There are many economic uncertainties in the world today, but one thing that all countries, regions and cities would agree unanimously on is that there is a major opportunity to harness digital innovation to create economic value. As a regional strategy consultancy, it will come as no surprise that regional ecosystems are an area we are actively interested in.
Cities and regions across the UK are looking to develop centres of excellence for innovation and technology, often centred on specific capabilities, such as advanced technology (Silicon Valley), FinTech (London), Smart Cities (Tel Aviv) or Artificial Intelligence (Toronto), but what makes an innovation ecosystem successful?
Despite the right intentions a successful innovation ecosystem is not a construct of luck or pure intention, it needs a well thought out strategy and an execution of the strategy. What are the key ingredients and what are the strategic considerations that facilitate a world-class innovation system?
Focus on capabilities
Every city and region needs to establish its core capabilities around which to form an ecosystem. This can be based on heritage, e.g. financial services in London or Leeds, digital and creative in Bristol or media in Manchester. At the same time it could be an artificial construct based on developing capabilities and fuelled by R&D within regional universities. The Smart City ecosystem in Tel Aviv or Artificial Intelligence in Toronto are good examples.
Innovation Hubs / Incubators / Accelerators
A solid number of effective, active and well-integrated accelerators and incubators across the spectrum of higher education, corporates and, importantly, neutral and not-for profit organisations, linked to international innovation ecosystems and offering both a physical presence as well as a virtual presence for remote start-ups and scale-ups.
A strong group of regional entrepreneurs and business leaders who are active and committed to the region being a great place to start and grow a company that form a sizeable, well-connected cohort of start-ups and entrepreneurs as well as scale-ups engaging with the wider ecosystem of investors, advisors, mentors and supporting organisations. Ideally, this cuts across multiple sectors and innovation streams.
Strong government support for and understanding of start-ups to economic growth. Additionally supportive policies should be in place covering economic development, tax, and investment vehicles.
Higher Education / Skills
A broad, deep talent pool for all level of employees in all sectors and areas of expertise. Universities are an excellent resource for start-up talent and should be well connected to and part of the ecosystem.
Often regional universities engage in ground breaking R&D that the surrounding ecosystem and commercial players may be blissfully unaware of. Most US universities have strong links between their R&D projects and industry to ensure new developments can be tested and commercialised as soon as possible. Some UK cities and regions still struggle bridging the gap between R&D centres / universities and industry, but a great example of how to bridge the gap is the Hartree Centre in Runcorn. The Hartree Centre is a high-performance computing and data analytics research facility that is part of the Science and Technology Facilities Council. Formerly one of the UK Research Councils, STFC is part of United Kingdom Research and Innovation. There is close collaboration with all regional universities and businesses looking to use advanced technology to use for front-end or back-end facing innovation.
Whitecap has established relationships with several northern universities, including those in Leeds and Manchester, who have recognised the need to connect with industry and are increasingly collaborating with corporates and SMEs to drive innovation.
Collaboration with corporates
Large companies that are the anchor of a city / region should create specific departments and programs to encourage cooperation with high-growth start-ups. They could develop sandboxes and specific collaboration programmes to enable start-ups to address the problems and innovation issues corporates are facing.
Experienced and well-respected regional mentors and advisors who give support across all stages, sectors, and demographics.
A culture encouraging start-ups to take risk and potentially fail. Fail fast, learn fast. Doing this builds end user relationships and empathy as to what constitutes value because feedback, whether positive or negative, is an important enabler towards adapting and responding quickly and continuously. This agile way of working makes failure a key part of innovation rather than an exception and it enables people and organisations to adapt, respond, iterate and continuously improve behaviours, systems, and processes to provide increased value for people and customers.
Innovation requires access to real data. It is impossible to innovate a process, system or application without access to real data, e.g. machine learning algorithm can’t be re-iterated without data. Data providers are likely to be the larger and established organisations within a sector, such as banks and financial service institutions for FinTechs, NHS Trusts for HealthTech or Retailers for data analytics innovators.
Start-ups and scale-ups also need a tech infrastructure within which to build proof of concepts and develop applications. This tech infrastructure can be (and often is) provided by the tech giants, universities, public sector clouds, and others.
Professional services (legal, accounting, real estate, insurance, consulting) are integrated, accessible, effective, and appropriately priced to make the benefits of these services accessible.
Large number of events for entrepreneurs and community to connect, with highly visible and authentic participants (e.g. meet-ups, pitch days, start-up weekends, boot camps, hackathons, and competitions, etc.).
Strong, dense, and supportive community of VCs, angels, seed investors, and other forms of financing should be available, visible, and accessible across sectors, demographics, and geography.
Every innovation ecosystem is different, and the various ingredients can be applied differently, depending on existing regional strengths and ambitions. The one thing they all have in common though is that all key stakeholders and participants need to come together as part of a united vision and proposition. This is further accelerated by the strong belief that individual actions should not result in direct ROI but that by contributing to the greater good of the ecosystem all parties will benefit in the long-term; the whole is greater than the sum of its parts.
Our recent analysis of the FinTech Ecosystem in the Leeds City Region provides practical insights in to the issues and actions needed for an ecosystem to succeed:
Regional ecosystems can have similar principles applied to them as other organisational entities. To give themselves the best chance to succeed they need to undertake the same strategy rigour as an organisation would; which means understanding their capability, competitive position, ambitions and potential, and then sharing a vision for the future and a plan to realise it.
As a result, innovation ecosystems should pursue these steps to develop their strategy:
– Map the ecosystem in detail considering the ingredients outlined above.
– Engage with all stakeholders and develop a compelling proposition and vision.
– Based on evidence, develop a long-term strategy and set out an implementation plan.
Hopefully you’ve found this article useful. If you feel that your innovation strategy would benefit from independent review and challenge, please get in touch.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education and Professional Services, including Corporate Finance and PE.