The City as a Lab: Open Innovation Meets the Collaborative Economy

Cities are complex systems of systems where transit systems, urban food systems, local and interconnected economic systems, housing systems, energy systems, and sociocultural systems coevolve and are managed through an increasingly interconnected set of public and private actors.1

Much of today’s most vibrant innovation happens in cities. Although some may write this trend off as a mere reflection of the demographic shifts associated with the mass urban migration,2 there is something much bigger happening. Cities are becoming a platform for the innovation economy. Urbanization, the democratization of innovation and technology, and collaboration are converging paradigms helping to drive entrepreneurship and innovation in urban areas around the globe.3These three factors are converging to drive innovation and entrepreneurship in cities and have been referred to as the urbanpreneur spiral (Figure 1).4

Cities are increasingly becoming living laboratories for rapid prototyping and testing innovations for complex local challenges.5 Through a series of books over the past few decades, the famed urbanist, Richard Florida, has demonstrated that cities able to attract and retain creative citizens are better positioned for sustained growth into the future. Florida has argued that by encouraging an active technology scene, supporting tolerance for diversity, and attracting and retaining entrepreneurial talent, cities can compete on a global stage, building thriving communities. This is increasingly important in a world where both societies and companies compete on innovation, trying to integrate external innovation in what we know as “open innovation.”


Collision Density

In the literature on the geography of innovation, there has been a long ongoing debate about whether clustering economic activity around specific industries, usually in suburban tech parks, versus the high density of diverse economic activity in urban areas leads to more innovation.7Alfred Marshall, and later Michael Porter, made convincing arguments that industry clusters benefit from synergies of geographic colocation that lead to the competitive advantage of regions and nation-states. Meanwhile, the famed urbanist Jane Jacobs made convincing arguments that mixed-use urban centers, which naturally attract a range of entrepreneurs and services, are better able to foster innovation through dense diversity. The idea of collision density, borrowed from nuclear physics, has emerged recently as a way of expressing the value of urban entrepreneurial ecosystems that are able to generate innovative mashups due to the intensity of different economic activities in dense urban spaces.

In this special issue of the California Management Review, Florida and Mellander’s article demonstrates that innovation ecosystems are migrating from suburban areas and tech parks, such as Silicon Valley, to more vibrant urban locations, such as San Francisco. Leveraging insights from urbanists such as Jane Jacobs, Florida and Mellander suggest that this migration of venture capital and entrepreneurs into cities and away from the “nerdistans” of suburban tech parks can be explained by the growing interest of entrepreneurs and their staff to live and work in walkable, dynamic urban environments instead of the sprawling suburban tech parks. Also, the democratization of development tools that cloud computing brought allowed developers the freedom to come back to cities. Local data centers were not needed anymore as they were in the cloud (which would be housed in settings with lots of unused land and very low electricity costs). Together with this opportunity, apps benefit a lot from the creativity and density of high-density spaces such as cities. After a thorough analysis of the changing geography of venture capital investment in the United States, Florida and Mellander conclude that “the suburban model might have been an historical aberration, and that innovation, creativity, and entrepreneurship are realigning in the same urban centers that traditionally fostered them.”


Local Governments Move from Bureaucratic Barriers to Enablers of Open Innovation?

The growing interest in cities for innovators goes beyond the appeal of more urban environments. Under the growing pressure on municipal infrastructure, a new breed of smart cities are looking toward open innovation and new technologies9 to more efficiently manage services and infrastructure while improving quality of life and incenting local innovation.10 This is further enabled by an economic shift from agriculture to manufacturing, and from manufacturing to services.11 The global spending on smart city technology is expected to grow to a total of $39.5 billion annually by 2016.12 By embracing sensors in transit and building infrastructure, cities are enabling the accessibility of real-time data on everything from congestion and energy efficiency to crime and pollution. In the United States alone, more than 40 cities have open data portals for use by citizens and private firms. Hackathons and open app competitions are encouraging civic entrepreneurs to develop services that improve quality of life while hopefully creating a sustainable business model.

Berrone, Ricart, and Carrasco in this special issue developed a framework for understanding the drivers and dynamics of open data initiatives through a deep case study of Barcelona’s open data initiatives. Their study was completed primarily during the mandate of the prior municipal government, which was seen as very probusiness and was seen as an active player in the global smart cities scene. Since then, a new mayor, Ada Colau, has shifted the priorities of the city away from a technology-driven smart city agenda toward a focus on how smart solutions can support social inclusion.

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