The Institute for Manufacturing recently hosted a visit by group of managers from major German corporations. Their programme included talks from academics, business networking organisations, business incubators, innovation-related student societies, investors, and visits to a wide variety of local firms. I thought that viewpoints captured during the final day of their two-week visit were worth sharing as they reveal interesting trends in the cluster from the external perspectives of large, technology intensive multinational corporations.
People: While the stories of serial entrepreneurs such as Hermann Hauser and David Cleevely were impressive, and the high energy activities of the students were inspiring, the visitors were particularly interested in the 'second-timers'. These were the highly technically competent engineers in the 30-40ish age range who had set up one company and were now on their second. There was remarkable commonality with many of their stories. The first venture had typically been very 'technology-push', requiring large amounts of funding for product development (based on some terribly clever but often low readiness level technology). By the time potential customers had been persuaded to recognise the value of the product, the funding had been exhausted. The second venture was much more market-pull, with close involvement of potential customers from the outset. Engagement of users in the early concept development, the recognition that the technology only needed to be 'good enough', and that the business model was key were all features of these second ventures.
Business models: The visitors had anticipated hearing the typical generic VC-backed start-up story repeated throughout the visits. What they actually saw were companies that mostly had no VC backing. Some had Angel funding, but most had started with a combination of grants, personal funds (in some cases the gains realised from successful previous ventures), and revenues from customers. They were mostly targeting a niche where the entrepreneurs' specific knowledge and resources could be targeted. Many had followed the path described by Eric Ries of getting the minimum viable product in the hands of customers and then adapting in response to feedback from these initial users. Extensive planning, plotting of scenarios and Excel wizardry had been replaced by customer engagement, rapid prototyping, and flexible scale-up.
Cambridge is weird and wired: There was a level of on-going befuddlement throughout the visit. Our attempts to illustrate the complexity of Cambridge may have resulted in more confusion than clarity: Who was in charge of Cambridge? What is the plan for Cambridge? Why are their so many networks? What is the role of the local government? But one message did stick clearly: Cambridge is an extremely networked community - and it is that connectedness that provides the fertile ground from which successful ventures can start. In so many presentations, multiple connections could be clearly seen. That student winner of the business plan competition was also actively engaged in this networking group, and had received funding from that business angel, who was also mentoring this new venture, which was connected to .. etc. But what could have looked like quite an incestuous community was also shown to be open to outsiders, as reflected in the number of start-ups whose founders had come from outside the region.
Cambridge continues to be held up as an exemplar of an innovative cluster (or 'innovation ecosystem' as seems to be the new label of choice) but the complexity of its activities can be hard to explain to those outside - and for that matter to many inside - the community. Cambridge can provide lessons that could be helpful to others, but those lessons are not simple to extract. If Cambridge wants to continue attract the resources of external organisations, more efforts need to be made to communicate what Cambridge is, what it does, and how those from outside can work with this networked and highly innovative community for mutual benefit.