Clusters are at the heart of the creative economy

Tech collaboration

Charles Armstrong, social entrepreneur and founder of The Trampery, explores the importance of tech companies working in clusters.

Digital communication means every business can be a global business, but even the most hi-tech sectors benefit when companies work in physical proximity. The informal conversations that take place in the community can all contribute to a rapid and productive exchange of ideas and skills.

Over the last 10 years, governments around the world have made an important shift in their economic perspective. Instead of looking to corporate giants as the mainstay of future growth, the focus has shifted to startups, entrepreneurship and the creative sectors. These are now recognised as the economy’s most sustainable sources of dynamism, innovation, employment and value creation.

As a result of this shift, governments everywhere are now working to understand what measures they can take to support entrepreneurship and help more businesses to scale up and become successful. Central to this is recognition of the strategic role played by innovation clusters. An innovation cluster is like a petri dish, providing a nutrient-rich habitat where new creative ventures can germinate and flourish before expanding into the wider world.

There’s nothing new about clustering as an economic and cultural form. From ancient China to medieval Italy, trades and crafts have frequently organised themselves into geographical concentrations. But innovation clusters differ from their historic antecedents in several important respects. They are more complex, often combining several different sectors, and they evolve much more rapidly, continuously changing their shape and character in the process. This complexity and constant evolution make innovation clusters impossible to plan or manage in the conventional way. Cities and governments striving to develop new innovation clusters therefore find themselves in need of a completely different strategic approach.

London innovation cluster

Some 10 years ago, London didn’t have any recognised innovation cluster. It was clear this was holding back the development of the city’s entrepreneurial ecosystem.

In 2007 I began pressing policymakers to look at the district of Shoreditch, which I felt offered London’s most promising focal point to seed a cluster that could spread across northeast London.

Artists had started moving to Shoreditch in the 1980s, followed by fashion designers, product designers, web businesses and finally software startups. There was a huge amount of creative activity and a free-flowing collaborative culture, but very little structure and no government recognition.

It seemed to me creative hubs offered the most powerful strategic tool to consolidate existing activity and accelerate the emergence of a recognisable cluster. In the simplest analysis, a hub provides facilities needed by small creative enterprises on flexible, affordable terms. However, in the context of an innovation cluster, a hub plays a much greater role. It generates vital social capital by building communities, collaborations and friendships. It creates sectorial hotspots, which attract the most talented entrepreneurs in a particular field. Hubs provide a stable foundation in the shifting fabric of a cluster.

Emergence of workspaces

In 2009 I founded The Trampery, Shoreditch’s very first workspace dedicated to startups, with a mission to develop a network of creative hubs across east London. My ambition was to underpin the formation of a distinct east London innovation cluster spanning software and the creative industries. Today there are more than thirty workspaces in the area.

Other cities around the world are now following London’s lead and using workspaces as a way to catalyse the growth of innovation clusters. The city of Oslo in Norway is working to focus its rapidly growing innovation ecosystem around a distinct innovation district in the Tøyen neighbourhood. Similarly to London, the development of anchor workspaces plays a fundamental role in this initiative.

Another good example is Ho Chi Min City in Vietnam. ADC Academy was established in 2012 to provide workspace, training and business support for designers and makers. This fostered a critical mass of activity that helped to seed other initiatives in the neighbourhood and spread to what is now a thriving creative cluster.

The future

The next evolution for this model is the integration of housing and workspace. This idea is already in development in east London with the creation of the likes of ‘Fish Island Village’ – a community of apartments, workspaces and amenities specifically for creative entrepreneurs.

Integrated developments like this hold the key to a new generation of supercharged hotspots bursting with innovation and creativity. The design and operation of such facilities will need to change significantly to work in different cities and cultures but the opportunity is universal.

I believe this is the most exciting period in several centuries to be involved with real estate, urban planning and innovation.

A version of this post first appeared in the British Council’s Creative Economy guide.