A common theme is emerging in the midst of digital urban transformation and the new digital economy. This theme is digital clusters and the need for cities (regions, nations) to become digital innovation platforms.  In order to achieve this, cities need to be more proactive and forward thinking in the way they create a favourable environment to support and facilitate the digital economy, as this will be critical in helping cities remain competitive. Failure to do so will see cities being left behind and losing their talent to other more proactive cities.

Note: In this blog, the term city apply to a city, region, nation and even community – When I refer to Government it can apply to both central government and relevant city departments.

Cities are realising that innovation, digitisation, and talent are prerequisites for a strong, diversified, 21st-century economy. Hence we see many of them, all over the world, investing in their digital strategy.  Digital clusters and innovation centres are the natural engines to accelerate and catapult cities into the next wave of economic growth.

Digital Clusters, when done properly, have the potential of driving economic growth by stimulating innovation and knowledge spillovers. The evidence is coming to light that cities executing such a strategy successfully, are experiencing rapid job creation, economic growth, international investment and are attracting global talent.

The role of government in enabling digital clusters

The government needs to have a clear Digital Strategy that is well thought through and clearly communicated. The key ingredients of such a strategy should focus on:

• Political leadership and support
• Pool of talent & excellent universities
• Top infrastructure both physical and digital
• Seed funding & Smart Capital
• Entrepreneurs friendly environment

Such strategy needs to be adopted at the highest level of leadership and given ongoing focus, attention, and support. Furthermore, real funding needs to be allocated to help kick start and/or accelerate each cluster.  A good example of such a strategy is the recently published UK Digital Strategy.

Cities must also make sure that their universities remain competitive and aligned with the talent gap both today, but also in anticipating tomorrow’s emerging needs. They must ensure a path to give everyone access to the digital skills they need.

If there is one undisputed value of globalisation, it is the access to global talent. We need to consider the world as a potential talent pool. Of course, you want to grow your own talent but it also means identifying skills shortages and enriching it with global talent; opening the doors and proactively making it an easy process to bring in foreign talent. The ultimate goal is to grow, attract and retain the top talent and to give them reasons to stay. The recent pushbacks on immigration in countries like Britain, the USA, and others, I hope will be a temporary blip rather than an ongoing trend. I believe part of the “pain” people are expressing frustration about comes from a failure to build the infrastructure to support population growth (e.g, transport, housing, hospitals, schools etc) that has led to people feeling like they’re scrabbling to access basic services.

So given the previous paragraph, I believe that another crucial aspect government must facilitate is in creating the conditions that make the city the best place to start and grow the digital business. Building world-class infrastructure to connect communities, be it road, rail or fibre. Hyper-connectivity today is a must if we observe the exponential evolution of technology and its real-life applications. Making the city a happy place to live will make it more and more attractive to top talent;  Developing and putting in place friendly startup policies along with specialised innovation centres closely linked to the clusters community. (A great example would be the various UK catapults).

The start-up world is volatile; investors and founders and their needs and activities change rapidly. Government and cities environment are not as agile and cannot operate at the same speed (policies, regulations, etc). Therefore Government should focus on enabling structures that can address more fundamental requirements and demonstrate they are business friendly and startup nurturing (such as access to low-interest loans, seed funds, rent free or low rent incentives, etc)

Digital clusters lessons learned

A quick scan of successful clusters reveals some common characteristics. If you are looking into establishing a digital cluster, you need to carefully assess the following:

• Visionary leadership – Digital clusters will need the government leadership support, to always tell their story and be their champion.
• Leveraging and enhancing existing capabilities – rather than start from scratch, seek a vibrant community with a lot going on and then parachute enablers and accelerators.
• Specialisation – Don’t build a generic cluster. Focus on a specific sector or a few sectors that are related to each other and more importantly that are part of the city’s essential identity and reputation.
• Affordability – Set it up in an affordable real estate place with a vibrant community and life. Keep the cost of entry as low as possible.
• Authenticity – Don’t copy or try to duplicate what exists. You can learn from others, or collaborate but let your local conditions and strengths reflect your identity or what your city is known for.
• Talent availability – Ensure sufficient talent supply. Talent is the future currency and the main ingredient for success. Use what you can find locally and embrace diversity and cross-pollination by bringing skills from all over the world to fill and supplement what you need.
• Access – Provide the cluster with affordable access to finance, to local networks, to commercial properties, to services, to data (including open data). Cater for all their needs and make the environment ideal so they can focus on their success.
• Connect – with other national clusters and similar clusters globally. Collaborate and share knowledge. In today’s world, collaboration and sharing are a business strength, not a threat.
• Reinforce – by setting up a specialised network of catapults (or innovation centres) to help emerging startups connect easier and faster and to accelerate the development of both the supply and demand sides of innovation.
• Environment – Ensure you provide a nurturing and enabling environment. Clusters require help in removing barriers and aiding the collaboration. They need advanced connectivity infrastructure to be in place (both digital and transport). They also need access to data (including open data) and various government entities. They need an enabling and accommodating Policy framework instead of a deterring one.

Conclusion

No one can predict the future with high certainty. However, what we are all sure about is that digitisation will play a very significant role in our future. It will change our environment, how we commute, the way we work, transact. It will surely change the economy around the world by introducing new business models and possibilities.  As these digital eruptions happen, cities today have a choice to make and to make it fast. Do they want to be part of shaping the future and the challenges we face ahead or do they want to remain a passive observer and be disrupted?