Third Generation Science Parks:Building Regional Knowledge Economies
This document describes the process and results of a ‘scenarios workshop’ held to determine what characteristics and objectives a future, successful and mature science park should have, which is here termed a ‘3rd generation science park’. Although there will be a range of models, most key factors are common and critical, including being:
·A global player, but with local roots. The park plays a significant part in actually defining the image and brand of its city or region, as well as projecting it. Companies on the 3rd generation science park see no geographical boundaries to their market and are increasingly engaging in international trade. Conversely, the park has a significant number of tenants with their main bases overseas;
·A part of the community, with care for people and the environment. The science park encourages skills development, new technology and the development of environmentally aware work-life communities. Its layout and architecture is acclaimed not only by planners and architects, but by those who work there and live nearby;
·A healthy business and an opportunity for investment. A top-quality management team is essential to cover all the disparate aspects which it has to deal with. In particular, the character of the Chief Executive is vital, requiring high-quality leadership and a broad set of skills. The park generates a healthy financial surplus, with an increasing proportion of private sector investment. It has also overcome the problem of access to investment capital for its tenants, because of its help in making them investment-ready;
·An essential element of university activity. The 3rd generation science park is not separate from its associated university, but an integral part of the university’s activities. It exerts an influence on the university’s curriculum, graduate destination pattern and research agenda. There are many growing companies on the park which have spun-out from academic research;
·Part of a multiplicity of networks. Engaging in networking and connectivity is part of the park’s essential function of optimising serendipity. Regional, national and international networks are involved, and their value regularly evaluated;
·Focused on the needs of its tenants. Their physical environment is important, but so too is the supportive business environment established by the park. The ‘graduation’ from incubator to the science park is a smooth and positive process. The Park generates an attitude of trust with its tenants.
In Manchester in October 2006, a ‘scenarios workshop’ mapped out future best practice for science parks and identified the key elements for success. In particular, the later stages of park development were considered in detail and an attempt was made to map out possible paths for mature science parks to achieve further success. Although a proliferation of successful science park models is likely to continue, there is value in identifying generic success factors that might apply in different degrees and in different combinations, from one successful science park to another.
Stages of science park development
There is a discernable process of science park development or ‘maturation’ which appears to be quite general. This has been apparent for some years and is described in detail in the UK Science Park Association survey by Angle Technology in 2003 .
A typical park takes around a decade to reach maturity and, in doing so, passes through a series of recognisable phases. The initial phase, which may take a few years, encompasses the initial planning and agreement from the park’s stakeholders, and the acquisition of funds sufficient for the commencement of operations. At this stage, everything is new and exciting, but the CEO soon realises that a big effort will be needed to fill up the buildings and for the park to reach financial self-sustainability.
The second phase is one of steady growth, involving the acquisition of further premises for multi-occupancy. This phase can be of varying length, depending on factors such as the location, quality of management and the overall economic climate. During this phase, the management and operational activities of the park develop progressively and become more efficient. Some parks remain in this phase, with steady growth and stable management.
However, there is for more progressive parks a third ‘mature’ stage, when the management recognises that the park is capable of playing some wider and desirable role in the economic or technological development of the region. This stimulates a change, sometimes quite profound, towards a more individual style of science park, which differentiates it from others. The change may be to move to multi-site operation; or to become increasingly involved in providing management services to assist tenant company growth; or to link closer to its associated university. Or it may be quite another special set of characteristics.
Scenario for success
This output from the Workshop is in the form of a ‘scenario for success’, written from a future standpoint. It brings together the key factors, drivers and objectives which were identified by participants. There is a multiplicity of sub-headings, but they are not necessarily presented in order of importance.
1 National and regional context
A successful science park is not and cannot be a ‘stand alone’ venture. It is intimately connected to and involved in the implementation of national and regional innovation policies.
The European and national context
Science parks in the 21st century have become an essential part of a more innovative Europe. They have achieved this by professional management, increasing their networking, achieving a greater mass and by helping to attract investment into their SMEs. They are a significant part of the innovation ‘ecosystem’ and a key to its success.
Successful European science parks have positioned themselves as leaders in the development of the knowledge economy. They have helped Europe to compete by designing workplaces and environments that optimise the innovation process – to make change easy. Such places facilitate spontaneous and dynamic working, and encourage random interactions and synergy.
A major turning point occurred when the more progressive parks determined to break out of a local mindset, and began to think and act globally. They recognised that their principal competitors were not the neighbouring science parks, but those on other continents. They therefore created effective international networks, and grew to a scale enabling them to compete, attract and retain companies at an international level.
The great cities of the world have also been influenced by the new generation of science parks, and in some cases, notably Manchester in the UK, they have been influential in changing their city’s brand and image as a focus of the knowledge economy. They have set the standard for high quality services to knowledge-hungry enterprises; exploited the interdependence of sectors; and are global players with capacity to accommodate international business investment.
The national and international science park associations have successfully protected the image and distinctiveness of science parks from devaluation by conventional property developers.
The regional context
Science parks and the regional public sector now enjoy a mutual dependency, and this has been carefully managed. The parks have integrated into their regions’ overall economic development plans, and play an increasing role in economic, educational and community development, thus developing a social infrastructure within which creativity can work. In some regions, the park has become an essential element of a sustainable community.
Science parks have engaged with their local communities to influence social, economic and educational improvement. Indeed, they have become local beacons for economic and community development. Because they impinge on a whole range of areas of life, some not at all technological, the name ‘science park’ may be strictly inaccurate, but their function, ethos and importance have become so significant that few are prepared to engage in quibbles over the term.
As science parks have become more financially successful, the public sector has played a decreasing role in their finance. Regional development agencies have generally been wise enough to sell their interest in the science park real estate to appropriate investors, and an increasing number of these recognise the value of science parks to their portfolios.
2 Strategic policy and management
A successful 21st century science park has both strategic and day-to-day management of the highest quality. This has enabled a clear long-term strategy to be defined, which has been implemented under a sustainable business model. This has been no small undertaking: 3rd generation science parks are involved with places, processes, relationships and outcomes, and they have been good at managing all of them.
The leadership of 3rd generation science parks requires far more than property expertise, although this is still absolutely necessary. They enjoy high level board and network representation, principally from their main stakeholders, but also from large firms and financial institutions, often from outside the region. This has afforded them the range of perspectives, contacts and expertise needed to compete in a global marketplace.
The 21st century science park is a gateway and not a destination. Thus, preoccupation with location, property and place has been replaced with a focus on process: an enabling process in the journey of each tenant’s development. Part of the challenge of this change in paradigm has been to develop efficient and effective pathways from the gate, since they could not have been left to chance.
Successful parks employ top-quality Chief Executives, with demonstrable leadership qualities, a broad set of skills and the capability of relating positively to all the disparate sectors which regularly interact with the park. The underlying and fundamental objective in managing a mature science park is to optimise serendipity.
It is apparent that the best science parks are those with first-class senior managers. It is the skill and personality of their Chief Executive which has given them their distinctive characters.
The task of senior management has been to ensure that the whole of the park’s operations, the physical location, the overall ambience and culture, the services provided, the networking opportunities, etc., work together to enhance ‘happy accidents’: to optimise serendipity. An innovative and entrepreneurial approach to management of the park seems to be the key.
Such serendipity takes many forms. For instance: one tenant helping to solve another’s problem; or two tenants, maybe on the same park or, just as readily, on parks in different countries, agreeing some kind of commercial relationship; or the chance finding at a networking meeting of a business angel with the money and interest to support the growth of a tenant; or perhaps the recognition that an apparently unrelated technology developed by the university could be of immense value to a particular tenant.
For those science parks that are ‘company-driven’, the characteristics and role of the ‘anchor company’ have been especially important. They have enhanced the overall image of the park, given it stability, demonstrated the effectiveness of an ‘open innovation’ strategy, and have illustrated the function of the park as a gateway rather than a destination.
The 21st century science park is a sustainable business. The proportion of private sector investment has increased greatly, and investors now appreciate the significant opportunities of investing in appropriate science parks. However, public sector support has remained important to allow some parks to establish operations in more difficult regional locations, where longer time-horizons to achieve viability are required.
Science parks were never meant to be ‘short-term fixes’, either in terms of their support for economic development or as property investments. Investors in science park property now take a long-term view of financial viability and, as the parks have matured and maintained high occupancy levels, have received a good return on their investment.
Although there has been an increasing proportion of private investment in science parks, even some highly successful parks still require a level of public sector finance for specific programmes. These have included establishing locations for specific and strategic technologies which require expensive initial fit-out, or for expanding the park’s operations into a more difficult, economically disadvantaged part of a city or region. Nevertheless, even in these instances, financial viability has been an essential objective.
For some years previously, commercial investors had seen returns driven down by global liquidity and low inflation. Any chance of earning superior returns demanded a blend of knowledge and capital. This imperative has led to some developers, initially hesitant in signing flexible, relatively short-term leases with small, technology-based companies, to come to understand both the risks and the excellent opportunities of such deals. They have recognised that the very flexibility of the leases has aided the growth of tenants, thus facilitating clustering and the overall growth and reputation of the park.
Although successful science parks produce a good commercial return on their property, they use a planned proportion of the surplus to support some of their services to tenants. Some provide networking services between tenants, and between tenants and the university or sources of business advice. Others offer a range of subsidised business services. Several take a ‘portfolio’ approach, and support the operation of their incubator (both property and incubation services) from surpluses generated from rental income.
5 Physical and environment
The built environment
Science parks were originally considered to be essentially locations. Then, at the turn of the century, location was considered by many to be quite unimportant and the focus turned to ‘brains, not bricks’. The 21st century science park once again regards the built environment as vital, not as an end in itself but as an aid to the process of creativity, interaction and innovation.
Physical development based on a thoughtful, in many cases inspirational masterplan has proved to be a significant success factor. Such masterplans have provided an overall context, with integration of neighbouring residential accommodation, learning, commercial activities and research; they have reflected purpose, values, and principles which in turn has led to a clearer image and branding of the park; they have helped to make the place a desirable work-life environment; and they have incorporated connectivity as a major theme.
Third generation science parks illustrate how important the built environment is to a growing company. Despite the increasing level of virtual, global and mobile working, people still need a workplace that is multi-functional and stimulating. This does not necessarily mean expensive: even modest buildings can provide the environment and interaction space which drives business functionality.
The features which exemplify these objectives are different in each park. However, in general they include:
·Keeping buildings close enough for people in each to interact;
·Sufficient green space, in a pedestrian-friendly campus;
·Components which contribute to branding, image and identity;
·Good use of natural light;
·Flexibility in size and use of units;
·Sufficient informal ‘interaction space’, where people can engage in impromptu conversations;
·Services to support the lifestyle of people working on the park, such as shops, exercise facilities, a crèche, etc.
The environment in general
21st century science parks are organisations with a sense of responsibility, and have shown concern not just for the environment within their boundaries, but for the global environment.
Science parks have become exemplars of sustainable developments in sensitive locations. They have invested in sustainable building designs, and have become parts of whole sustainable communities.
6 University relationships
An active, effective, diverse and two-way university relationship is perhaps the principal defining characteristic of a 3rd generation science park. The emphasis on exploitation of technology has given universities a new relevance to the global economy, and science parks act as a bridge between research and the marketplace.
In the late 20th century, the role that universities could play in the exploitation of new knowledge was only beginning to be appreciated, and science park managers had to jostle their way into university departments to encourage academics to take some part in the innovation process.
Today, successful science parks work closely with their associated universities to spin-out new technology into the marketplace. Universities employ specialist exploitation professionals, who are sometimes part of the science park management itself and always networked closely with it. University staff see the science park as part of their own institution, or at least as part of the family of operations which a modern university needs.
Furthermore, science parks are regarded as shapers of the university curriculum and faculty culture, by encouraging exploitation and helping to deliver education in entrepreneurship and also in other areas which are vital to future business, such as language training. Thus, the science park impacts back on the university’s core business at a number of levels: curriculum; recruitment; graduate destinations; and the research agenda.
Connectivity and networking at all levels is essential to the 3rd generation science park and its tenants. So vital is it, that a number of parks record a network value in their annual reports and accounts.
Young, growing companies benefit from access to a multiplicity of networks and contacts, and it one of the major tasks of a mature science park to maintain these, and also to regularly assess their value and effectiveness.
The networks start within the park itself, expand to the associated university and the regional business community, and include consultants, advisors and large commercial and financial institutions. Many successful parks maintain close links with their ‘alumni’, those companies which have moved from the park. They have proved good role models for younger, aspiring companies, and the experience of the older firm has often been of considerable value in guiding the younger one to success.
But networks do not stop near to home. The most successful parks have created effective national and international networks and alliances, enabling them to perform comparative benchmarking, compare best practices and support the rapid commercialisation of complex, high added-value products and services into the international market.
8 Growing the tenant companies
In a science park, the term ‘tenant’ denotes a relationship which goes far beyond the legal: the park team adds value by interpreting the opportunities and consequences of each tenant’s business activities, assisting both the growth of the tenant and their attractiveness to potential investors. An intimate understanding and response to different tenants' evolving needs during their tenancy is essential. Mature science parks strive to establish a climate of trust with its tenants.
A pro-active science park management has a considerable understanding of what its tenants are about, and directs appropriate skills, advice and networking opportunities (including access to investment) to the tenant. The park also recognises that the needs and level of advice needed will change as the company matures.
The successful parks have recognised that the principal deficiency and hence need of a technology-based business is not technology but commercial skills and understanding. To meet this need, they provide access to a range of advice and support. As just one example, a number offer courses in selling (as opposed to marketing), which is so important but often ignored by the more technologically-minded entrepreneurs.
The support given in enhancing tenants’ commercial skills has not gone unnoticed by investors. There is an increasing willingness by investors in small companies, such as business angels, to network with the more successful science parks to identify suitable firms in which to invest. Venture capitalists are also prepared to purchase equity in such companies, recognising that the experience of the park management can assist them to identify those companies that are truly investment-ready.
Relationship with incubation
The process of innovation is a continuum, and there is no clear demarcation between an incubator and a science park, although the help required by companies inevitably changes as they mature, becoming at the same time less intensive but more specialist.
The 3rd generation parks have recognised that they must understand and anticipate the earlier stages of company formation and growth. All of them either incorporate an incubator or have access to at least one in their region, and all of them take pains to make the transition from the incubator to the science park a smooth and positive process.