Fernando Fischmann

What Are The Key Traits Of Innovation-Friendly Environments? Some Cities Have Figured It Out

14 August, 2015 / Articles

Earlier this year, UK based innovation charity Nesta, together with Accenture and Future Catapults, released CITIE (City Initiatives for Technology, Innovation and Entrepreneurship), an in-depth report aimed to help policy makers create the best possible environment for innovation and entrepreneurship in urban contexts.

There’s plenty of interesting information in the 60-page long guidebook. For the purpose of this article, I extracted some of the key features highlighted in the report, that in my opinion identify cities that are truly smart and able to improve the quality of life of this generation and of the coming ones.

1) They act as customers

Cities can have a huge buying power. New York City, for instance, spent $17.8 billion in 2014 buying goods. But for young, innovative firms, it’s not always easy to access this market, as authorities prefer to make deals with large, established companies and are somehow averse to trying new ideas and suppliers. Real smart cities are those that go the opposite way: opening up  procurement mechanisms to make them accessible to smaller businesses and providing local entrepreneurs with a living urban lab with a living urban lab in which to test their services.

Barcelona has been going in this direction for a long time: first with its Urban Lab, and more recently, with the BCN Open Challenge which set out six challenges for businesses and entrepreneurs to propose projects that will transform public space and services. Winning solutions were provided with public service contracts and office space from which to run their operations.

São Paulo is another good customer for innovative businesses: when tendering for public sector contracts, companies  only need to display their tax compliance at the time of bidding to pre-qualify for the contract. And SMEs are given preferential treatment as long as their bid price is no more than 10% higher than non-SME bidders.

2) They make for great hosts

Cities are increasingly competing which each other to attract talents; but talents – and companies – need places to meet and work together. They look for affordable offices and coworking spaces, as physical proximity to potential collaborators and investors matter. They also look for great incubators and accelerators. Smart cities are those which integrate the needs of young businesses into their development plans.

The Nesta report uses Toronto as a case study. The city government has helped start and support a network of 50 business incubators and accelerators which fuel small businesses and start-ups in the city. Overall, through its Entrepreneurship Services programmes, the city supports 30,000 young businesses a year.

Buenos Aires has been also very active in this space. Old, neglected areas of the city have been transformed into innovation districts with different themes – the first being technology. Tel Aviv’s ILVenture is an open platform for startups, investors, accelerators and others in the city interested in innovation which allows users to post jobs, services and programmes, and search for investors and potential hires.

3) They advocate for startups and innovation

Some cities are consciously branding themselves as startup hubs or startup “capitals”. They sponsor international events, to attract investors and influences. This, in turn, helps local businesses to achieve greater visibility. New York City is a leading example of this, with initiatives like World to NYC – launched by the New York City Economic Development Corporation, invites and connects innovative international companies to contribute to the local ecosystem.

Another meeting point is Digital.NYC an online platform that facilitates connections and meetings between investors and entrepreneurs. Local companies can also use the ‘Made In NY’ brand, provided they have at least 75% of their business production in NYC.

All of this matters: according to the recent study, “The Power of Entrepreneur Networks: How New York City became the role model for other urban tech hubs” between 2003 and 2013, the Big Apple’s tech scene raised $3.1 billion in funding, with capital availability growing twice as fast as in Silicon Valley.

Other good examples of how cities could strengthen their brand as innovation hubs include Berlin’s “ Business welcome package” which, for €4,500 provides extensive soft landing support for businesses seeking to start out and expand in the city and Dubai’s SME100 ranking.

4) They act as connectors

Meaning that they facilitate both digital and physical connectivity. Entrepreneurs need to be able to work from anywhere, anytime, and this mean that fast and widespread Internet access is a must, for cities that want to attract talent. Innovators also need to move fast across town and they often appreciate sustainable mobility solutions. Bike hire schemes allow busy entrepreneurs to move quickly around the city.

Paris stands out in this respect: its physical cycling infrastructure and public cycle hire scheme is one of the largest in the world. Fast, free Wi-Fi is also available at more than 260 public places across the city.

Another interesting experiment was started this year in Australia: in January, Melbourne introduced the Free Tram Zone in the city centre to get people out of cars and on to trams. Coupled with free Wi-Fi in the city centre, citizens are able to connect physically and digitally across the city for free.

5) They have a long-term strategy

City councils – and mayors – come and go. In order to guarantee consistency, it’s important that cities have a clear and public vision on how to foster innovation and entrepreneurship and a senior leadership to carry it through.

Last year, Amsterdam has created the role of chief technology officer (CTO) of the city, responsible for setting the overall strategic direction, breaking down silos across different offices, and providing a consistent face to external stakeholders.

Seoul has a chief information officer (CIO) in place since 1999. In London, the Smart London Plan sets out the role that digital technology can play in improving Londoners’ lives, while the City of Chicago Technology Plan sets out an inspiring vision of change for the city.

Having someone in charge, of course, isn’t enough: there also has to be a public set of Key Performance Indicators (KPIs), to measure the success of the city’s vision.



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