Successful local milieux and the Lisbon process
Local employment development in the context of the Lisbon Strategy
The aim of this theme is to explore the role of local employment development in the context of the Lisbon Strategy. The EU policy agenda often seems distant to local-level stakeholders and this report offers an essential opportunity to explore how local level action links directly to the Lisbon agenda.
By contrast with the other IDELE themes, this one has not sought to define the subject matter in this case in terms of a given geographical label such as major urban agglomeration or remote rural area. In practice, however, the examples we have chosen fall under the broad label ‘free-standing and ex-urban places’. For the most part they are places that:
- are intermediate in size;
- have a discrete spatial and community identity;
- are ‘urban’ in economic activity but semi-rural in lifestyle and setting.
Some are identifiable as ex-urban (satellites, new towns or ‘edge cities’ set within city regions) while others are more clearly seen as freestanding (small and medium sized cities and towns with discrete rural or semi-rural hinterlands).
What makes the geography interesting to IDELE is that there are some places within this set that appear to have been uniquely successful in ‘catching the wave’ of the modern globalised world economy. They tend to be places whose attractiveness has been underpinned by the arrival of new transport systems and the new information and communications technologies and that have thrived on the shift of economic emphasis to high value added, high skill and knowledge-based activities. They also tend to offer attractive environments that appeal to the more mobile, higher educated professional and technical workers. The people that operate in them are often drawn by the possibility of achieving a unique combination of possibilities in the work-life balance—participation in the global and metropolitan economy while at the same time living in an amenity-rich community with a strong sense of locality.
By no means all (or even most) of the places we have called ‘ex-urban and freestanding’ can, of course, hope to achieve this status. But for our purposes in IDELE, these more successful local milieux can offer some clear lessons about the power of the local in the new knowledge-based economy. There is an extensive academic literature on these ‘new industrial spaces’ and on the ‘flexible specialisation’ that gives them their competitive edge. In what follows we explore what can be learned about the practicalities of action through a selection of case study environments where the local milieu has had a powerful impact on success. Most such places have not been the beneficiaries of EU regional policies; indeed they demonstrate that local employment development is not just about helping ‘poor people in poor places’ but has relevance to all types of locality as a means of improving governance. They offer important lessons about how locally-driven development can be sustained by competitive action to generate continuous revenue. Our discussion of this group of local knowledge-based places is set within a broader context that is critical for the EU as whole—the Lisbon Policy Agenda.
Lessons for practice
Key success factors
The case studies identify good practice lessons for transmission to others seeking to replicate their actions. Some of the more general lessons with regard to such issues as change management and sustainability have been explored earlier in the paper. But there are a number of others that should be highlighted in the context of on-the-ground practice and that arose in the context of general discussion at the Cork seminar.
Branding and critical mass
This was regarded as vital in giving an established cluster a profile visible across the global marketplace. Having both visibility and a brand associated with quality was seen as essential for success in competing with other, similar localities seeking to capture the best firms and the best-qualified professionals. This demands a strategy both to build a brand name associated with a successful local milieu and one that sets out active steps to protect and maintain the quality of that brand. All the case examples in the set regarded this component of strategy as vital.
In Dundee, Erlangen, Oyonnax and Flanders, the areas were branded as ‘Bio Dundee’, ‘Medical Valley’, ‘Plastics Vallée’ and ‘District of Creativity’ respectively. The branding helped to build internal and external identities, which allowed each locality to create a positive image. This served to promote each location to companies seeking to invest and for individuals in the labour force to feel a sense of loyalty and belonging not just to the company but also to the area or milieu as a whole.
A key component of positioning in the competitive marketplace for localities seeking to capture the knowledge-based industries is some means to acquire critical mass. There is a sense here that there exists a minimum scale threshold below which the necessary profile is unlikely to be achieved.
What is surprising is how different localities have achieved this critical mass. For Bio Dundee it has been about creating it in one particular sector through a focused marketing campaign. In Erlangen Medical Valley and Sophia Antipolis it has been more important to market the whole area rather than to focus on any particular sector. For Flanders DC, a collaboration between localities in the region was used to achieve critical mass. In Leuven, it was already present in the university’s research base but a supportive environment was required to maximise the benefits of this asset.
Market intelligence
While creating and sustaining the brand itself is a vital management activity, this needs to go hand in hand with the active gathering of market intelligence for the locality as a player in a competitive ‘localities’ marketplace (over and above that of its constituent firms in their individual market segments). Staying ahead as a place also means watching for and responding actively to general market trends in the high technology environment. This involves having systems in place within the local partnership or management team to have an early sense of those ‘weak signals’ that can give early warning of significant shifts in the overall market or technological environment. It was agreed that a successful milieu needs to be capable of anticipating such shifts and ready to respond to them ahead of their rivals.
Access to finance capital
Keeping a successful growth trajectory in the most successful local milieux demands continual investment and re-investment in the place and its hard and soft infrastructure. While the public purse can and does offer assistance, it is essential for these places to attract investment capital from the open financial marketplace. The most successful local milieux know that they needed to persuade finance capital to invest in them. They have to regard themselves as businesses in own right and offer investment and equity opportunities to those who would finance their growth. Having a well-known and successful ‘locality’ brand and showing that they have a good grasp of the market intelligence needed to stay ahead is a critical part of the ‘offer’ to the international investment market for the funds to sustain growth.
Foster international reach for client companies
Being well-known is an important feature for successful local milieux. Being internationally well known is, however, the real ambition for those localities that have the highest ambitions. International recognition brings in its wake a host of networking possibilities and, as a valuable by-product, can deliver free-rider benefits in marketing opportunities for constituent firms. Through this connection to the wider world by virtue of being a known ‘locality’ brand, a successful local milieu can offer economic advantage to firms within it—helping them capture or extend their market reach. Sustained growth can arise from these sorts of subtle circuits that can offer reciprocal benefits both to firms and to the place that plays host to them.
Extend influence at all government levels
The most successful local milieux are singularly adept at extending their influence across all levels of government and this is considered to be another vital role for the management team and partnership body. There are clear lessons here for IDELE in general about how a locality needs to position itself optimally across the full range of government bodies and how sophisticated the strategies need to be to navigate between legitimate local interests, regional strategic aims and the demands of the nation state. While the need for optimal positioning can be set out as a generic lesson, the precise form that it needs to take is, however, highly contingent to local circumstances and experience shows that it is often particular individuals that make the real difference. In this latter respect ‘succession strategies’ can be regarded as essential especially where early success has been closely associated with a charismatic individual. Continuity needs to be assured.
Developing and maintaining a quality skill pool
The Lisbon strategy for a knowledge-based society demands creating and sustaining a pool of skill and competency that can support local businesses in a highly competitive global marketplace. Building competitiveness in the knowledge-based industries and developing the skills that underpin them is central to the Lisbon strategy as it is set out in general terms. The IDELE proposition is that those who promote the Lisbon generality need to be made more aware of the specificity that the knowledge-based industries are situated in local contexts and that the necessary skills are mobilised/sustained in local settings.
The competitive advantage as places of the case examples comes from being at the forefront of the knowledge-based industries sector. Labour is at the heart of the competitive equation for them—finding the best, keeping the best, building on the best in terms of skills and wider competencies. A clear lesson from the case examples is the importance of taking a sophisticated and dynamic view of the local pool of skills and competencies and of keeping it ‘healthy’ through local actions—not just by the employers themselves but by actors across the wider community. The image here is of a local ‘ecology’ of complex, mutually interacting and often delicately balanced elements—workers, social partners, employers, carers, educators, training providers, state bodies with a shared interest and so on.
The orthodox model of bidders supplying and demanding labour in a competitive marketplace is not denied by this perspective. But it emphasises the role of embedded culture with its relations of trust and co-operation as a powerful discriminant of success or failure from place to place. To think only of labour or skills per se is too narrow. The case examples showed that the best local approaches are able to identify and work on what can be shared across the players while the labour market itself can continue to be configured by the competitive process. The discussions also highlighted the growing importance of conditions outside the employing organisations themselves –in local civic society generally—for attracting and retaining those with the highest professional competencies. The way the local milieu functions can have a powerful impact on the competitive process.
Improving risk management
The most open and creative enterprises are, by definition, those that need the best strategies for dealing with risk. The same is true of those places that seek to play host to these kinds of businesses. They too need to measure the risks that they can be exposed to as the price for setting themselves out as open and creative local milieux for these sorts of businesses. They too need a risk management strategy.
Having scale and diversity in the local business portfolio is the obvious best insurance against these uncertainties. But the competitive advantage that comes from specialisation and a labour pool with particular skills can tend to pull them in the opposite direction—especially where they become successful. For the case study examples this tendency toward sectoral dependency is identifiable to differing degrees but all have at one time or other to confront the downside risks associated with economic change. What marks the longest surviving of them out is an ability to ride these changes successfully as their economies have shifted to meet new conditions. This has often been easier for a local community that has created a sense of common endeavour and has had the embedded relations of local trust that can allow the hardest choices to be confronted. Change management is an important function for any local partnership or coordinating group and that long run sustainability depends upon the organisations involved having a clearly defined strategy for the management of risk.
Avoiding ossification and staying institutionally adaptable
One of the concerns of the case examples is that over time there is an inherent tendency for local institutions to become ossified and to lose their ability to respond to change in the open and flexible way described in the previous section. Not only, then, do they see a need for change management in the case of the local economy and labour market but also in the case of the organising body for the locality itself. The recommendation in this case is that active measures need to be put in place constantly to promote an awareness of the danger that the institutional structure can become a drag on development.
One way of dealing with this is through classic benchmarking methods—consistently seeking out the best practice examples of successful local milieux for the knowledge-based industries, finding out how they operate and taking steps to level up to the performance and quality of the best of them. This is, of course, a process to which IDELE can make an important contribution.
‘Deepening downwards’—ensuring socially inclusive attitudes
One concern of successful local milieux is not to achieve competitive success at the detriment of other objectives. It is a measure of the importance they give to being embedded locally that they se themselves as having a dual mission—being competitive by hosting successful firms but having clear social and environmental objectives that would sometimes need to temper the clear attachment to the demands of the competitive marketplace. On occasion, the case study examples have turned away the prospect of new enterprises and jobs where these did not meet the standards of environmental protection or the jobs involved were of too low a quality to fit with the overall quality and inclusiveness ethos of the local partnership.
The lesson to be conveyed here is that even the most successful local partnerships face difficult ethical and moral choices and that they need to be very clear about their core mission in relation to the wider local community. They need to have clear and transparent procedures for dealing with those sorts of choices as well as those that are more narrowly economic in nature.
Forms of partnership and collaboration
Across all the case studies, partnership and collaboration were inherent to the creation of the local venture. What is revealing, however, is the variety of forms it can take under different circumstances. A clear lesson is that there is no prospect of a ‘one-size-fits-all’ proposition for partnership form.
Flanders DC, Belgium
The coordination of local and regional actions is crucial to success. One of the aims of the coordinating network is to help individual places focus on the right objectives and to ensure that they are linked in with regional and national strategic objectives. Flanders DC has taken the collaboration a step further—to an international level. This enables the region to showcase its creativity and innovativeness abroad and to benchmark it with other regions as part of a programme of continuous improvement.
Oyonnax, France
In Plastics Vallée local firms were initially unwilling to collaborate for fear of losing competitive advantage through sharing otherwise exclusive knowledge. Subsequently, they came to realise the benefits of working in partnership. This collaboration led to the creation of the Pole Européen de Plasturgie that allows businesses to share know-how and learning and, by extension, to reinforce the overall comparative advantage of the region and its firms.
Sophia Antipolis, France
The Sophia Antipolis venture only allows implantation of companies whose activities are focused on research and development. But while the research is undertaken by many different sectors, the Sophia Antipolis Foundation encourages ‘cross-fertilisation’, i.e. networking among these companies to encourage the sharing of ideas. There is recognition that ideas can be shared across sectors or even combined to foster further innovation, and encourage networking via a number of means, such as the holding of informal ‘get-togethers’ over breakfast, seminars and forums, etc. Not only does this cross-fertilisation help in getting different sectors of research to interact, but it also helps to add to a sense of ‘community’ for the people who work in Sophia Antipolis.
A further key factor for the success of Sophia Antipolis and its longevity has been the successful engagement of a network of local actors. These actors combine to add to the sustainability of the project, and represent regional and local government, the academic sector and the Chamber of Commerce.
Sophia Antipolis recognised the need to engage the academic sector from the outset. The University of Nice is closely involved with the venture, so much so, that it modified its name to ‘Université Nice Sophia Antipolis’. Part of the university campus in now on the site of Sophia Antipolis. It hosts 5,000 students and helps to foster an atmosphere of networking and ‘cross-fertilisation’ between the academic world and the private sector.
In the government sector, significant investment in the project has come from local and regional government (around one third of the overall investment). In 2002, 16 communes from the area around the site of Sophia Antipolis united to create the ‘Communauté d’Agglomération Sophia Antipolis’. The local Chamber of Commerce is also heavily involved in the Sophia Antipolis partnership, further enhancing Sophia Antipolis’ credibility in the private sector, given the considerable influence of Chambers in France.
Issues of transfer to New Member States
One of the subjects for debate among the attendees to the seminar the sorts of lessons that were most likely to be transferable to Member States where there is as yet only a limited experience of the LED approach. While there are cases where this situation prevails within the EU15, a future concern for IDELE will be that for the New Member States. The expectation here is that a range of cultural, institutional, environmental, economic, regulatory and governance factors will present dramatically different conditions.
A perspective available to the seminar from Poland suggested, however, that a number of key elements of good practice can still be transferred despite the vast differences in structure that exist between it and the case study countries. While there is still much to learn about the different contexts involved, it may that some new model of local development will need to be constructed allowing new starters to learn as much from the mistakes and the ‘blind alleys’ of the past in the EU15 as from ‘best practice’. It may indeed be necessary for some new model variant to be evolved that can ‘play back’ into new starters not only in the new Member States but also in some old Member States.
Perspective from a New Member State, Poland
Local employment development initiatives are relatively new in Poland due to the limited support from central and regional government for such actions (although since the early 1990s there have been a few). Local employment development is now more and more seen as a tool for managing local unemployment. For most regions though, it still is a completely new experience. Local governments have a long tradition of governing top-down. The role of the public employment service is now changing. Before, there were few active measures for employment now the public employment service initiates more individualised programmes and career guidance (financed by ESF funds). Since local democracy is new for Poland, there is a particular issue around capacity building. At present only the more confident local leaders are willing to form partnerships.
Conclusion
So what then of the local approach and the Lisbon process? First, an overly top-down approach with grand aspirations for sustainable economic growth, while vital in its own terms, must eventually deal with specificity and context. Second, there are national level and regional level strategies and actions that necessarily provide facilitating frameworks for a European growth strategy based on the knowledge-based industries. But third, there is evidence to show that a strategy that bases itself on having the most sophisticated, skilled, creative and dedicated labour force in the world must take account of where such people choose to locate themselves and what sort of cultural and environmental context will attract and retain the very best of them at different stages in their life.
What the best of the case study examples lead us to understand is that the local milieu—capturing the widest sense of the description—is vital and that, while in an unequal world some places are naturally better endowed than others, the power of local people and organisations to extemporize on broad themes to create their own particular and attractive ‘mood music’ for local development is a power not to be ignored.
