Britain’s Tech Cluster that no one’s talking about
Where is it?
The “Silicon Thames Valley” is an area of South East England that is home to a disproportionately high amount of Technology companies?
It includes a number of towns along the M4 Corridor such as:
- Reading (Oracle and Microsoft)
- Basingstoke (IBM)
- Swindon (Cisco)
- Bristol (Hewlett Packard)
Why?
First of all it’s important to understand why clusters form.
One may think that by setting up shop next to your competitors you face issues surrounding keeping top talent. For example if IBM isn’t doing it for you, you can drive 20 minutes away and you’re in Reading with more options. There is however a newer and more convincing argument.
Benefits of clusters
Porter, renowned Business strategist argues clusters benefit their members in a few key ways
- Access to to top talent from competitors
- Access to top graduates
- Access to customers
Clusters benefit from intangible benefits
The above benefits are all examples of “intangible assets” that dominate the modern economy. Intangible benefits are non-physical assets such as human capital and relationships but it can also include things like ideas and culture.
Westlake and Haskell argue in Capitalism without Capital that intangible benefits are partly characterised by their tendency to create spill overs and synergies which create clusters.
Spill overs
The classic example here is R&D: copying innovations is relatively easy. In an information based sector like Tech, there are a lot of ideas to copy. After Apple released it’s iPhone, all phone’s began to look like Apple’s. Not all ideas can realistically be protected by copyright.
Synergies
Brian Arthur of the Santa Fe Institute wrote in his 2009 book “The nature of technology” that technological innovation was “combinational”. For example, software can only be build because hardware was. Websites can only exist because the internet does.
Clusters gain momentum from path dependency
Clusters also demonstrate path dependence in action.
Path dependency is a phenomenon whereby what has occurred in the past persists because of resistance to change.
An easy way to see how small differences create huge differences over time can be seen on Slack. If you pick Dancing shark it becomes just a second easier for the following person to pick it so if you answer first you disproportionately the results following.
In the case of a clusters Microsoft may set up near to Basingstoke because they know they can poach talent from IBM. And IBM may be there to supply technology companies that are their to hire ex-Microsoft employees. All parties involved benefit from the constant flux of technological innovation.
Whilst Silicon Thames Valley is not quite comparable to it’s Californian cousin, it will be interesting to see how the cluster evolves over time with many start-ups looking very promising such as DataSift, Qmee and CloudFactory.
