Why Digital Business Ecosystems Really Matter
Striking a balance between the local supply and demand of human talent within tech clusters around the world will likely be an ongoing challenge. If you’ve been following my stories, then you may recall that back in December of 2012 I shared some observations and predictions about the evolving digital business marketplace in London, England.
The East London Tech City initiative – including the area known as the Silicon Roundabout – was again the focus of a market research report. According to the findings from a recent market study by UHY Hacker Young, a total of 15,720 new businesses were set up in this London neighborhood (postcode EC1V) during the last year. Much of the growth is attributed to the rapidly evolving digital and technology hub.
The report authors claim that the concentration of entrepreneur activity here is greater than any other area of the UK marketplace. That being said, there are other pockets of new business growth nearby.
Major socioeconomic regeneration activity — such as new infrastructure, including broadband network investment — has been an important catalyst for British start-up company launches in the area.
“Clusters of expertise can be highly effective in driving new business creation. The area around Old Street has been an emerging business destination for some time thanks to relatively cheap rents, but since the internet and app industries started to colonize the area, new business creation has really taken off,” said Colin Jones, a Partner at UHY.
Ongoing Quest to Find the Best Talent
Unfortunately, I didn’t attend the Digital Shoreditch festival in-person this year. However, I was able to view some of the keynote and session video that was streamed live via the internet (now it’s archived).
Once again, the sessions that were most interesting to me were about the updated assessment of the Tech City community progress, plus the near-term economic outlook.
The “Tech City Futures” report — produced by GfK – was discussed during a very insightful session that explored the market study results – with informed stakeholder commentary about the implications to the community and its digital creative industry residents.
A summary of the entrepreneur survey findings include:
- Nearly a half (44%) said a shortage of skilled workers is the biggest challenge they face.
- Over three quarters (77%) said a lack of skilled workers is restricting their growth.
- A third (33%) believes a lack of access to capital is hindering their business. A similar number (29%) say as a consequence their company is missing significant business opportunities to expand.
- There are mixed feelings about the effectiveness of Government support. While some initiatives have gained widespread support, others have been criticized for an emphasis on what some perceive as PR as opposed to helping develop Tech City’s infrastructure.
“This report highlights the ecosystem of entrepreneurship and how vitally important it is to have all the elements in place,” said Ryan Garner, Research Director for GfK.
Perhaps you’re wondering, why are government and commercial leaders investing so much time and effort in the analysis of this local cluster? It’s all about their economic stimulus and growth aspirations – for good reason. It’s estimated that 8.3 percent of Britain’s GDP comes from the tech sector, and that is expected to rise to 12 percent by 2016.
Building a Brilliant Future, in the UK
I plan to visit London soon – for the upcoming opening of the IDEALondon centre.
UK Prime Minister David Cameron announced IDEALondon at the end of last year. It’s intended to be a hot-house of commercial creativity — established by Cisco, DC Thomson and UCL as the Innovation and Digital Enterprise Alliance (IDEA) initiative.
IDEALondon aims to support the growth of digital and media companies — in particular the most promising start-ups which have come to characterize the Tech City entrepreneur community. It’s anticipated the facility will host around 25 digital and media companies which will employ people in the area, in addition to staff working in other locations across the country.
Building and nurturing a local digital business ecosystem is a significant undertaking. One of the most effective ways to grow a savvy talent pool is to offer mentoring from experienced start-up practitioners.
When I launched my first small business, many years ago, I was fortunate to have access to people who helped me. Today, I follow their example, by extending their generous knowledge transfer and thereby pay-it-forward to the next generation of entrepreneurs. Truly, I’m looking forward to my next UK visit.