Innovation centres are growing in popularity, top 10 ecosystems

03 February 2017 Consultancy.uk

As innovation becomes the lifeblood for companies in a host of industries, support centres for the innovation journey, so called 'innovation centres' are increasingly in demand. New research highlights that their opening is accelerating, with Asia the top region for openings, on the back of, among others, readily available talent and proximity to market.

CEOs across a range of industries, including telecommunications and financial services, live in fear of a digital disrupter rapidly consuming market share and relegating their proposition to history, like the fate of Kodak, Nokia or Blockbuster. Research from BearingPoint for instance highlights that the business world is an increasingly dynamic place, the average S&P 500 company survival period have fallen to 18 years.

Innovation centres

One way of improving the innovative output of companies is through innovation centres. These centres bring together expertise from a range of sectors to support companies in their innovation journeys. In a new report from Capgemini Consulting, Fahrenheit 212 and Altimeter, titled ‘The Spread of Innovation around the World’, the partners explore the state of the innovation centre landscape across the globe.

Accelerating growth of innovation centres globally

Global innovation centre growth

According to the firm’s recent global survey of innovation centres, their number continue to increase – in July 2015 there were 301 such centres globally, in October last year this had increased by more than 50% to 456. The firm also notes that their rate of formation is on the increase; 88 new centres arose between March and October of this year, compared to 67 between July 2015 and February 2016.

Top ten locations by number

Top 10

Silicon Valley is almost synonymous with innovation, the region boasts some of the world’s most successful and dominant tech startups, as well as top innovation talent. In terms of the number of innovation centres as a % of the global total, its dominance is being slowly eroded, falling from 18% in July 2015 to 14% in October last year – the region remains #1 in the top ten locations however.

London takes the number two spot, while Paris finds itself displaced in the October 2016 survey from its former third spot, to fourth. Singapore moves up one spot to third. Bangalore has beat out Tokyo in the February 2016 survey to round off the top five. Berlin finds itself out of the top 10 in the latest survey, as do Munich and Boston, while Atlanta and Toronto make their first appearance.

The evolution of innovation centres in top 10 cities

The research further explores the distribution, by country, of the addition of innovation centres in the most recent period. Silicon Valley stands out, adding 7 in the October 2016 survey and five in the February 2016 survey, hitting a total of 65. London comes second, increasing by 2 in the most recent survey and 4 in the previous survey, to a total of 16. Singapore beat out Paris by 1, largely due to the opening of four centres, to Paris’ two, in the most recent survey. Bangalore has more than doubled its centres over the past two years, while Atlanta created five additional innovation centres.

Asia attracted the most new innovation centres and grew the fastest

The study also notes a trend towards innovation centre openings in Asia – in part, driven by the availability of talent across the region. In total, 34 centres opened in the region between March and October 2016, at around 35% of the total. North America took the first spot however, with at least 35 centres opening up in the region, the US has by far the biggest impact, adding 33. Europe saw the addition of 13 centres.

Asia also saw the biggest regional increase as a % of total centres, up 35%, followed by the US, up 29%. Europe only saw an increase of 12% on its total over the period while the rest of the world increased by 16%.

Europe seems to be falling being in the digital innovation race

Europe has seen its competitiveness, with respect to the rest of the world, in the innovation centre space – as a % of total global innovation centres – deteriorate. In July 2015 the region had 90 centres to the rest of the world’s 211, or 30% of the total – by October 2016 the % total of the region had fallen to 26%.

The research does note however, that the UK continues to win share in terms of % of European Innovation Centres. In October 2016 the UK was host to 24% (29) of Europe’s total, up from 17% (15) in July 2015. France and Germany both saw net decreases to 20% and 18% of total in the most recent survey respectively.

Eric Turkington, Director at Fahrenheit 212, part of the Capgemini Group, remarks, "We are witnessing a rapid changing of the guard for global investment in innovation centers. The US and Europe have traditionally been viewed as dominant forces in innovation and technology but Asia could soon surpass the US for number of innovation centers built and operated. Moreover it is clear that funding alone is not enough — the success or failure of any innovation center hinges on how effectively it taps into the surrounding ecosystem, and the role it plays in driving a broader corporate innovation strategy."

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