Virtual clusters can be the new Silicon Roundabouts
With less emphasis on where we work and more on expertise, innovation will still be able to thrive
In 2010, “Silicon Roundabout” was the label for a small cluster of start-ups housed in the corners of London’s Old Street. Political impetus, favourable headwinds and global talent turned this light-hearted moniker into a proven, national success story.
Fast forward a decade, and there are now over 35,000 start-up and scale-up tech businesses across the UK.
The idea of physically clustering with other like-minded businesses was strong. Like that roundabout, the pandemic is forcing us to come full circle on our thinking.
It is easy to forget the inventiveness needed to support tech in the UK. While the financial crisis of 2008-9 helped catalyse the fintech industry, other strata of the tech sector lacked the investment and vision that were needed to excel.
The Government’s success with shining a light on the then Silicon Roundabout shouldn’t be viewed as a single suburb success story; it’s the wider narrative it helped carve that gave UK tech a global showcase.
Central to this was the welldocumented and empirically supported concept of clustering and its ripple effects.
The Government fostered tech with supportive policies around visas, procurement and tax.
Equally important was the messaging. Delegations of tech businesses joined politicians on international trade missions.
Time and again, the welcoming environment for tech was drummed home in keynote speeches. Silicon
Roundabout has produced success stories, such as the unicorns FarFetch and TransferWise, but its impact was wider than individual companies. The roundabout grew into a city, then into a nation, as regional clusters emerged across the UK.
By 2019, a quarter of the top 20 European cities for technology investment were in the UK, with Manchester the fastest growing European tech city between 2018 and 2019. Software developers were in the top five most sought after roles across UK cities last year, among key worker roles such as nurses and social care workers. With a highly paid, workfrom-anywhere workforce, I predict the UK tech sector will remain a resilient employer in the challenging months ahead.
What is harder to predict is the depth of the changes that Covid-19 will have on the business community. Some are self-evidential.
More firms have embraced remote working. People are reducing time on trains, and connecting digitally. Working from home means that businesses can dump their physical offices and the high rents and rates of a central city location.
As the CBI and others point out, the partial “hollowing out” of city centres has serious ramifications for the plethora of small businesses reliant on that passing trade.
One can see that reflected in job losses in service sector businesses that will be hit worse.
But there is a deeper impact on established business practices. Many businesses, especially young ambitious scale-ups, might see a reduction in the serendipitous benefits of physical clustering.
Some business founders I have been speaking to are increasingly looking at the benefits of a pop-up office which allows regular face-to-face meetings without the need of investing in a permanent space. Not being tied to a physical office also encourages the hiring of remote workers from anywhere.
A CEO in Bristol passionate about supporting the South West may no longer hire based on location.
We, as a country, have to think about how and whether we make it easier for companies to recruit from outside the UK without needing to physically bring employees into the country.
In a previous role, I managed teams around the world. When it works well, we have round-the-clock offices with all its productivity benefits. But the virtual doesn’t negate the physical, of course. We are human beings, not disembodied brains and would like to live somewhere and congregate with like-minded people.
Cities, towns, universities and colleges will continue to organically grow on their expertise. Virtual clusters will enhance capability to send expertise across the globe.
I make this point because Covid-19 is more than just a national disrupter to the future of work; it is challenging the emphasis we put on “place”. This by its nature questions the impact of physical “tech clusters” in the UK.
In this new decade, we need to find the best way of digital clustering,
‘The roundabout grew into a city, then into a nation as regional clusters emerged across the UK’
‘We should support nomad visas for international talent who prefer to work where they choose’
ensuring professional networks and curated databases of information can replicate the innovation and knowledge-sharing that happen in physical environments.
Virtual clustering in an international forum could replace tenets we’ve long held dear. Of course, this has an impact on cities and their policy makers, especially global powerhouses like London.
The combined effect of talent clustered in a physical city with vibrant education and culture sectors has always been potent.
However, in the next decade, we should move beyond placing emphasis on physical clusters as the knowledge and equity moves to the cloud.
We should support “nomad” visas for international talent who prefer to work where they choose and reach a cross- border agreement on how such employees will be treated for tax purposes.
If we want to prepare the country for the next decade, these are the new visions we have to come up with. Does place-based policy making still make sense when opportunities are borderless?
Gerard Grech is chief executive of Tech Nation, the growth platform for tech companies and leaders. You can follow him on Twitter @gerardgrech