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Feature

posted 6 Mar 2006 in Volume 9 Issue 6

Cities of the future?

By Graeme Burton

On the shores of the Gulf in the Middle East, in the United Arab Emirates state of Dubai, sit one-fifth of the world’s cranes. The edge of a desert is an unlikely home for the symbol of the skyscraper, but Dubai is in the middle of the biggest building boom the world has ever seen.

More than $100bn is being spent in a bid to build a future for Dubai when the oil runs out. The idea is to turn the desert state by the sea into a modern, diverse economy that will maintain the living standards of its people – and its rulers – long after the last drop of oil has been extracted from beneath the parched sand.

For Dubai, the work is tinged with urgency. While neighbouring Gulf states, big and small, will be swimming in oil for a century or more, Dubai’s is fast running out and neither its rulers, nor its people, want to return the way of life they had to endure before oil brought widespread prosperity.

In addition to the skyscrapers, Dubai’s rulers want to create a global centre, not just for finance and tourism, but a city that will attract the ‘work hard, play hard’ crowd from around the world, a city dubbed ‘Internet City’. It wants conferences, knowledge workers, designers and artists to come to Dubai, to share ideas and to inject into the country the wealth that their know-how and hard work can create.

Furthermore, it wants the city to become the strategic base for companies targeting the emerging markets of the Middle East, India, Africa and even countries of the former Soviet Union – an area of the world encompassing some two billion people and a total wealth of $6.7 trillion.

Silicon valleys

Dubai is not the only state with such grand ambitions.

Around the world, national and regional governments are building the infrastructure to support so-called ‘knowledge cities’ – innovation zones where young, high-achieving knowledge workers can gather and share ideas, facilitating the development of the next generation of products and services. The reason, of course, is that such people are regarded as key wealth creators and governments want them creating wealth in their territory, rather than their neighbour’s.

The inspiration, in many respects, comes from the US. It has long been recognised how the communities that coalesced in Silicon Valley in California – and to a lesser extent, Boston, Massachusetts and Austen in Texas – fed a virtuous cycle, in which bright young technologists could easily meet up with like minds, develop new ideas and products together and, crucially, win the backing of venture capital groups to start up their own company if they wanted.

Santa Clara, California-based computer chip giant Intel, for example, was set-up by technologists from Fairchild Semiconductor in 1968, which itself had been established only a decade earlier after the so-called ‘traitorous eight’ had stormed out of Shockley Semiconductor Laboratory to form Fairchild.

The desire in both cases was for the freedom to pursue their own intellectual pursuits, but pursuits that could at the same time be turned into highly profitable business ventures, of course.

The ease with which such companies in Silicon Valley can be formed and, crucially, backed financially, remains the envy of the world. But it was not before the mid-1990s that the networks of people and companies, as well as the overall environment in which they might thrive, was first studied in earnest by knowledge management specialists, particularly Debra Amidon, founder and chief executive of Entovation International, and Leif Edvinsson, founder of consultancy Universal Networking Capital Innovation (UNIC).

However, Edvinsson today is less sure that the US technology industry provides such a convincing example. “I would say that the US technology industry has provided the means, like the internet. The worldwide web, however, was a Swiss innovation [it was developed at Swiss laboratory CERN by Tim Berners Lee] and the iPod is a German innovation, exploited by Apple,” says Edvinsson.

What the US has excelled at, says Edvinsson, is exploiting new ideas and providing the funding infrastructure in which these ideas can be quickly developed.

Nevertheless, the access to funding alone still makes the US one of the most enticing environments for young, ambitious ‘knowledge workers’, a fact reflected in the number of students who go there to study – about one-third of all post-doctoral researchers in the US are non-American. “It’s an open society providing good structural capital and affluent financial resources,” says Edvinsson.

The power of coffee

Back in the 1990s, policy-makers wanted to create their own Silicon Valleys – such as ‘Silicon Fen’ in East Anglia in England, but they could equally have taken their inspiration from history. The Lloyds of London insurance market, for example, started up in the 1680s in Edward Lloyd’s coffee shop in London. A meeting place for sailors, merchants and ship owners, Lloyd catered to their ‘knowledge needs’ by providing reliable shipping news and a variety of related services – and this attracted financiers willing to invest their money in marine insurance.

Remarkably, this ad hoc arrangement outlived Lloyd and lasted more than 100 years, when a formal exchange was established.

Coffee shops, it seems, are one of the constant themes of innovation zones throughout the ages. At about the same time that Lloyds of London was being caffeine-fuelled into existence, the same was happening in the coffee shops of Vienna, the-then capital of the Austro-Hungarian empire. In this case, however, the ‘knowledge workers’ were not in the shipping industry, but music.

“You could say that one of the innovation zones of the old days was the ‘knowledge café’ in Vienna, Austria, where Mozart and other famous composers met and developed something new,” says Edvinsson.

Unfortunately, no one thought to study the dynamics behind Edward Lloyd’s coffee shop or the Viennese coffee-house ‘scene’ at the time. In modern times, the study of innovation zones is rooted in economics. “The history goes back to Porter’s value chain, but then people began recognising that the chain concept didn’t quite cover the needs of knowledge-based organisations,” says organisational change management specialist Oliver Schwabe, founder of Eurofocus International Consultants.

“Then, there was a wave of looking at so-called knowledge clusters. So, from the idea of knowledge as a chain, to a ‘flow’ of knowledge, moving into clusters and networks. That brought social-network analysis people into play and turned it into organisational network analysis,” he adds.

Today, there is a strong belief that there are certain conditions that can encourage like-minded people, often with complementary skills, to gather in one place – to communicate, to share thoughts and to develop new ideas together. That, combined with a conviction that the essential essence of knowledge cities or innovation zones can be distilled into a set of ingredients, which can be replicated and reproduced anywhere.

In addition, unlike just ten years ago, there is less emphasis today on developing the technology industry and greater belief in the value of facilitating knowledge sharing  per se. Regardless of whether someone is a technologist, a financial expert or an artist, the idea is simply to put like-minded, but ambitious people together and to let them work out among themselves whatever emerges.

Research into knowledge cities has, likewise, changed. “In the 1990s, it was more about the hidden values of cities, regions and nations. Today, it’s more refined, focusing on the ‘in between’ dimensions that I call the relational capital,” says Edvinsson.

That relational capital simply refers to the tools, skills or circumstances by which two different people can communicate. “If you and I do not share English, we wouldn’t be able to communicate. So you need to have a taxonomy, you need to have an openness to be able to relate to the surrounding dimensions,” says Edvinsson.

The language, however, does not just refer to English or French, for example, but the professional language between two people in the same industry. The language of someone working in semiconductor research, for example, will be incomprehensible to all but a few outside of that specialised sphere.

The ingredients

Once researchers, such as Amidon, have identified the main ingredients of a successful knowledge city or innovation zone, they hope to be able to use this knowledge to facilitate the construction of many more knowledge cities in the idealistic notion that it will fuel wealth creation and make society more meritocratic.

Amidon has therefore spent much time studying the world’s knowledge cities and has written a report on her findings. “The knowledge innovation zone, for us, is a general description of a class of diverse project initiatives,” she says. Not all of them are geographically anchored, either. A number are what she calls ‘virtual knowledge networks’. “All have, nevertheless, a shared and common purpose,” she adds.

“Their main objective is to focus on ways to leverage creativity, know-how, talent, technology and innovation as major inputs. Their ultimate desire and motivation is to achieve higher performance outputs that matter to citizens, business people, communities and governments in the global knowledge-based economy of today… The aspiration is to create wealth, growth, prosperity, high quality employment, a modern connected lifestyle… in an amenity rich, entertaining and stimulating urban milieu.”

Knowledge city is, perhaps, an inaccurate term. What Amidon has come across includes neighbourhoods, ‘creative districts’, science parks – although these have been a tool of local and national policy makers for decades – campuses, clusters and regions (such as Sophia Antipolis in the south of France), as well as knowledge cities.

While most of the factors driving interest and the growth in knowledge cities and innovation zones are universally acknowledged and agreed, their key ingredients – coffee shops apart – are highly intangible and subject to debate.

The typical knowledge workers targeted by innovation zones or knowledge cities are young graduates between the ages of 20 and 30. “What we have recognised, I think, is that they are spaces that attract. You have to create the mood at the place where people will be comfortable, where they will be happy to go,” says Schwabe.

He adds: “The zone itself is a space where innovation happens at a very rapid pace and which attracts other people. It’s a hot spot, so to speak, of development. That space can be a geographic locality, such as Internet City in Dubai, or it can be a virtual community.”

Or in other words, with knowledge cities, nothing succeeds like success – that attracts other knowledge workers, keen to follow, as well as companies and investors.

In the old industrial quarter of Barcelona, the local government hopes that tearing down the old, decaying factories and replacing them with science centres, a university, stylish new housing and parks – not to mention restaurants and, of course, coffee shops – will attract the kind of people that will help reinvigorate the whole city.

And not just from across Spain, but across Europe, as well.

Research into such areas as Seattle, San Francisco and Boston in the US, says Schwabe, suggests that there are a number of common factors. “Research found that there’s a high percentage of artisans, of young singles and young families, lots of coffee shops. It’s bohemian. There’s many different nations coming together,” says Schwabe.

However, Amidon’s research suggests that there are shortcomings in the design and leadership of many innovation zones. Too many, she says, are still focused too closely on particular areas of activity, such as science or culture, when a broader remit would make them more attractive.

At the same time, both knowledge entrepreneurs and venture capitalists operating in such zones do not fully appreciate the potential of the intangible assets of the knowledge economy and are therefore not as well equipped to exploit them as they should be, suggests Amidon.

However, despite the amount of research and volume of papers produced, specialists are still far from able to produce a shopping list of ingredients.  “There’s no blueprint for actually creating them,” admits Schwabe. Furthermore, the increasing intervention from government – some might call it interference – may in some cases be detrimental.

It is all very well for national governments to embrace the knowledge cities idea and to build the infrastructure required to support it, but in many cases those same governments can be wary of people exchanging political ideas or ideas that ruling elites may consider subversive.

For example, in China the government is keen to do anything to maintain the country’s free-wheeling economic growth. But it also tries to keep a tight control on the internet to shield its citizens’ eyes from information about anything that might be considered subversive, such as Tibet, the Falun Gong religious sect and details of the many disturbances that take place across the country every week.

Likewise, in Dubai, which is liberalism itself compared to nearby Saudi Arabia, it does not pay to criticise the ruling family – certainly in the same way that any leader in Europe (Belarus and Russia apart) or North America can be lampooned. And where citizens have to be careful about what they say or e-mail, can there truly be an open exchange of ideas? How can corruption, which ultimately stymies economic freedom, be minimised in such an environment?

Across swathes of Asia, while communications are regarded as a key to further and faster economic development, the commanding heights of most economies nevertheless remain tightly controlled by just a handful of people in or among the ruling families. This is true even for such ostensibly open countries as Thailand as it is for more repressive regimes.

Similar criticisms, however, could equally be levelled at many of the countries of the Europe.

It raises the question, however, of just how much knowledge people will be allowed to share, not to mention the utility of some of the knowledge cities that are being constructed across the world – or whether knowledge cities and the technology that underlies them can, or will be, a positive force for change.

References:

Debra Amidon will be presenting her latest paper on Knowledge Innovation Zones® at the 5^th International Roundtable and Oman World Summit on Innovation and Entrepreneurship: www.wsie.org. Her paper, Knowledge Innovation Zones – The State of the World, is available from www.entovation.com. The term Knowledge Innovation Zone is a registered trademark.

Oliver Schwabe has written a paper detailing his project with the Egyptian government. It can be downloaded from www.euro-focus.com.

For more information about knowledge cities and knowledge innovation zones, please see www.inthekzone.com.