City Innovation Environments

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Today we live in a world of rapid development. Economic conditions have changed considerably in both the worlds industrialised and the worlds developing nations over the past three decades. The break with previous trends have become so marked that the accepted economic models of economics of scale for achieving success are facing a fundamental crisis. Instead, the combination of technologies and economies of scope has emerged as an important source of job creation, growth and business success.

Most places and organisations realities today are characterised by hyper competition and rapid changes in all forms, from customer demands to technological development. Hyper competition is a key feature of the new global economy. Not only is there more competition, there is also tougher and smarter competition. Consequently, competitive barriers to entry that were once considered permanent are gone and have been replaced by competitive advantages that continuously mutate and develop. Hyper competition is a state in which the rate of change in the competitive rules of the game are in such flux that only the most adaptive and quick to change will survive. Customers want it quicker, cheaper, and they want it their way. This fundamental quantitative and qualitative shift in competition requires organizational change on an unprecedented scale, and the competitive advantages must constantly be reinvented.

During the 1960 and 1970s, and particularly following the oil crisis, most countries increasingly recognized that innovation was a crucial element of competitiveness in the manufacturing and service sectors. They began to develop technology policies either to stimulate the transfer of public research results to create new products and processes or to enhance private sector efforts to innovate, notably through increased investment in research and development. Peter Drucker’s excellent book “Innovation and Entrepreneurship” was the first book to present innovation as a purposeful and systematic discipline.

For individual businesses faced with slow growth, commoditization and global competition, many CEOs started to view innovation as critical to corporate success. Now in the 21st century, innovation is seen as a key differentiator in markets that are increasingly hard-fought and it is destined to become ever more so as competitive pressures increase across all sectors, as the inevitable pressure of globalisation intensifies. Today it is recognized that innovation separates the winners from the losers. In a world of hyper competition, pro-active and continuous work with focused innovation is imperative to gain competitive advantage, both for individual businesses as for nations and regions.

In the global context of the 21st century, cities and regions compete at a level unknown of before. For European countries, the only sustainable way to compete is to rely on science, technology, innovation, knowledge and industry, in being able to offer innovative new quality products and services to the market before anyone else. The success of a city can be measured in how well it responds to and attracts people and businesses in its target markets of investors, visitors and residents.


To become and remain competitive toward these target markets in the 21st century requires the cities to find their unique attraction factors, in competition with other cities on the national and global area, and today this requires work with innovation. However for a city, innovation is a messy business. It’s full of blind alleys, random collisions and abrupt changes in direction. Ideas mix and recombine, fail, re-emerge and, in the end, a precious few become successful.

Innovation, most of all, is driven by collaboration. So it takes more than just smart people, but diversity as well. Different people, working on different things, colliding together in unexpected ways is what brings about important new ideas. That’s why, more than anything else, vibrant cities are crucial to our continued ability to innovate and compete. Therefore we need innovative ecosystems – the regional attraction and clustering of talented professionals, smart institutions, frontier research and innovation and leading companies that allows the spark of creativity to bring new innovative developments – are rare and historically exceptional. They do not spawn from nothing and it is very difficult, maybe impossible, to create one simply with public action and investment. However, they do exist, and typically the public sector (local, regional, national administration, or research institutions and universities) is a central player in the creation, growth and dynamisation of innovative ecosystems.

The creation and development of Urban Innovative Areas and Innovative Ecosystems is a complex, long and difficult project. They demand a clear vision that remains attractive and consistent over time, and coherence and harmony between very diverse but inter-related activities: urban planning, real estate investment and commercialization, science and technology strategies and programs, attraction of leading companies, dynamisation of the ecosystem, political and economic leadership, etcetera.

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