Technology clusters at the pinnacle of success

 
Philip Salter
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SILICON Fen is the UK’s answer to California’s tech-rich valley. The Cambridge cluster is proof that, by forming a hub of creativity, UK technology companies can compete on the world stage.

Charles Cotton of Cambridge Phenomenon explains that the original catalyst for Silicon Fen came from Tim Eiloart and David Southward, chemical engineering graduates from the University of Cambridge, who founded Cambridge Consultants. They endeavoured to “put the brains of Cambridge University at the disposal of the problems of British industry.” Cambridge and the surrounding area prospered. According to the Cambridge Cluster Report, by 2004 24 per cent of all UK venture capital was being injected into companies in Cambridge. Between 1988 and 2008, employment in the Cambridge tech cluster grew from under 27,000 to over 43,000. In the same period tech-based firms increased from approximately 800 to 1,300. There are about 1,400 today.

Richard Green, CEO of the Cambridge-based real-time location start-up Ubisense, describes Cambridge as a great ecosystem, second only to Silicon Valley. Nick Thompson, vice president of technology at Jagex, an online games developer and publisher headquartered in Cambridge, says: “Cambridge has a real entrepreneurial spirit which runs through the fabric of the city. There is a real start up mentality and, because of the university and the town’s history and reputation for innovation, it has become a natural hub for the technology industry.”

Cotton says: “Cambridge is a cauldron of activity, people communicate well formally and informally and the entrepreneurial scene remains vibrant.” Dr Mike Lynch, CEO of Autonomy, believes Cambridge has shown it can cover almost all areas of the technology industry, whether that is designing hardware, like ARM, whose chip designs run Apple’s iPad; creating software, as Autonomy does; applying technology to life science research, as Cambridge Bioscience does; or providing technology consultancy services and partnerships.

Over the years many Cambridge companies have failed, but this is the sign of innovative competition. In the middle of the twentieth century, Joseph Schumpeter appropriated and reinterpreted from Marxism the concept of creative destruction. For Schumpeter, creative destruction is the process whereby in a capitalist society, innovative technologies destroy obsolete ones. This process is manifest in Cambridge. Following the collapse of Acorn Computers came numerous spinouts from its temporarily redundant human capital.

Research on high-technology clustering by Elizabeth Garnsey and Paul Heffernan of the University of Cambridge finds that “the emergence of clusters of firms is related to serial spin-out from the university and local businesses.” Another paper from Garnsey and Vivian Mohr also finds that the big four indigenous Cambridge technology companies – ARM, Autonomy, Domino and CSR – “have operated as learning centres where over 6,000 employees have gained critical experience of rapid and sustained growth in international markets.”

Cambridge’s DNA is laced with success. Its present-day James D. Watsons and Francis Cricks are working in the city’s many technology companies, as innovators and vital parts of the world’s global supply chain. In a country that readily ignores success, Silicon Fen should be celebrated.

Next in the series: business and professional services, 31 May.