The global economy is built on apparently ever-increasing mobility of people, capital and knowledge. Not everywhere, however, is equally attractive for these assets, creating clusters that attract international inflows and areas reliant on their own resources. This process is undergoing changes with Greece’s potential exit from the eurozone but has been a battle throughout the ages, from the intelligentsia diaspora – John von Neumann et al – leaving Europe for the US in the 1930s and 1940s to London tapping financial markets through the Rothschilds effectively to fund the later stages of the Napoleonic war.
But whereas foreign direct investment (FDI) was the goal of 1980s government policies in many countries, the requirements to attract the brightest people, use information most effectively and supply the funds to fuel growth mean corporate venturing has become a crucial guide signifying whether a region is advancing or retreating in attractiveness. In effect, corporate venturing is the 21st century equivalent of FDI.
For if a country or region cannot attract the only significant sources of cross-border venture capital – independent venture capital firms (VCs) for the most part are too small and parochial – then it is a good sign there is a lack of soft power networks and historical ties as well as a more fundamental lacunae of basic and applied research, government support, communications infrastructure, talented entrepreneurs and ambition to tackle big markets. US-based technology equipment provider Cisco calls the interconnectiveness of industry, university and government the triple helix model, one where collaborations among all parties are increasingly important and undergoing substantial changes.
Anne Lange, director of the global public sector at Cisco’s internet business solutions group, in the second of a Global Corporate Venturing webinar series hosted by the National Council of Entrepreneurial Tech Transfer (NCET2), said the knowledge-based economy and need to create clusters meant there needed to be "the virtuous cycle of triple helix collaborations". She said: "The knowledge-based economy puts a
stronger emphasis on the value of knowledge capital and access to primary sources of innovation. It forces academics, politicians and businesses to shape new collaborations and decrypt, together, these complex ecosystems. The substantial increase in university-industry partnerships is a visible output of this shift [and] global clusters are best positioned to address this new challenge and accelerate new partnerships."
As each institutional sphere "takes the role of [an]other" and so performs new roles as well as its traditional function, Lange said it meant universities were forming firms, governments were acting as venture capitalists and industry was raising training of employees to higher levels. Clusters will dowell where all these areas are thought through and supported.
The consequence of the evolution in the triple helix model is, according to Lange, that "innovation policy is increasingly an outcome of interaction rather than a prescription from government", exemplified by the US’s Silicon Valley in California with its culture of networks, international connections and sustainable innovation as locals focus on
emerging business areas.
Cisco sees information technology as being a bridge between the "real" world of a physical cluster and the virtual links required by international business and networks.
While this is an opportunity for Cisco to sell its teleconferencing equipment, the company has developed interesting and joined-up policies under its Global Exchange for Growth (GXG) programme to follow and benefit from the disruption and insights thrown up as the model works itself out (see graphic overleaf).
Russell Craig, manager of the global public sector at Cisco’s internet business solutions group, told the webinar how Cisco was
applying the programme in the UK through the British Innovation Gateway (Big).
He said $500m was nominally to be invested in the UK and, as revealed by Global Corporate Venturing, the group has just hired Frederic Rombaut from Qualcomm to head its corporate venturing efforts as "Cisco anticipates making significant UK investments as a consequence of Big".
This is similar to the $1bn Cisco is investing in Russia’s Skolkovo project and the billions going to China from numerous other companies to support its burgeoning cluster.
China has also rapidly expanded its projection of soft power itself as it is the largest supplier of overseas students and its companies and VCs target entrepreneurs in
other countries.
The relative disparity between investment flows is indicative of importance. And, as someone fortunate enough to see first-hand the policies in China, at a corporate venturing conference in Shanghai in April hosted by CEIBS, and Singapore, at this October’s TechVenture event, among others, the complacency and myopia of much of continental Europe and the Anglo-Saxon world is a recipe for future underperformance – nemisis follows hubris, after all.
Next month’s Global Corporate Venturing webinar hosted by NCET2 is with Japan-based drugs maker Takeda, so tune in or drop editor James Mawson a note if you want to present your company’s approach to university and corporate venturing.