Local initiatives create new opportunities for international investors
A common image of innovation is large firms having business disrupted by a few smart people in a garage striving to make their ‘little dent in the universe’. But effective innovation often happens when people and firms of all sizes cluster in a hot house of competition and collaboration to satisfy demand in new ways. Five thousand years ago people in China clustered together to innovate and manufacture silk, and there are countless other examples.
In the 1990s, Paul Krugman  and Michael Porter  explained clusters in terms of:
- Interconnected companies and institutions in one place
- Focused on a particular field
- With individual economies of scale
- Where productivity benefits from one’s closeness with neighbors
- Access to knowledge and finance
- Competitively driven speed of innovation
The publicity encouraged cities around the world to identify and grow their own clusters.
Clusters also fail or never ‘catch fire’ and often waste lots of money. The reasons are thought to be due to forces both internal (i.e. obsolete business models, anti-competitive practices, productivity) and external (i.e. demand shifts, investment declines, new innovations elsewhere); Detroit and autos, Glasgow and shipbuilding.
In 2014, the Brookings Institution and others rejuvenated the cluster debate with an emphasis on compact areas within cities full of eclectic creativity, called Innovation Districts (ID) . This work started another wave of cluster-creation, and there are now over 100 IDs.
A systems’ approach provides a fresh lens with the ID seen as a collection of actors (stakeholders) networked into a complex adaptive system
There is no agreement, but this definition is representative; “We define innovation districts to be spatially delineated urban areas in which firms connect with each other and with anchor institutions to foster innovation and entrepreneurship, with active support from policies and programs, effective infrastructure, attractive amenities, and conducively structured economic and social spaces.” 
Evidence on ID success and failure is scarce . A systems’ approach provides a fresh lens with the ID seen as a collection of actors (stakeholders) networked into a complex adaptive system . Like raising children or baking a cake, one never really knows the future outcome. Nesta, the UK innovation organization, reflecting on the progress of IDs, suggests cities should match construction with curation, be wary of landowner windfalls, and be rigorous in collecting and analyzing evidence .
Successful clusters have industry focus (i.e. London’s finance, Milan’s fashion and Silicon Valley’s technology), whereas many IDs are industry neutral (Barcelona’s @22, Galway City’s ID, and Atlanta’s Tech Square). The clusters grew organically (largely driven by business decisions), whereas the IDs are more synthetic (deliberately driven by planners). Kendall Square, the wonderful ID poster child in Boston is a focused hybrid (with existing stakeholders, new entrepreneurs, and politicians in open collaboration) .
What about IDs focused on climate change? The city of Leeds in England  majors in sustainable living. In Houston, Greentown Labs is an energy transition incubator. Amsterdam’s doughnut economy strives for sustainable living. All are doing great work and address parts of the recipe for a Climate Change Innovation District. Additionally, as the world looks to Glasgow for COP 26, the city’s green ambition is awesome.
This checklist is for city leaders and other stakeholders wanting to grow an Innovation District to combat climate change. A focused hybrid ID is advocated. A vision is essential but no detailed masterplan, this is a complex adaptive system to be nurtured.
- System Leadership . Driven by passionate leaders in local politics, industry, research, entrepreneurs, and infrastructure. Red flag: top down, flawed and plagued by wishful thinking.
- Existing Assets. Demand is high for solutions to climate change, so start with an honest assessment: relevant world-class research university(ies); a few anchor firms delivering climate solutions in relevant sectors such as energy, transport, or food; and a creative entrepreneurial culture are all items that should be on the checklist.
- Location. A neighborhood ripe for development, close to existing assets with good transport links. Gaps to be filled with new infrastructure creating a cultural buzz to attract talented people and post-covid teleworkers interested in climate change. Red flag: gentrification and local alienation.
- Funding. Public investment, including matching funds as a catalyst to fill gaps alongside angels, venture capital and banks. Red flags: excessive funding to attract anchor firms and pay for real estate, whilst not enough for startups and other parts of the city.
- Startup Incubator / Accelerator . Most startups fail but also create most new jobs. Provide entrepreneurs with a base of support in business, legal, financial, and digital services, plus environmental expertise and mentors.
- Local Customers. Encourage established firms and public sector organizations to collaborate with startups on pilots to test business models, providing skills and creating demand for products and services until “exporting” (customers outside the city, region, country) is achieved.
- Practice what you preach. City governance to apply CCiAP (Climate Change in all Policies) to health, housing, education, transport etc.
- Learn what works. Observe and study the results routinely (emerging success and challenges). Spread best practices through the network as a way to hyper-charge innovation. Horizon-scan new innovations elsewhere.
The prizes for a Climate Change Innovation District are enormous: successful firms, jobs, a thriving local economy, and avoiding catastrophic climate change.
The word ecosystem is often used for clusters and what we see in nature may be beautiful but often unseen are ruthless, risky Darwinian struggles for survival via competition and cooperation. The prizes for a Climate Change Innovation District are enormous: successful firms, jobs, a thriving local economy, and avoiding catastrophic climate change. For the guys in the garage with a good idea, when you are done tinkering you might consider relocating to such a city.
References and Further Reading
If you only have time to follow one link I suggest Radio Boston on the success of Kendall Square (8).
1. Economic Geography
2. M Porter
3. Katz & Wagner 2014
4. Drucker, Kayanan & Renski 2019
5. Questions to consider, 2019
6. Knowledge, Clusters and a CAS Approach, 2015
7. Nesta, G Mulgan 2019
8. How Kendall Square did it, 2018
9. Leeds UK
10. System Leadership
11. Incubators and accelerators https://www.cleantechopen.org/en/ and https://unfccc.int/ttclear/incubators/
Regina "Gina" Kline
Founder & Managing Partner, Enable Ventures
October 27 - 12:00 PM EST
Founder & CEO, Acumen
November 3 - 12:00 PM EST
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