Knowledge Hubs and Creative Clusters – How Convention Centers Can Benefit From and Contribute To New Economic Development

What Are Knowledge Hubs and Where Are They?

They go by many names; knowledge hubs, brain hubs, innovation centers, creative clusters, magnet cities.  Social scientists call the field economic geography. Economists have come up with means to measure the relative strength of this special sector (the knowledge sector) which are beyond base employment and contributions to regional GDP. Now these areas and locations are mapped and ranked by number of patents issued annually (see 2011 map below) and the annual churn in venture capital investment and R & D investment.

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CITYLAB, October 9, 2013

Indeed these places are defined by intense entrepreneurship.  The concentration of related technology firms includes competitors, suppliers, distributors, service companies and customers.

Let us assume that technology and business demand exists along with a solid foundation of human capital (university educated and trained engineers, scientists and mathematicians), job security, opportunities for career success, and a vibrant progressive living environment. Case studies and academic papers show that some knowledge hubs get a head start with government incentives – through tax incentives or zoning for special districts where start ups can locate. There are other factors too that help drive a hub’s success:

  • A connection with a university or research institute nearby, where facilities can be used and there is access to the university research, knowledge and talent base. Some universities have technology transfer and “commercialization incubator” programs offering business, legal and technical counsel.
  • Access to venture capital firms which appreciate all the attributes and habits of knowledge hubs
  • Marketing and branding support from state and city economic development organizations. Also hub companies should count on similar support from a hub organized association which focuses on the growth and success of the hub and is well connected to other global industry organizations.
  • A community that fills the social needs of a young skilled workforce – nearby affordable residential, better than average amenities and services and an active entertainment and sports culture.
  • Meeting Places – Most of the literature about knowledge hubs describes the importance of “knowledge spillover” (called cross-fertilization by some). Also described is the ideal setting for this to occur which is an event venue. These can be formal or informal places such as cafes, restaurants, sports and cultural facilities. They can also be a convention or conference center with A/V, high speed internet and F&B services. These environments are deemed essential for the frequent and free exchange of ideas and collaboration. This increasingly includes the promotion of more formal and informal events, ranging from forums to workshops to a simple social gathering.
  • Rock Stars – It helps a great deal to have a renowned scientist or business person associated with the hub or with an anchor company in the hub. This should be someone who has made a name for themselves and can lead and inspire others. Would Silicon Valley be the knowledge hub beacon that it is without Steve Jobs, Larry Page, Sergey Brin or Mark Zuckerberg?

The types of industries represented and the cities and regions where knowledge hubs reside and thrive have become familiar to us all:

  • The San Francisco Bay Area (Silicon Valley) – By far the best known concentration of knowledge based industries, this area’s popularity started with the development of transistor technology, followed by silicon chip innovations. The area is now well into internet use and applications and of course mobile communications devices. From a technology point of view, the Silicon Valley cluster or knowledge hub may be viewed as multiple, overlapping and ongoing technology initiatives. For example, Silicon Valley has seen a cluster of technology evolution across semiconductors, computing, software and information technology, and entertainment media.There are several renowned universities in the area (Stanford and UC Berkley among them).The entire area is in fact a metaphor for growth and success in the knowledge sector. To show the strength of this region, the map above depicts 14,811 patent applications for the Bay Area, where New York had 6,181, LA – 4,766, Seattle – 4,802 and Boston- 4.089.
  • The Boston Area – The Route 128 corridor area is often compared to California’s Silicon Valley. Media often call the positive effects of this growth on the Massachusetts economy the “Massachusetts Miracle“. Its development was driven by technology out of Harvard University, MIT, Tufts and many others universities and institutions. IT companies located there include IBM, Microsoft, EMC and others.In Cambridge lies the heart of Boston’s booming biotechnology industry. As it was once described, “That kinetic energy of having everybody squished together — it leads to a lot of advantages you can’t get outside the city.” The Boston-area biotech community is among the largest and densest in the world, with Kendall Square at its epicenter. The neighborhood squeezes 120 biomedical firms within a 1.5-kilometre radius. The density and diversity of the biotech ecosystem make Kendall unique; the area is home to biomedical firms large and small, but also to the investors, patent lawyers, contract research organizations and suppliers they need to support them.
  • North Carolina’s Research Triangle – Situated between the cities of Chapel Hill, Durham and Raleigh one of the more prominent knowledge hubs in the country has developed. The hub is anchored by a mixture of high-tech start-ups and Fortune 100 companies such as IBM, SAS Institute, Cisco Systems, NetApp, Red Hat, and EMC Corporation, In addition to high-tech, the region is consistently ranked in the top three in the U.S. with concentration in life science companies. Some of these companies include GlaxoSmithKline, Biogen Idec, BASF, Merck & Co., Novo Nordisk, Novozymes, and Pfizer.  Three well known research institutions are nearby, Duke University, University of North Carolina at Chapel Hill, and North Carolina State University. This thriving hub of innovation is home to more than a dozen pioneering industries including biotechnology, pharmaceuticals, clean technology, and information technology. The “Triangle” name originally referred to the region’s universities whose research facilities and highly-educated workforce served as a major attraction for businesses

There are of course many other locations which are models of knowledge hubs; Austin and Seattle for software development, San Diego for biotech and telecommunications, Washington DC for biotech and health science,  Sacramento/ Davis California for agro-tech, Vancouver for clean energy tech, Albany NY for nanotech. The table below is from the on line publication City Lab. It shows the top ten metros for creative-in-traded employment. Creative In traded employment is a term used for creative work which can be exported from the region. This is opposed to in – traded local which are service jobs for inside the region. In earlier discussion the San Jose-Sunnydale-Santa Clara metro is combined with San Francisco-Oakland-Hayward.

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What Is It About Knowledge Hubs that Differentiate Them from Other Historical Economic Development Clusters?

Clusters are not a new phenomenon. In Europe, watchmakers clustered in Switzerland and fashion designers in Paris. In the United States, well known clusters include Detroit for the automotive industry, Hollywood for movies, and New York City for financial services and advertising. So why are today’s employment clusters so different?  The UC Berkeley economist, Enrico Moretti, has noted distinct differences:

  1. About two thirds of US jobs are in the local service sector, anything from waitresses to store clerks to teachers, lawyers and doctors. These jobs make products and perform services that are locally produced and consumed. Global competition does not affect them very much. But while these jobs are the major source of employment, they are the effect and not the cause of economic growth. Productivity in the service sector generally remains the same year to year. Moretti calls these “non-tradable jobs” (also referred to as In-traded local jobs) because they cannot be exported outside the hub region.

    Productivity in the knowledge sector however continues to increase at a healthy pace each year. Every sub-sector has grown; software, biotech, scientific R&D in manufacturing, chemical and material science, robotics (related to advanced manufacturing), agri-tech, nano- tech, digital entertainment, clean energy tech and on and on. These are creative In–Traded jobs and their products can be exported. New technological advances are their product and it is this sector that drives the local economy – creating the need for more service sector jobs, higher wages and general prosperity. What happens in the knowledge hub has a profound effect on local salaries whether the job is part of the knowledge sector or not. 

  2. Traded sector jobs typically have a multiplier effect. An example cited is that an automobile assembly plant causing a shopping mall to be built nearby. Traditional manufacturing jobs generate about 1.6 non-tradable jobs in the service sector. For knowledge hub jobs, research shows the multiplier effect as generating 5 non-tradable jobs in the service sector. This is a remarkable increase. As an example, Moretti cites Apple’s affect in the Bay Area. Apple employs 13,000 directly in Cupertino but has spurred 70,000 indirect jobs in the region.

There are many other differentiators but higher wages and a 5 to 1 multiplier effect are two reasons alone that make the knowledge industry very relevant to the convention and conference center business.

Using Knowledge Hubs to Fulfill a Convention Center’s Economic Development Mission

There is a broad economic development mission for most convention centers:

  • Generate consistent economic impact (in the form of sales tax revenue and permanent and part time service employment) by booking events which attract attendees and delegates who are from outside the city spend money by staying at city hotels, and use local restaurants, shopping and entertainment venues.
  • When convention centers are built in blighted areas, the expectation is that a new convention center will stimulate new commercial development.

Adding a role to the economic development mission to assist in the growth of a knowledge hub is a good fit for convention and conference centers. The 5 to 1 multiplier effect is a powerful economic and political force.  The role can be further defined if the true value of “thought leadership” is considered. In this context “thought leadership” is the art of positioning your city’s knowledge hub as a leader in its field through popularizing and promoting best-in-class research and product development. If conferences are drawn to the area because of hub business and research success, then the convention center’s role will help enhance thought leadership. Hosting hub company meetings (training sessions, product demos, sales meetings, and shareholder meetings) may eventually lead to the development of a niche conference. Having your city’s knowledge hub achieve research breakthroughs and business success will cause thought leadership to take hold. When articles are published about technological advances or business growth of a hub company, the fact that it all originated at your city’s knowledge hub will seem expected. The plan is of course for meeting planners and trade show organizers to consider your city and venue for their larger annual events which draw national attendees.  The meeting and event industry will begin associating your city brand with advanced technology and innovation. When meeting planners are looking for an event destination for an association congress, or a multinational corporation’s innovation forum, or a plant managers’ training trip, at some point the requisite site selection criteria (hotels, transportation, venue space, etc.) will become secondary. This is not because those things are not important, but because they are so fundamental, planners will only source cities where they’re a given. What they are likely to explore more carefully is how a city truly sets itself apart with differentiating and unique appeal to attendees. Here is where a knowledge hub’s depth of technical knowledge, industry expertise, unique research, interesting people and universities can influence an event destination decision. Planners should want to know how these attributes will enhance their event and CVBs and convention center sales teams should have a convincing marketing message.

In the US knowledge hub development has a non-linear quality. The pace is one where growth can proceed at a measured pace to be followed by a burst of accelerated growth only to subside again. Bursts of business activity are normally spurred by the ”next big thing” –  I phones and mobile apps for example.There is a great deal of difference when knowledge hub development is compared to the rest of the world. Just do a Google Scholar search of knowledge hubs and you will find the vast majority of papers and research written by academics in Europe, Asia and Australia.   My impression is that there is a bias for more planned economies. They seem to prefer linear growth with material help from the government. They like things tidy. As an example, last Fall I was on a consulting assignment in Nottingham, UK. My client was interested in convention center development and management. Nottingham does not yet have a convention center. In my time there I was introduced to an ambitious economic development plan established to move the local economic base from manufacturing to a diverse knowledge hub. Nottingham has several areas of potential:

  • The city also has two well known universities which contribute in ways similar to US universities; they share facilities, cooperate and partner on research and share academic and research talent.
  • Nottingham is increasingly developing a niche within the digital content sub-sector. This includes video, film and photography, music, publishing, radio and TV, computer games, and social media. Niches also exist in life sciences sector (medical technology, medical biotechnology, industrial biotechnology or healthcare sectors) and Clean Tech where low-carbon goods and services are produced
  • The government is also actively involved in creation of industry parks for each discipline; Bio City and Medipark for life Sciences, Nottingham Energy Park and Clean Tech Centre for clean tech and the Creative Quarter for other technologies
  • Government activity stretches into investment and finance following a program called “Transformational Finance” with the Nottingham Investment Fund and the Technology Grant Fund.

The economic development plan also made mention of expanding the amount of scientific and technical conferences. There are some conference centers but they are quite small. I had the opportunity to talk with one city official.  We talked in a location where you could view part of the city. From a streetscape above the official outlined an idea to demolish old buildings and build a hotel and convention center. I could visualize it all taking shape as we talked. The possible site for a hotel and convention center bordered Bio City and the Creative Quarter. Time will tell.
Examples of Convention Centers Benefiting and Contributing to the New Economic Development of Knowledge Hubs

No doubt some convention centers and CVBs have identified their city’s knowledge hubs, established contacts and have assigned the knowledge sector high on the list of desirable verticals. There are several success stories worth noting:

  • Boston venues, both convention centers and hotels, will host over 170 conferences, tradeshows and annual meetings in the bio-medical/life sciences sector this year, Boston is the nationwide leader for Medical/Health Science events and clearly the many hotel and convention center venues benefit from and contribute to the bio-medical knowledge hub – a true symbiotic relationship.
  • In Houston, Visit Houston/Houston First Corp. and National Trade Productions (NTP) partnered to create SpaceCom. The first three-day event took place Nov. 17-19 at the George R. Brown Convention Center, capitalizing on an estimated $320 billion global space economy-one that’s growing by the minute.  The impetus for the event was to support Houston’s knowledge hub of space technology. The hub has of course matured a great deal and experienced periods of growth and decline. For many years the hub was in fact a government run operation. New life arrived for the space industry with the commercialization of space transport, the communications networks which rely on satellite communications and applications for advanced manufacturing. Houston took everything a step further than other hub locations by launching their own event where they own the event.
  • In November 2015, the Palais de Congres de Montréal (Montreal’s premier convention center) and Montréal Invivo announced a partnership to attract more international congresses of major health and life sciences in Montreal, at the Palace. Montréal InVivo is an economic development organization dedicated to the creation of a business environment that fosters innovation and growth of companies and organizations in the life sciences sector. This economic development organization brings together over 600 organizations including 150 research centers and 80 subsidiaries of world-class companies, This Montreal knowledge hub has achieved a leadership role in rallying the hub’s players around common goals aimed at ensuring competitiveness of life sciences sector in Greater Montréal and throughout Québec. This new partnership will allow not only to intensify actions to stimulate the arrival of new events, it will also help to optimize the economic benefits and intellectual innovation and the development of companies and organizations active in these major sectors of the economy of the metropolis and Quebec.This one is worth watching. I think a more structured approach will succeed here and may serve as a model. They have a strong foundation of companies, a well organized association with Montreal Invivo, an enthusiastic partner with the Palais de Congres, funding, achievable objectives and passion.
  • A useful small market example – Two years ago I was asked by a client to look at several small market areas in order to find a sales model which could be replicated for a venue elsewhere. One point in common was that a major university existed in Knoxville as well as the city my client wanted evaluated. I learned through a salesperson at the Knoxville Convention Center, that several events were hosted at the convention center as a result of a business relationship which had developed between the center and the University of Tennessee. On-going research activities at the university and the influence of a prominent faculty member brought the events to Knoxville. In December 2015 this press release was published:

    Scientific conferences choose Knoxville for innovation

    December 9th, 201

    With two national scientific conferences in our facility this week, the Knoxville Convention Center welcomes industry leaders in two rapidly emerging fields – carbon fiber and energy and environmental technology. Meeting and convention planners select Knoxville for its central location and close proximity to heavy hitters in scientific innovation, such as Oak Ridge National Laboratory and the University of Tennessee.

    Carbon fiber technology and 3-D printing is the future of manufacturing technology, and East Tennessee is one the forefront of this emerging industry thanks to work by the Oak Ridge National Laboratory and private companies, such as Local Motors. Leaders and experts in the industry are at the Knoxville Convention Center this week for Composites World’s Carbon Fiber 2015.

    Exhibitors at the conference will display the latest in carbon fiber and 3-D printing technologies – including a 3-D printed car constructed at Oak Ridge National Laboratory that they pulled right onto our concourse!

    On Tuesday, the conference offered the opportunity for guests to tour the Department of Energy’s Manufacturing Development Facility at Oak Ridge National Laboratory (ORNL) and see the advances in carbon fiber technology and additive manufacturing happening right here in East Tennessee. Keynote speakers and panels throughout the conference will highlight the design and fabrication of carbon fiber structures and parts, as well as applications in wind energy, automotive, aerospace and additive manufacturing.

    ETEBA has held its annual conference at the Knoxville Convention Center since 2003 and has also has strong partnerships with ORNL. ETEBA is a non-profit trade association representing nearly 200 companies, large and small, that are mostly innovative firms in various environmental and energy-related fields, engineering and construction services.

    The conference features key note speakers from the U.S. Department of Energy, panels and workshops on growing industry of energy technology and environmental, as well as great networking opportunities.

    The Knoxville Convention Center is proud that East Tennessee is a hub of innovation in the scientific field, and we are pleased to be able to provide them with excellent service in the beauty of East Tennessee.

Recommendations

  • Conduct a rapid review of the knowledge sector in your city; who are they, where are they, why are they located here? Meet with the city economic development staff. Describe why you’re interested
  • Get to know them. Learn if there is an association representing their industry locally. If so, this is an ideal working situation.
  • Arrange introductions to each company’s leadership
  • Describe how your convention center could be an ideal meeting place for a variety of uses; private meetings, sales meetings, product roll out and demos; recruiting fairs, board meetings, shareholder meetings and social gatherings.
  • Learn what conferences, conventions and tradeshows they normally attend. See which could fit at your center. Ask for their help and influence to persuade events to play in your city.
  • Stay apprised on business strategies to attract knowledge hub related events elsewhere.

Learn More About How Statistics Can Shape Your Marketing Plans

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In the Pursuit of National Medical/Health Science Events – A Primer Focused on Convention Centers

Booking National Religious Events – A Primer for Convention Centers on How Event Location Decisions Are Made

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