority of open innovation ‘solutions’ are web-based. These are also an undoubtedly cost-effective way to reach a large audience of potential partners. Yet such web-based open innovation or crowdsourcing misses out on the crucial component of building trusted networks and ecosystems which is best achieved face to face. So in a sense the tradeoff is the quantity of a virtual network versus the quality of a physical cluster.

There has been a phenomenal effort in boosting clusters in the past two decades (building upon the work of Michael Porter and others) and my (entirely subjective and unscientific) estimate is that 98% of that investment has been in vain. You can’t recreate Silicon Valley in Milton Keynes, no matter how hard you try and how much money you invest.

“You need to build an eco-system based on what is already there.” Chris Moore, UKTI

As a friend of mine who works for a major water utility said to me at the weekend, when discussing the poor drainage in a section of our local park (bear with me – this is related to the point), you have to make a feature of it as it’s very hard to rechannel water away from where it wants to go. The same applies in a networked, innovation economy – go with the strengths of a location and make the most of its features, rather than try to import characteristics from somewhere else.

Another historic examples which show just how hardwired clusters are in places comes from the textile quarter in Florence which has remained in exactly the same location for over 1000 years even though everything around it (the buildings, the streets, the people, the political and economic climate) has changed many times over. Location is magnetic and is one of the primary ways we organise behaviour and this is a difficult concept to change. Similiarly, if you look at a map of economic output/wealth across London from 200 years ago compared with today, the one thing that jumps out at you is how little it’s changed in that time.

In addition to the move towards location-based open innovation ecosystems by Government policy makers recently, many companies are realising that it pays to be part of, and ideally at the heart of a vibrant network of entrepreneurs and innovators. The context for our day at IfM was whether this heart should be physical or virtual. Within this, the four key questions at the start of the day were as follows:

  • Challenge 1. How to embrace both the best of local and global networks simultaneously (and avoid a postcode lottery, or being too insular)

  • Challenge 2. How to share problems/needs safely (without giving away competitive advantage)

  • Challenge 3. How to facilitate/have lots of conversations yet keep focused on your objectives – i.e. Embrace social media, build a portable ecosystem 

  • Challenge 4. Everything happens somewhere, that’s geography, however it is seldom a primary organising principal i.e. Everyone wants good ideas/people regardless of their geographic origin, however clusters can help tap into critical mass of solvers

  • There was lots of interesting and useful discussion around all of these challenges which we will be published and shared by the IfM team shortly. In the meantime I remain convinced that we really need to come up with a new model of open innovation eco-systems, Clusters 2.0 if you will, that recognise the reality and value of a networked world combined with the importance and humanity of place.

    Comments

    1. The location of the “pearls” on the global innovation string (e.g. Cambridge (UK), Cambridge (US), Munich, Stanford, Singapore, Shanghai, Tel Aviv etc) is actually mostly driven by US military spending (http://www.informaworld.com/smpp/content~db=all~content=a788969052).

      Cambridge UK is a nice University (HT Tim) but it is probably more relevant that we are the unsinkable aircraft carrier from which the jets punishing Libya take off. My next door neighbour died a couple of years back. He was a US pilot flying straffing missions over areas of conflict. Nice guy, drove a red jeep. When I was CEO of the high tech cluster locally I was getting invited along to barbecues by the US Airforce (sadly, I had to decline, because they didn’t want my wife or kids there and this was weekend stuff). Similarly, my very first start-up (with a mate out of Scott Polar back in the 1980s, still extant locally as SAIC Polar Oceans (http://oai.dtic.mil/oai/oai?verb=getRecord&metadataPrefix=html&identifier=ADA216738) was doing contract work for the US Navy, trying to work out where they should run the subs on the Artic passage up the coast of Greenland.

      I’m still trying to find another paper that managed to explain 80% of the location of high tech around the entire world by the strategic investments of the US military. The internet (DARPA), the windows system (Xerox Parc for the US Airforce) and the RFID used in logistics for shipping (MIT for the US Airforce, to count in returning naval bombers onto aircraft carriers) are happily exploited by Zappos, Threadless and Local Motors to re-arrange the design and logistics of customer goods delivery. But then, that was ALWAYS the plan. Dual-use technology (Teflon from moonshots) is so much easier to justify to Congress. And SBIR http://www.sbir.gov/ just shares the love.

      Of course for Cambridge UK, this is the love that dare not speak its name. Who wants to admit that actually we are just a side-effect of US defence spending? Hardly very good for national morale. But it does rather neatly explain the long noted scale differences between Stanford, Cambridge (Mass) and Cambridge UK… 😉

    2. Hi Matt,

      Thanks for the message which is fascinating and a blog post in it’s own right. I agree, that this appears to be the ‘love that dare no speak it’s name’ but it’s important part of the defence and economic development debate – and with longterm defence spending set to decline, certainly in the UK according to everyone I know who works in that sector, we need to think about and talk about alternatives.

      Roland

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