Key takeaways

  • Virtually-connected innovation hubs can facilitate knowledge-sharing on a global basis
  • Clusters form around collective ideas and shared expertise
  • The innovation hub of the future will be based on intellectual proximity rather than geography

In the article ‘Clusters and the New Economics of Competition’ published in the Harvard Business Review, Michael Porter makes a powerful case for the way clusters can spark high levels of productivity and innovation and pave the way for economic growth.

According to Porter, these “geographic concentrations of interconnected companies, specialised suppliers and service providers” can set the stage for closer relationships, higher-quality information and powerful business incentives, factors that are critical when it comes to maintaining a competitive edge.

Over a decade later, the pace of technological change has lent a new relevance to Porter’s ideas. The post-recession era has given rise to a wave of virtually connected clusters – proof of an increasingly networked digital economy based on global partnerships and collaborative exchange.

Silicon Valley is a powerful example of this. The impact of this Northern Californian innovation hub on the world’s technology sector testifies to the success of Porter’s model. But in the last few years, virtually connected clusters have emerged in the United Kingdom, South-East Asia and everywhere in between – CNBC included Bangalore, Dublin, Hong Kong and Copenhagen on its list of up-and-coming global technology cities.

However, Next Generation Clusters, a paper by networking and technology services firm Cisco, explores the idea that virtually-connected clusters shouldn’t be limited by geographical proximity. It also highlights the ways that these clusters can fuel the shift towards an open, borderless innovation and drive economic growth:

  1. Community trumps geography – Social networks and online collaboration tools have made it easier than ever for digital communities to form around collective ideas and shared expertise. Initiatives such as virtual meetings and dedicated pitch days foster collaboration on a large scale and allow partners and stakeholders to pool their resources – in spite of regional differences.
  2. Connecting ideas with markets – The best kind of digital community seeks out niches and connects relevant ideas with relevant audiences. This can spark partnerships, projects and conversations and set the stage for wealth creation and new creative capital on an international scale. Virtually connected clusters can also unearth opportunities for global collaboration that would be difficult to observe on a local level.
  3. Supercharged agility – By drawing on the knowledge of a virtually connected cluster, entrepreneurs can gain instant feedback on ideas, conduct proof-of-concept market tests and quickly incorporate changes and considerations. This can dramatically reduce product development cycles and allow new products and initiatives to be launched at a rapid pace. This is something that we have been exploring with our App Hot House events with Transport for NSW.

There’s no denying that virtually connected clusters can foster high levels of innovation and drive economic growth. How are you capitalising on this across your business?


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Trent Lund

Trent is Head of Innovation and Ventures for PwC Australia. With 18 years’ experience spanning Australia, Asia, UK, Europe and the Middle East, Trent joined PwC to lead the customer centric transformation consulting team dedicated to improving the way Australia’s leading private and public sector organisations re-focus on the customer.

Before his commercial career, Trent worked with some of the earlier forms of computing, transforming traditional business through programmable logic controls to automate machinery. The learning he gathered from this early experience saw Trent ‘smash a lot of strawberries, but learned a lot about the power of technology’.

Trent began his commercial career in telecommunications in Australia and later independently as a business consultant in the UK. Trent helped high tech and communications clients develop product and market entry strategies for complex solutions such as data centres, mobile content platforms and 3G Mobile licenses.

Afterwards Trent joined Oracle to lead the mobile content and service delivery platform proposition in Europe and Asia. One of the key milestones he achieved was to architect a custom solution into 10 countries, gaining 45 million subscribers, operating in many different languages and different currencies. The key challenge was balancing the latest technology advancements with the pragmatism required to address economies in different stages of maturity, from emerging to very mature. Advising technology owners on what business models will be profitable in these environments is one of Trent’s great strengths.

Trent specialises in user experience design, customer-led innovation and disrupting business models through technology.

“Digital is challenging the status quo. We’re beginning to see how customers are interacting with technology and it’s exciting to see the escalating rate of change in all industries.”

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