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Cities are machines for innovation, incubators of ideas born of necessity as people from different places and social classes rub up against each other, creating a space for ideas and inventions. Look at Rome in the first century, Baghdad 1,000 years later, London in the 19th century or New York in the 20th; the city stands out as an engine of progress and modernity.

Yet a city’s pre-eminence does not necessarily last. Detroit, a city that was only a few decades ago at the forefront of industrial innovation and production, is now an epic example of collapse. So, how to create the conditions that attract and encourage entrepreneurs and ideas?

Richard Florida, author of The Rise of the Creative Class and director of the Martin Prosperity Institute in Toronto, believes the first thing governments must do is “get out of the way – stop ‘squelching’ entrepreneurial culture”.

Why has the creativity of the San Francisco area, epitomised by Silicon Valley, developed while other regions have languished? Is it the concentration of top educational institutions, such as Stanford, or just sheer luck?

Prof Florida argues that the influence of universities is overestimated as a causal factor. However, he concedes, US universities are more effective than counterparts in emerging markets such as China and India “because they encourage the formation of groups and of discussion. The San Francisco Bay Area was always open to art, music, literature and ideas and most places are not open – even if they think they are. These [cities] accrete entrepreneurs over time”.

That openness needs to extend to people, too. “Fifty per cent of all technology start-ups in Silicon Valley had an immigrant on the founding team,” he says. “Steve Jobs’ [biological] father was a Syrian immigrant and we all know about Sergey Brin.” He puts the success of cities down to “technology, talent and tolerance”.

Harvard’s Edward Glaeser, in his recent book Triumph of the City, points to the “ability of skilled cities to reinvent themselves”. He only has to look across the Charles River at Boston to see a city that has made its living as a trading post, a port, a manufacturing centre, a financial centre, a high-tech hub for producing military equipment, and that has also spawned early computers and the emergence of management consulting.

Prof Glaeser also points to how industrial Milan reinvented itself in the 2000s as a design capital, after suffering a similar fate to the US rust belt. Its centre and edges have evolved into thriving areas for studio spaces, with the fashion industry, architects and product designers all thriving. The city has also invested in building itself as a desirable location for trade fairs, employing some of the finest architects to design spaces that will attract those in creative industries that match the city’s image.

Ricky Burdett, director of the Cities centre at the London School of Economics, points to Turin as another Italian city that has re­invented itself. He cites how it “and the broader reg­ion, Piedmont, were proactive as the downturn kicked in, allowing significant investment bet­ween universities, foundations and industry to create high-tech and innovative clusters”.

Prof Burdett credits Valentino Castellani and Sergio Chiamparino, Turin’s successive mayors, as cutting through Italy’s notorious red tape to re-zone areas of the city and for attracting European Union funds.

“It’s also about stabilising economies, not just a question of creating new jobs,” he adds. “You have to ask what would have happened to Turin or Barcelona or Munich if these policies weren’t carried out?”

State or municipal intervention needs to be smart as well as properly resourced. Prof Glaeser is scathing about the efforts to rehabilitate Detroit, for example, where money was thrown at construction but achieved negligible results.

By contrast, Pittsburgh has transformed itself from a city decimated by the decline of the steel industry on which it was built into a contemporary metropolis of tech clusters and vibrant neighbourhoods. Its success seems to result from a lucky combination of careful, consistent investment and seed money for start-ups from the Pittsburgh Technology Council (established perceptively early in 1983), while it is an ethnically mixed city of lively and distinctive neighbourhoods defined by good restaurants and cafés and, critically, cheap property prices.

London categorically does not benefit from cheap and plentiful real estate. Yet here, too, there has been an effort to establish a tech cluster on the eastern edge of the city. Old Street’s “Silicon Roundabout” was re­c­ently seized on by government ministers as an example of a cluster of suc­cessful urban innovation. It is home to more than 600 tech companies and start-ups, but it grew spontaneously, without municipal intervention.

On the border between the wealth of the City of London and the fashionable bohemia of Shoreditch and Hoxton, this was a young, funky place to be. Charles Armstrong, an entrepreneur and founder of Trampoline Systems, a social analytic software company, has been based in the area since 2003 and suggests three points that have defined Silicon Roundabout’s success: “Density – the concentration of relevant businesses; diversity – a range of different businesses, not all tech-based. This was a fertile fashion, art and design scene before it was a tech hub; and connections – the network of cafés and bars, networking opportunities and events.”

Mr Armstrong has also used his background in ethnography to create the Tech City Map, a representation of how start-ups in the area are linked, with tweets popping up on screen in real-time.

He suggests that the local authority, Hackney, has been helpful in “zoning regulations and in maintaining a balance of businesses, but also in ensuring that in new buildings a proportion of the accommodation needs to be provided as incubator space”. This, he says, ensures the continuing availability (at relatively affordable rates) of space for start-ups as the area becomes more popular.

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The UK government is keen to see the phenomenon spread eastward to Stratford as part of the legacy of the huge Olympics regeneration. To this end, it has established Tech City UK, a body whose sole purpose is to encourage companies to move to the area.

But the same dynamic just is not there. Even if the £308m taxpayer-funded Olympic media centre is turned over to tech companies, as has been mooted, it would be difficult to foster the same urban intensity as Shoreditch.

Innovation can be encouraged, but almost never kick-started from zero – although it will be interesting to see whether the much-touted Songdo in South Korea, billed as the world’s first smart-city, will manage it. The key, it seems, is to spot the first stirrings and fine-tune the conditions.

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Key factors in urban innovation

A good mayor

Mayors in Barcelona, Munich, Turin and Bogotá have radically influenced their respective cities’ futures through tenacious and intelligent intervention. Measures have included the reduction of red tape, zoning and construction restrictions, and the careful balancing of social, business and cultural agendas.

Ethnic mix

Cities with a lively, tolerant, changing and cosmopolitan population tend to attract the best people. But big cities need to be wary of ghettoising new arrivals to the peripheries, a problem that has blighted Paris.

Education

Although Richard Florida plays down the link between education and start-ups, every successful city, from Bangalore to the San Francisco area, has a good university at its core or nearby.

Intensity

Urban innovation is not just about the numbers of tech companies; the trick is to get them communicating with each other. This means bars, coffee shops, shared offices and communal public spaces. Innovation often comes through serendipitous meetings, so tech clusters need places for unexpected encounters. Cool bars attract bright young people, and the proximity of the creative industries helps both groups to spot new opportunities and emerging trends.

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This post was originally published by the Financial Times.

ImageThe FT/Citi Ingenuity Awards: Urban Ideas in Action programme, supported by Citi, will recognise ingenious individuals who have developed solutions to urban challenges in the fields of education, healthcare, energy and infrastructure. www.ft.com/ingenuity