digitalswitzerland’s aim is strengthen Switzerland’s position as a leading innovation hub. This includes supporting a world-class start-up ecosystem that creates an environment where entrepreneurs grow and scale. In second part of this blog series, Jan Friedli, Project Manager at digitalswitzerland dives deeper into the trend of Superclusters.
Sharpening our understanding
In the first blog post, we discussed the growing trend towards hyper concentration of innovation activity, which has fuelled the rise of so-called ‘Superclusters’.
Analysing emerging research into STATION F in France, this helped to understand what exactly brought 1,000 startups into one building in less than two years. The economic impact that followed has been unprecedented, and has gained worldwide praise. Many governments are now looking to replicate this success, but they share a difficulty.
The term ‘Supercluster’ remains a very abstract concept. The question is how can we conceptualise a Supercluster? And, what exactly makes them so effective compared to traditional ecosystems?
How can we conceptualise a Supercluster?
The term itself may suggest that Superclusters are a radically new and unlike anything we have previously encountered. According to research, that is not quite accurate.
Superclusters are not new but rather an extreme form of regional clusters, which have been around for quite some time. Recall the ‘Silicon Roundabout’ in London, ‘Silicon Valley’ in San Francisco, or ‘Silicon Wadi’ in Tel Aviv.
At its core, these regional clusters have two things in common: (1) they operate in the same general area of geographical proximity and (2) they have an established social network across firms.
Superclusters, in contrast, take a leap forward on these two dimensions. They bet on (1) an extreme concentration of innovation in a single location and on (2) a closely-knit community of entrepreneurs, investors, and corporates. If STATION F is any indication, the bet is paying off.
Despite the successes, we have yet to conceptualise Superclusters in any meaningful way. Such a conceptualisation of Superclusters is essential if we hope to build them elsewhere. I argue that Superclusters need to be understood as a system of several interconnected parts that they provide to their startups, which are called ‘Capitals’.
As depicted in the below framework, I propose an analytical distinction between six different types of Capitals including human, financial, political, built, cultural and social capital – all of which are desirable for startups to have.
In summary, Superclusters are an extreme form of regional clusters, focusing on an extreme concentration of innovation in a single location and a closely-knit community of entrepreneurs, investors, and corporates. They are best understood as a system of six interconnected ‘Capitals’, each distinctly valuable to startups.
What exactly makes Superclusters so effective?
All other things assumed equal – a startup becomes more successful when it accumulates Capitals. For example, if a startup gains credibility through the Supercluster, it accumulates Political Capital. Similarly, if a startup learns from co-located peers, it accumulates Human Capital.
The idea that accumulating Capitals is beneficial is hardly groundbreaking. However, what is astonishing is the way in which the Capitals are absorbed by startups.
The empirical evidence suggests that when certain Capitals are gained, it increases the likelihood that others will also follow. For example, once a startup has Social Capital, it can more easily access Financial Capital, which makes it easier to access Human Capital, and so forth. Consequently, startups undergo a process of ‘success building on success’ – a virtuous cycle that accelerates growth.
To illustrate such a virtuous cycle, consider the following experience from the Co-Founder of a Mobility Startup:
Critics may contend that it is quite possible to attain these Capitals outside of Superclusters, and thereby trigger a process of ‘success building on success’. They are correct. This happens all the time in traditional innovation ecosystems that we have all become accustomed to.
But virtuous cycles are all about intensity – and that is the ace that Superclusters have up their sleeve.
Recall that Superclusters bet on an extreme concentration of innovation in a single location and on a closely-knit community of entrepreneurs, investors, and corporates. This makes Capitals both highly-centralized and highly-accessible.
This high-level of integration across Capitals is their defining characteristic.
Because of this integration, the virtuous cycles that startups experience are much more intense in Superclusters than anywhere else. In other words: startups grow much faster because they can accumulate more Capitals in a shorter time.
In summary, Superclusters are tremendously effective because they offer the prospect of intense virtuous cycles that cannot be rivalled by an innovation ecosystem.
Implications for Switzerland – Are Swiss Superclusters on the Horizon?
As emphasised, the emergence of Superclusters indicate a new trend towards hyper-concentration of innovation activity. Given their continued success, governments are beginning to respond.
How can Switzerland take action?
For the deeptech nation of Switzerland, this has two practical implications.
First, we must strengthen our existing sector-specific clusters. We are privileged to have a range of vibrant tech hotspots from MedTech in Neuchâtel to BioTech in Basel to FinTech in Zug. The research indicates that social capital plays the most important role in starting or accelerating virtuous growth cycles for startups. In the short-term, our limited resources are best invested in the social infrastructure of the respective clusters to create more connections between regional entrepreneurs, experts and venture capitalists.
Second, we must start building our own version of a Supercluster. Even in the digital age, the physical location continues to matter a great deal. The fact that 1,000 startups have moved to a single building in Paris in less than two years shows us this beyond any doubt. If we want to attract the next 1,000 of the most promising entrepreneurs, we must give them a reason to come.
To accomplish this, we must first learn how other Superclusters got started, namely by talking to lots of startups about their needs and defining clearly what the new community stands for. But far more importantly, we need to shed our Swiss mentality of modesty, and instead gather our courage to think big.
Of course, there are promising projects underway. For instance, the Switzerland Innovation Parks (including the EPFL Innovation Park or Biopôle) or the Impact Hub’s new Hub in Zurich (planned for 2024). These are all pioneering efforts in their own regard. With such projects, we are undoubtedly moving in the right direction – but can we afford to be bolder and faster? After all, the shift from Ecosystems to Supercluster is an imperative for the digital age, and it’s happening right now. As the most innovative country in the world, we have the ideal conditions to build Superclusters – so long as we find our courage.
Where do we go from here?
The aim of these two blogs is to highlight this new trend and start a conversation. Because it concerns many stakeholders, different perspectives are needed to paint the whole picture.
We want to provide you with the opportunity to share your thoughts. So the third blog of this series belongs to you. It will crowd-source perspectives on this topic and serve as an open forum to showcase yours.
Navigate here to take this chance to shape the conversation around Superclusters!
Missed part one – read more here and stay tuned for part three!
In the meantime, please feel free reach out to our Collaborative Innovation team who are busy working to empower organisations to create impactful ecosystems for innovation or find out more about our work in Startup Ecosystem.