The increasingly knowledge-intensive economy is changing demands for contemporary workplace environments. All over Europe, we see a variety of initiatives for the (re)development of business and science parks, landscapes for working, and technological valleys and campuses. Though these initiatives vary in their objective, diversity, or brand, many of them bear at least one important thing in common. They presume added value from designing specifically for the knowledge economy by co-location. Such “hotspots,” nowadays the holy grail of area development, are believed to spur innovation. However, despite strong convictions, empirical data has proven their success to be a wash.
Taking this into perspective, we intend to discuss the design and organizational aspects of successful knowledge locales and what therefore must be incorporated to optimize innovation. Based on a literature study and fieldwork in a number of cities, we propose aspects or strategies for “knowledge management” at knowledge locations. The examples used to illustrate the strategies are based on field observations and expert interviews in a number of knowledge hotspots across Europe. Here we highlight Arabianranta in Helsinki, Finland, and the High Tech Campus in Eindhoven, some of the best examples of comprehensive knowledge-management schemes.
The intention of area development
Before addressing specific strategies, it is important to take notice of the fact that knowledge hotspots are developed for different reasons and with different intentions in mind. What’s the main idea or key purpose of the concept? Who takes the initiative? Which party is leading? In what way is the original goal preserved? Typically, public sector bodies drive the foundation of knowledge hotspots. Some hotspots are inspired by political goals like making the knowledge economy more visible; others have more specific ambitions. An example of such is that of a university-affiliated hotspot seeking to develop university intelligence into marketable goods. However, some are more business-driven, with the ultimate goal to increase innovation and profitability for a company. Whereas a public sector or university hotspot may have difficulty in maintaining focus and clear vision, a business-driven development avoids such hazards. The number of actors involved is reduced, decision-making clarified, and politics streamlined; even more so when one dominant, locally and politically well-connected, private actor takes the lead.
Strategies of knowledge management
The added value of a knowledge hotspot ultimately lies in the positive effects of co-location of related companies and knowledge institutes. However, achieving these benefits requires knowledge management. We here identify five strategic aspects that encompass successful knowledge management programs: optimizing cognitive distance, managing “co-opetition,” facilitating spillovers, and the active as well as passive promotion of knowledge diffusion.
Optimizing the cognitive distance
A first strategy is to ensure an optimal “cognitive distance” between tenants at the hotspot. Optimal cognitive distance means that the cognitive “gap” between people and companies at the hotspot is big enough to create new ideas but small enough to retain the capacity of collaboration. Several studies suggest that optimal cognitive distance between partners increases the chance of fruitful cooperation, ultimately resulting in innovation. Assuming that an optimal cognitive distance between park tenants is conducive to effective and fruitful knowledge exchange, the next question is how to manage this factor.
An option is to apply an active tenant admission policy based on a carefully detailed concept for the hotspot. Rather than targeting a large, diffuse group (“high tech firms”), the management may focus on a specific sector or a “community of practice.” Branding may help to identify and aim for specific “target groups” for the park, in order to generate a certain critical mass. It can be translated into admission criteria for tenants to avoid the risk of losing focus and creating fragmentation.
Arabianranta is a redeveloped industrial area in the northwestern part of Helsinki. In the mid-1990s, the area was redeveloped into a mixed-use district of housing, leisure, educational facilities, and offices. The area’s redevelopment has been governed by the theme “Art & Design” making a focus that has lead to the international acclaim and commercial success of the project. Historically, Arabianranta had been dominated by one of the largest porcelain factories in Europe, Arabia. Arabia Porcelain was renown for quality and good design. Decline set in during the second half of the 20th century causing factories to close and the area to become a polluted wasteland. In the early 1990s, the government sought a strategy to regenerate the region and elected on a vision to revitalize the heritage of good design. Moreover, Helsinki’s world-class Art & Design Academy had opened a temporary facility in an abandoned building in the area, and a small number of design firms were already located there.
Since 1995, the redevelopment and management was taken over by a dedicated development organisation ADC – Art and Design City, Helsinki, comprised of the City of Helsinki, the Design Academy, and some large design firms and knowledge institutes in the region. Together, these actors develop and implement the management and planning strategies for the area. Over the years, strong investments have been made in art in public spaces and requirements for the design quality of buildings have been set exceptionally high. Each building is equipped with state-of-the-art broadband infrastructure, making the area an interesting “playground” for innovating firms to develop and test new products and services. The area is a frontrunner in “user-driven innovation,” a process in which resident communities help drive innovation. ADC plays initiator and network broker for new projects. Arabianranta seeks to become the leading centre of art and design for the Baltic region, through a “quadruple helix” approach: strategic partnerships between firms, public organisations, knowledge institutes, and citizens. Today, the area counts five institutes of higher education, a large number of renowned creative design firms, many of which are foreign, a mix of upscale residential areas and social housing, and high quality amenities. It has attracted some 10,000 residents, of which 5,000 students and 300 creative firms employing 4,000 people.
Companies indicate that they like the area for its creative ambiance; moreover, they highly value the presence of the Design Academy. The area has gained a strong reputation as the “place to be” for design firms. According to some entrepreneurs, being located in Arabianranta helps to sell products to business clients, and also, makes it easier to find qualified staff. Many firms are located there to stay current with the latest design trends. For them, “buzz” is even more important than the other benefits like the facilitation of networking and commercial cooperation.
Having admission criteria is more difficult to implement in long-established or very large hotspots. To replicate the strategy in very large and more diffuse knowledge hotspots, zoning or cluster policies co-locating similar types of businesses could create “sub-climates” for enhancing local cultural identity.
A second strategy for knowledge management is a clearly defined “co-opetition” programme. Co-opetition refers to the idea that companies may cooperate and join forces in the first stages of research and development (the exploration stage), and become competitors in later stages of commercialization and mass rollout (the exploitation stage). The move from the first to the second stage can be a sensitive one and may cause problems if no proper arrangements are taken. Active management at the hotspot can help to address this relational risk. For example, the management can protect intellectual property by providing pro-active patenting. Another tactic is to avoid mixing pre-competitive and post-competitive activities in one hotspot, preventing the issue entirely. The hotspot management may, for example, decide to concentrate on the exploration phase, investing more in research and (a bit of) development activity.
A case in point is the Eindhoven High Tech Campus, a privately run knowledge park at the edge of Eindhoven. The major tenant and governing actor, the Philips Research division of Royal Philips Electronics, organises the park via company divisions and organizations that are mainly concerned with basic research. Only the affiliated Philips Applied Technologies is active in the “exploitation” or production phase, transitioning ideas into goods.
Facilitate spinoffs and spinouts
A third strategy for enhancing innovation is to facilitate the creation of spin-off and spinout firms from a mother company or university at the hotspot. Evidence suggests that if “mother and child” are located at the same spot, knowledge synergies can be expected. At research and development hotspots, like a science park, it is becoming typical to have incubation facilities, where spinout firms can prosper. At “smart” knowledge hotspots, conditions for the spin-off companies are optimized beyond the “usual” support activities of providing cheap rent and basic facilities. Such hotspots incorporate venture capitalism, internal subsides and financing, and access to a network of logistical expertise that academic start-ups typically lack such as intelligence on marketing, logistics, and management.
The management of company spinouts, however, may necessitate different strategies than for university spinoffs. Company spinouts are strongly tied to development within an existing value chain. They may emerge for different reasons: the mother firm may stop a business line which has spun out and run it as a separate entity; researchers in the mother firm may discover new products or develop ideas that don’t fit within the company’s portfolio/profile but have commercial potential, so a new firm is created; or, individual employees may join forces and create a new business. In the latter case especially, competition issues with the mother firm may arise (though not necessarily). University spin-offs are less problematic in this respect.
In Eindhoven’s High Tech Campus, the campus organization attends to company spinouts and external start-ups in several ways, including maintaining a fund for new technological entrepreneurs named Technostar. Apart from financial means, the management of Technostar helps start-ups with company development, networking, and coaching. In a physical sense the start-ups are accommodated through a “technology and business accelerator,” a multi-tenant building with reduced rents and dedicated spaces.
Planning knowledge diffusion
A fourth strategy to augment innovation at a hotspot is through the active promotion of knowledge diffusion in-situ. There are many ways to do this. One is to increase encounters between people through, for example, networking events or joint seminars. Creating the right atmosphere for non-threatening casual encounters between people is crucial. Network management can promote these encounters, by organizing business meetings, conferences and gatherings. Network managers may, for example, bring partners together on a specific topic.
In the Eindhoven Campus, there is a keen and quick process of knowledge validation. A dedicated “Technology Liaisons Office” maintains close contact with tenants and creates potentially valuable connections between them. The Technology Liaisons Office functions as an intermediary for technology sharing and the management of spillovers between tenants. It organizes workshops, business meetings, and network happenings to enhance knowledge diffusion. It has also initiated the “Campus Technology Liaisons Club,” which is a network organization of decision-makers and “influentials” on the campus. The office essentially tries to build and maintain a community of practice. In the end the purpose of the community is to have the feeling you work on the campus instead of with an individual company. To help foster a sense of security there is an “Intellectual Property & Standards Office” that is dedicated to processing patents for innovations made within the campus.
Promoting "unplanned" knowledge exchange
A fifth tool is the passive promotion of knowledge diffusion. Knowledge exchange can be promoted by the physical layout of an area and smart positioning of certain functions. For instance, providing communal facilities (like cleanrooms or expensive machinery) increases encounters between people and different firms and fosters cooperation and exchange. Locating communal facilities and ample open space in the campus centre creates a “stage” for knowledge diffusion and interaction between people and organizations in the area.
At Eindhoven’s High Tech Campus, to promote interaction and knowledge diffusion, the campus has a specific zoning plan and special rules. The designers have opted for a central position of collectively used facilities with a concentric zoning of different functions around it. In the heart of the campus, collective functions (like a restaurant, shops and meeting rooms) are housed in one building called “The Strip.” Next door are shared facilities like “MiPlaza,” “The Holst Centre,” and the “Centre for Molecular Medicine”; these buildings contain clean rooms, laboratories, and other specialized spaces. More towards the edge of the campus are several collective parking buildings in between assorted mixed-use, multi-user buildings. In the periphery are sports facilities and a kindergarten. The maximum walking distance between the centralized shared facilities and other functions on the campus is approximately eight minutes.
Specific regulations and campus policies have reinforced the physical zoning strategies. The interior zone has been made inaccessible by car and the quality of the landscaped, green spaces is high. Employees and visitors are therefore encouraged to walk to their destinations on the campus, again improving the chance of casual encounters in a welcoming environment. Within the private buildings, no meeting rooms for more than eight people have been permitted. Instead, facilities for larger gatherings are collectively offered within “The Strip.” Neither lunchrooms nor café’s can be situated inside private buildings. Again, these are offered collectively. Even the sporting facilities, communal as well, focus mainly on facilitating team sports in favour of individual workouts.
Conclusions, recommendations, and some precautions
Developers of knowledge hotspots and local governments typically have very high expectations of the innovation potential of the new area. However, most companies continue to have links with innovation partners outside rather than inside the location, often with established partners. As many studies have come up inconclusive on whether the success of companies within a hotspot is merely a correlation of factors already present in an area or a result of co-location, there is no reason to believe that knowledge hotspots can be driven by local interaction alone. Further, often, the interactions that do occur at such locations may not directly relate to “knowledge and innovation.” However, they still can be fruitful for companies, providing, for example, access to business information (e.g. market trends) and policy information (e.g. how to win subsidies).
Realizing that innovation works very differently in different industries is another important consideration. Creative industries rely heavily on networking “with the right people” and customer-relationships for innovation. These firms prefer an inspiring ambiance to enhance creativity. Free-lancing and job rotation is very common and reputation is a central asset. In science-based sectors (like biotechnology), on the other hand, innovation processes are highly systematic and based on formal knowledge and scientific methods; “know-what” and “know-why” are more relevant and firms search for partners in a very selective way. Technical cooperation often takes place through internationally orchestrated partnerships. Even within sectors, modes of innovation can differ – industrial design is very different from shooting a film and discovering a new molecule requires other procedures and “proximities” than developing new human tissues would.
Finally, don’t expect that a common bar will necessarily promote innovation. As Huber finds out, in the case of Cambridge ICT workers, “In bars people are often too drunk to say something technically meaningful.”
Given the restrictions listed above, what tools are available for knowledge hotspot developers and designers?
• Apply tenant selection. Make sure that tenants at the hotspot are complementary to some extent. The “cognitive distance” between tenants should not be too high (i.e. they do completely unrelated things) but not too low either (if tenants are exactly similar, they won’t have an interest in cooperating). Tenant selection can be achieved by setting admission criteria for new tenants.
• Offer shared professional facilities (i.e. cleanrooms, labspaces, prototyping services, funding agencies, business support services, etc.). This gives tenants access to state-of-the-art facilities and thus enables them to concentrate on their core activity: innovation. Many professional knowledge firms are happy with the turn-key solutions and an all-in price that includes access to many excellent facilities. Moreover, it may lead to unexpected encounters between tenant firms.
• Ensure a smart programming of activities. Organising keynote speeches by industry leaders, new technology demonstrations, etc. can bring different people together around a shared interest and may bring interesting leads. On the soft side, organising events (like sports tournaments or cultural events) may promote the formation of social bonds and bring people into contact with each other, possibly resulting in business cooperation.
• Promote interaction through urban and landscape design. The area of the knowledge hotspot can be designed to optimize the chance of spontaneous encounters between people in public space. Conducive elements include a park-like setting, a lack of vehicular traffic, meandering pedestrian walkways, and/or bicycle tracks.
• Create common facilities or amenities at a central location. Having a central place for bars, restaurants, or meeting rooms enhances the chance of encounters there, and also helps to give the place a centre and an identity. In a very strict hotspot, tenants may even be forbidden to have their own facilities (as is the case in High Tech Campus).
• Offer special services for start-up firms. Young firms are a source of innovation and new ideas. Make sure they feel at home at the knowledge hotspot, by offering cheaper premises and business support. Moreover, put them into contact with larger firms on the site that could become potential clients or help to open up networks for them.
• Set up a “technology transfer point,” where tenants can link up with sources of (technological) knowledge they might need. Local universities might be willing to open up an information desk.
• Consider hiring a programme manager for the knowledge hotspot. This person should set up and implement a programme for joint activities in the area that help to bring the concept forward.
(This article was published in Stream 02 in 2012.)