Creating hotspots for the knowledge economy

Introduction

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.

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.

Managing co-opetition

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.