Most read articles in Transforming Business:

Read all articles

The cluster recipe: how to emulate Europe's most famous innovation hotspot
18 November 2010

Send EMail

Billy Boyle is the kind of entrepreneur European policy makers would love to clone. Working out of a basement lab at Cambridge University, Boyle and two fellow chemical engineers pioneered a sensor system on a microchip to detect toxic gases and compounds used in explosives.

Their six-year-old start-up, Owlstone Ltd, now employs 40 people and its order book includes a $4 million contract from the US Department of Defense.

As governments across Europe struggle to nurture innovation and entrepreneurship, Boyle’s is the kind of success that has given rise to the “Cambridge phenomenon” – a place where innovation just seems to work.

Cambridge makes it look easy. Though it still can’t match Silicon Valley’s roster of home-grown global technology champions, it is by far Europe’s most successful innovation ecosystem. The traffic-choked zone around Cambridge University now boasts 1,500 companies employing 45,000 people, up dramatically from 1980 when it consisted of just 20 companies employing a few hundred people.

Cambridge University spin-outs from 2001 to 2006 raised over £390 million in financing and employ over 1,700 people, according to the 2008 Cambridge Cluster report. And they managed to attract over half the aggregate investment of Stanford spin-outs -- an impressive achievement given that Stanford is the world's most prolific source of innovation-based companies, a 2007 Library House report concludes. California also benefits from eight times as much venture capital per head as the UK.  “I see Cambridge as similar to Stanford University 25 years ago, in its openness to embrace start-ups and the ability of professors to get involved with companies,” says Bandel L. Carano, managing partner at Oak Investment Partners in Palo Alto and an active investor in Cambridge-based start-ups.

What is it that singles out Cambridge from other European universities? Researchers, investors and entrepreneurs say Cambridge has the key ingredients to drive innovation: a deep pool of world-class scientists and researchers, strong links between the university and business, a vibrant entrepreneurial culture and investors with plenty of start-up capital.

Hermann Hauser, a physicist who helped to lay the foundations for the microcomputer industry in Cambridge before going on to become a serial entrepreneur and successful investor, says the size of the talent pool in Cambridge is by far the most important factor driving innovation. Using crystallisation as an analogy, Hauser says, “You need a ‘seed’ to initiate crystallisation, but you also need a supersaturated solution. We have a supersaturated solution of bright people.”

As an innovation centre, Cambridge also benefits from a strong base of technology consultancies, says Andrew Mackintosh, chief executive of the Royal Society Enterprise Fund, which backs early-stage technology start-ups. Innovation hubs in their own right, the Cambridge consultancies are, in fact, technology development and design centres.  Consultants often are scientists who run their own labs and apply for patents.  So in addition to giving technical advice to young start-ups, Cambridge consultancies create their own companies.

Policymakers sometimes fail to appreciate the relative importance of these talent-driven factors, says Hauser. So they focus on the wrong ingredients. For example, they may focus on the value of intellectual property rights that arise from university research. While Hauser does not dismiss intellectual property, he says 99 per cent of the value created comes from people.

Cambridge also helped pioneer the concept of on-campus “incubators” for start-ups. Professor Alan Hughes, of the Cambridge Judge Business School, points to role of the St John’s Innovation Centre, which rents office space by the month and in small units. Another key factor, says Hughes, is the concentration of key individuals with highly valuable networks who can open the doors to finance and advise on how to develop a new business.

With the right introduction Cambridge start-ups can easily raise several million pounds in their own backyard. The hard part is raising $100 million for a new pharmaceutical product.

That may be one reason why Cambridge, despite its success creating start-ups, has yet to match Silicon Valley in producing world-leading tech companies.

One way to improve the cluster’s connections to the outside world would be to attract more large businesses to set up their own R&D operations in the region. For example, Microsoft established Microsoft Research Cambridge in 1997, growing from three researchers to more than 120. More such investments bolster the Cambridge dynamic.

New technology transfer centres could be a lure. The Broers Building, a commercial property development, was designed to lure small and large companies to work in close partnership with researchers to commercialise their technology. Its first tenants include Nokia Research Centre and Base4 Innovation, a spin-out company from the Cavendish Laboratory which develops “detection platforms” for healthcare and the life sciences.

Despite the many policymakers and experts who visit Cambridge to glean the secrets of its success, those who are part of its innovation ecosystem say there no set model for driving innovation. That’s because today’s model for transforming research into economic gain is already on the way to being transformed and improved. What counts is agility.

“We operate in different ways and we are changing some of the ways in which we operate all the time,” says Ian Leslie, professor of computer science at the Computer Laboratory and previously the university’s Pro Vice Chancellor for Research. By the time someone has analysed how Cambridge succeeds in knowledge transfer, there is a strong likelihood that it will have moved on.

Article by Michael Kenward, Science|Business

Related content