Governance in innovative cities and the importance of branding.

INTRODUCTION

If anything, the twenty first century's economy may be characterised as a knowledge economy. In the Western world, knowledge and innovation have become determining competitive factors, not only in the commercial world but also in regions and cities. Greater investments will have to be made in knowledge if we wish to maintain present levels of welfare (Cooke 2002). Development of knowledge underlies new products, services and processes (innovations) that end up constituting the engine of economic progress. To express it in the words of the economist Schumpeter, knowledge-based innovation sets off a process of 'creative destruction' whereby the existing disappears and something new is born (Schumpeter 1943). New knowledge can lead to innovations varying from breakthroughs in information technology, life sciences and nanotechnology (radical innovation) to small changes in everyday objects (incremental innovation). No company, region or city can hold itself aloof from this innovation race and its consequences. In turn, policy makers struggle with the question of how their particular urban area can become an 'innovative city' (Simmie 2001).

This article explores the relationship between innovation and cities as well as the ways policy makers might contribute to urban innovativeness. Everywhere in the Western world mayors and aldermen are looking for recipes as to how to implement the appealing message of the knowledge economy in their local context. In this paper, we suggest that the knowledge economy indeed demands innovative cities and supporting policies if the living standards of urban populations are to be maintained. Making use of insights from urban economics we understand innovative cities as competitive urban areas that are able to combine concentration, diversity, and instability as well as a positive image. After discussing these elements we deal with the policy question of what city authorities can do to create and reinforce them. Then the focus is on the experience of local authorities in three urban areas--Austin, Oresund and Manchester--with targeted policy measures in the field of innovation, with a particular focus on branding. Finally come some policy recommendations.

CITIES IN THE KNOWLEDGE ECONOMY

The rise of the knowledge economy is closely linked to a structural trend in the world order familiar to all of us as 'globalisation'. Globalisation is a far-reaching form of internationalisation that has slowly but surely led to a worldwide integration of spatially spread activities since the 1980s (Dicken 2003). The movement towards the European Union and the collapse of communism have led to an increasing belief in the advantages of free trade and the market mechanism as drivers of growth. Indicators of the globalisation trend are the gradual disappearance of borders, the rise in exports and imports, an increase in foreign investments and the lively mobility of labour and capital. On the one hand, Western countries benefit from this development because companies have found new markets and investment opportunities abroad. On the other hand, globalisation gives rise to new players competing against the Western world. The rise of areas where labour costs are far lower, such as Eastern Europe, South-East Asia and Latin America, has not only sharpened international competition but has also changed its character radically (Krugman & Obstfeld 2003). Thus, it is no longer sufficient for highly developed countries such as Canada, Germany and New-Zealand, to compete on the basis of cost; instead they have to draw their competitive advantage from knowledge-intensive and high-quality innovations. It is not only countries, large companies and employees--the 'knowledge workers' in Drucker's words --that are having trouble keeping their feet (Drucker 1999). The same applies to cities: they too have to ask themselves how they can compete in an intelligent manner in the globalised knowledge-based economy.

The consequences of the worldwide knowledge economy for cities are not immediately obvious. Some authors predict the gradual decay of cities. They see the growing increase in integration as a threat to the continuing existence of the traditional city. These authors point to the major effect of what are known as 'space-shrinking technologies', which have made the knowledge society and the global community possible (Dicken 2003). These are technologies that make the world 'smaller', such as transport technology (ever-faster planes and efficient logistic solutions) and information and communications technology (for instance, e-mail, internet and i-mode). These technological developments are said to have done away with the role played by distance and proximity and thus the requirement that knowledge workers be located at a particular physical place. In the view of the pessimists, the place where you happen to be is no longer of importance: all we need is a good cable connection that puts the entire world within easy reach. The consequence of this 'death of distance' is said at the extreme to be that the city of streets, squares, stations, shops and restaurants will be replaced by a 'city of bits', a virtual city with a street pattern consisting of digital 'information highways' (Mitchell 1995).

In turn, other writers see globalisation as an exceptional opportunity for cities. In order to develop new knowledge and the innovations it leads to, they believe that face-to-face contacts between people at a certain place remain of crucial importance. New ideas and innovative solutions, in fact, come into being by intensive communication and exchange of knowledge with others. The proximity of people is a condition here--it still seems to make more sense for a knowledge worker to pop into a colleague's office than to work via e-mail on a new project with an unknown person on the other side of the world (Simmie 2001). In addition, people still have the need for physical contact with others, not only in their work but also in their free time. And it is precisely the city, with its vibrancy and range of pubs, cinemas and shopping centres that offers all the space required for this. How can we explain otherwise the fact that it is innovative cities such as Stockholm, Barcelona, Munich, Toulouse, Dublin and Minneapolis that have blossomed in the world of the knowledge economy? For cities, the knowledge economy means 'localisation'--the increasing importance of the local level and thus the city--rather than globalisation (Cooke & Morgan 1998).

We may be dealing here with a 'global-local paradox'--that in a world that is becoming increasingly integrated cities must lean more and more heavily on their specific local characteristics. These unique characteristics, indeed, determine what a city excels in and uses to distinguish itself in the competition for places in the sun with other cities in the knowledge economy.

The knowledge economy and the related global- local paradox mean that cities compete for the favours of inhabitants, companies and visitors. Here every city derives benefits by drawing in and binding to itself knowledge workers and knowledge-intensive activities since it is from these that a city can derive competitive advantage. This battle for knowledge is being hard fought, a process caused partly by the advancing process of 'McDonaldization' whereby every city that wishes to have something of a high profile has its own university or institute of higher education, high-quality shops, a music centre or a renowned theatre. In this respect, Landry (2006) even coins the term 'clone cities'.

This convergence between cities and their competitive strategies has important consequences since it means that small details, such as the city's image, can be decisive in decisions taken by companies or individuals looking for a place to settle or to visit. In order to maintain and increase their attractiveness to knowledge workers and other target groups cities must reflect on what sort of profile they should have, on what their brand should be. For this a clear competitiveness strategy is required. If someone is free to choose, in the end it is the most attractive city that will win. The local parties involved in this process have to deal with a wide variety of questions. Which target groups should they focus on? What sorts of activities (culture, economy and/or leisure) should be employed in the strategy? How do they want their city to be known to the outside world?

Providing answers to such questions requires imagination and innovation on the part of city authorities, the local population and the business community. Cities can hope to distinguish themselves from others only by finding innovative solutions and in this way hope to beat the competition. In this paper we focus on branding as a critical element of the package of policies necessary for city innvoation and growth.

CONDITIONS FOR AN INNOVATIVE CITY

If history from the time of the ancient Greeks up to the present makes one thing clear, it is that the innovative city does not exist. At first sight, the Athens of Pericles, Manchester during the Industrial Revolution, the Detroit of Henry Ford and today's Silicon Valley have little in common. But on closer inspection these cities do have one common element--they were without exception breeding places of creativity and renewal. It is impossible to predict where and when a innovative city of this sort will come into existence. That is related to the essence of innovation which by definition is surrounded with uncertainty. The innovator sees what others see but thinks and does something different. The result is that existing ideas not previously linked together are recombined to lead to an innovation. In the words of Schumpeter (1912), knowledge and creativity leads to 'Neue Kombinationen' (new combinations). Innovation is not only human work but is surrounded by coincidence and unexpected circumstances. It is therefore an illusion that one can force innovation or 'construct' an innovative city. And yet there are a few factors that can increase the chances of success for urban innovation and thus contribute to the development of an urban knowledge economy. In general terms these factors are concentration, diversity and instability (see for an extensive overview of the importance of these factors Hall 1998 and Desrochers 2001). But cities can have all these elements in abundance and yet not succeed in attracting investment by innovative firms or in-migration of knowledge workers. Some cities succeed by chance but some policies can help chance along. Getting city strengths known and the city as a whole well branded can give chance the helping hand it needs.

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