By Roger Keenan, managing director, City Lifeline

The British government announced Tech City with great fanfare. David Cameron visited it (it’s not very far from the Houses of Parliament!) on its nominal first anniversary in November and launched more bits of it — a “national Virtual incubator” for small businesses and an “Entrepreneur First” scheme to encourage young people to start their own businesses.

In these times of economic doom, gloom and failure, the government wants to see success in the areas of the future. It needs to be seen to be encouraging success and it needs the economic growth that comes from new industries and the tax revenues that come from people working to create new products and services and customers buying them.

But will it work? Governments and civil services are slow, political and have their own internal agendas. The internet world is fast and vibrant and anarchic. Companies grow, flourish, get overtaken, die and reform themselves in months, not over government lifetimes. Is there a role for government? (Apart from providing free money, of course, but civil servants and politicians have a terrible record in selecting potential winners to give it to).

Hubs of innovation form themselves. People with like interests come together because they like being with people who are like themselves and have similar interests and aspirations. People like hanging out after work in bars with people who they regard as peers and respect and can learn from. Often, there will be a catalyst — something which is not directly participating and is itself unchanged by the experiences in its surroundings.

Technology-focused universities often fulfil that role and Cambridge in the UK and Stanford in the US are classic examples where hubs have spontaneously formed around them. So do manufacturing companies, where designers will leave a company and set up down the road making something similar, be successful at it, grow, then have their designers leave, set up down the road and make it happen all over again.

So hubs of innovation are organically created. Occasionally, governments can make it happen — an example is the Canadian government’s successful efforts in creating an aerospace hub around Bombardier in Montreal. But such examples are rare and often happen because the government has a lot of buying clout, like buying planes and trains from Bombardier. Mostly the creation of successful hubs is spontaneous, organic and not predictable, plan-able or controllable.

Although governments can rarely create such hubs, they can facilitate their growth by smoothing the way, flattening obstacles that might block progress, making it easier for start-ups to get commercial credit, promoting the benefits of an area, making people aware of the opportunities and so on.And that is what the British government is doing with Tech City (or Silicon Roundabout as everyone used to call it before the marketing professionals got involved). The government didn’t make it happen, it did that on its own, as like-minded people chose places with cheap accommodation and trendy bars and restaurants where they could do fun things. Everybody wants to be at the party, so others joined them. And Silicon Roundabout was born.

The government is promoting it, for example by the appointment of Eric van der Klieij as CEO of the government-sponsored Tech City Investment Organisation. Exhibitions dedicated to it are starting to appear, for example the new “Digital London” exhibition at the Excel Centre in March. The need for extreme bandwidth has been recognised and Virgin Business Media showcased a 1GBit/sec feed into THECUBE in Shoreditch to show what can be done. Existing business offering relevant services, such as City Lifeline’s colocation hosting centre just off the Old Street roundabout find that their services are more in demand than ever as a result of the government’s interest and promotion.

The fact that the internet industries are so fast-moving is in some ways an advantage. The nature of the products is fleeting, with every new development being quickly overtaken by its successors and products flowering, dying and being replaced. Once people are in a stimulating and exciting environment where that happens, and where the supporting infrastructure has already been attracted, they will carry on doing it in the same place because that is where the stimulation and excitement is. So they will stay in the innovation hub unless they have a reason to go elsewhere.

Activity creates activity and success creates success. Google’s well-publicised move to set up a London office near the Old Street roundabout bodes well for the hub. So does the success of organisations like TechHub, actually on the Old Street roundabout, running networking events, training and bringing together people who can spark off each other. Others are trying, notably Dublin, but Dublin is more about tax than technology. To get to be viable, a hub needs size and momentum to get to critical mass, easy accessibility and a flow of new people. London does that.

So the overall conclusion is very positive. Government cannot make successful innovation hubs, but government does have a role to play and seems to have identified it correctly and be playing it well. All the necessary conditions are there for Tech City (or Silicon Roundabout for us veterans) to be successful, but it will be successful or not on its own and on its own terms. Let us look forward to seeing what happens over the next few years.

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