Cooking up some innovation magic
How to manage innovation spaces for impact
Once upon a time there was a Brazilian entrepreneur, Antonio Jacob Renner. Who in 1912 founded his business with a factory in the Navegantes area of Porto Alegre (down in the southern tip of the country) based on turning the local cotton crop into textiles and apparel. The city’s name means ‘joyful port’ and it certainly was a good location for him; within ten years he’d opened a clothing shop in the city specialising in the ‘Ideal cape’ — a weatherproof garment beloved of city clerks as much as the gaucho cowboy out tending to the cattle for which the region is famous.
The business grew and by the 1940s had become a department store; soon after there were branches right across the country. By the 1960s it had become a key brand — Lojas Renner — which still exists today as a fashion-led chain, a kind of Brazilian version of Zara.
Not bad for a one-time start-up in downtown Porto Alegre. But times change and while the retail side of the business continues much of the old factory estate has crumbled away, leaving only the shells of derelict buildings behind. Which was the case for one of Renner’s first factories in the 4th district of Porto Alegre. It accompanied many other businesses into a decaying wasteland which quickly became a hot spot for crime and other social problems, making the area something of a no-go space.
Enter an unlikely coalition of around 40 city and state authorities, local universities, large employers and others who together decided to help reshape the region’s fortunes and make it a new centre for entrepreneurial growth. They took over the factory and, as the ‘Pacto Alegre ‘ — joyful pact — began to stir their pot. They christened the site the ‘Caldeira’ — named after the original industrial boilers which Renner had imported and installed way back in the 1900s. And a hundred years later their centre has been cooking up a particular kind of innovation magic.
Their vision was — and still is — ‘to promote connections between large firms, start-ups, universities and public authorities to create a transformative movement to foster the technology and innovation ecosystem’. Ambitious if nothing else — but despite a rocky start they’ve managed to do so.
The centre opened in 2018 just before the Covid 19 pandemic began to hit, and it’s a testament to the vision and persistence of the founding team that they survived and grew. Despite restrictions on physical interaction they managed to create the space and attract a cohort of early users, especially in the rapidly-growing digital business space. Drawing on the expertise of local universities the Caldeira became a strong focus for innovation in key emerging sectors like biotechnology, healthcare and education technology. A key development was the arrival of support service players — legal firms, financial advisors and, of course, venture funding — which helped create a kind of vortex, pulling in different players with a common focus on innovation. An ecosystem in miniature and the basis for the ‘Caldeira community’ which still characterises their underlying philosophy.
Today’s Instituto Caldeira is a thriving innovation hub with bright airy spaces, open plan offices and a palpable sense of creative energy in the air. It always was a big building but the huge space is being outgrown; the first two storeys of the building are fully occupied, the third is being developed and the next stage is to buy another adjacent factory. It’s going to need all that space to house an increasingly eclectic mix of start-ups, service businesses in fields like finance and law and a growing number of major companies for whom a presence here keeps them close to the buzz. And an environment where there is a palpable climate of innovation, one which gives them a chance to rekindle their ‘start-up mojo’, get it working again to help renew their established activities.
It’s a physically attractive space, lots of glass office walls so you can peer into miniature worlds filled with colourful furniture, walls and windows covered in idea sketches and pictures. Everywhere there are artefacts and messages challenging the occupants to think and act differently. The layout is one of wide avenues and high ceilings; these streets regularly open out into small and large areas like village squares, designed to encourage people to sit together and talk. Tables and chairs invite such conversations and encourage interchange of ideas; there are also multiple arenas of different sizes where people can gather and pitch ideas or explore shared interests. The whole place has a sense of configurability, very little (apart from the structural walls) is fixed; it’s designed for spontaneity and emergence, creative collisions between people are inevitable and encouraged. Work together, play together, eat, drink and think together seems to be the underlying design mantra.
But it was always designed to be much more than a physical environment within which start-ups could operate; the vision is about building a community. For start-ups the offer includes not only space and services but also extensive support in the form of training and help with acceleration. In particular it provides a brokering role, linking with investors, support services, large companies and the wider innovation ecosystem.
And for established businesses it provides a valuable innovation space in which they can exchange ideas and good practices, explore emerging market and technological trends and experiment within a different kind of innovation culture to their mainstream operations.
There’s a sign inside identifying one area as ‘start-up village’ but the feel is closer to that of a small town, sprawling in many interesting directions. Instituto Caldeira has helped over 700 start-ups get off the ground and currently has around 60 new ventures within its space. Alongside them are over a hundred larger businesses, operating variations on the ‘innovation lab’ theme and there are close links to universities and public agencies who also have a presence in the space. On any given day there are close to a thousand people buzzing around this busy hive. Perhaps most important for a venture which began as an attempt to help regional growth through innovation is that, after the initial investment from the founding partners, the space has become self-financing, with a long waiting list of potential future tenants.
Inevitably it’s had an effect on the surrounding area; from a run-down old city district it has become a fashionable place to live and visit, with bars and restaurants sprouting where once only dry grasses would grow. It’s following a pattern shown by other innovative centres around the world, attracting attention from elsewhere in Brazil to try and understand the ‘secret sauce’ behind this success story.
Which is about much more than bricks and mortar. While the old factory offers some advantages — space, price and availability — it isn’t simply a case of another trendy conversion job turning old industrial halls into chic start-up spaces. (Though a part of the old machinery has been preserved in one corner which now houses the Renner museum and a great bar/social area where tenants of the Caldeira can network and party all day (and night) long). The real secret is in understanding the conditions which entrepreneurial business need to start and to grow.
These days innovation spaces have become something of a fashion accessory; no large organization can afford not to be seen without having one. And start-up spaces have followed a similar trend; there’s been an explosion of support to try and tap into this potential source of local economic growth. On the surface these look like a welcome developments, innovation finally moving centre stage. But the reality is that very often these ‘adventures’ are little more than physical spaces with a slogan, perhaps brightened up by a few coloured bean bags on the floor or a chic location in a converted factory or warehouse.
What we know from research is that providing such space can make a huge difference — but we need to have an operating model which is geared to providing support and creating a mechanism to repeat the innovation trick. We need operating ‘routines’ which help foster and support various aspects of the innovation process and which create a community of practice for organizations who take up residence inside them. Managed well innovation hubs, labs or whatever else you want to call them can operate as ’boundary spaces’, creating an environment for shared creativity, connection building and continuing interaction across different communities.
It doesn’t happen by accident — and it’s not simply a matter of scale; reach a critical mass of participants and the magic will happen. Instead it comes down to a kind of ‘innovation horticulture, using multiple techniques to help bring on green shoots but also enabling new strains to emerge from old cuttings. And it’s about helping new saplings to take root in a local economy where they can grow and flourish into tall fertile trees.
Of course we need facilities and key services; to extend our metaphor we need a greenhouse to provide a degree of shelter from the extremes of external climate and we need to ensure the plants are fed and watered regularly. But beyond that we also need a variety of tools and techniques to help, things like:
· Training and capacity building — successful entrepreneurship is about more than passion — it depends on learning a set of key skills, and doing so fast. The good news is that we now know a lot about these skills and they are increasingly available embodied in practical hands-on tools. Frameworks like the ‘lean start-up’ give us the curriculum but new ventures still need some kind of classroom with structured learning programmes and experienced teachers. And there’s huge value in sharing the learning experience, elaborating and experimenting together, challenging and exploring and critically providing moral support when the going gets tough.
Effective innovation spaces, like Instituto Caldeira offer a range of programmes to deliver this, targeting not only start-ups but also established organizations looking to learn new innovation approaches and modify their internal innovation culture. They are now extending their educational activities to bring in the next generation, offering training around basic entrepreneurial skills to schools and bringing classes into the live and very different environment of the cauldron.
· Enabling connections — for start-ups the problem isn’t that they’re small, it’s that they’re isolated. Studies repeatedly show the importance of networking, assembling connections to help build, test and ultimately launch new ventures, and a key role for innovation spaces is to help make these links. In particular the challenge of scaling beyond the initial launch of an innovation is all about ‘complementary assets’ — the ‘what else?’ and ‘who else?’ do we need to grow our venture? Finding, forming and getting such a system to perform requires help in making connections — brokering, sponsoring, endorsing and in many other ways integrating start-ups into a wider community. Once again having representatives from a diverse set of participants — knowledge centres like universities, financial and legal services, large established organizations and public sector players — under the same roof helps catalyse this process.
And it works in reverse; for established organizations the challenge is one of extending their networks, making new and different connections and bringing ’open innovation’ to life. Where better to do so than in a place whose raison d’etre is to be a great big melting pot for innovation?
· Experimentation — creating boundary spaces in which people and ideas can creatively collide and where different worlds can be spanned is of considerable value — but if all that gets transacted there is talk then it may not help much. Innovation is like an omelette; it can’t be made without breaking eggs. So another key component is having a safe space in which to allow the extensive egg-breaking associated with learning something new to take place. That’s the essence of a laboratory — somewhere to play around safely.
For start-ups this is going to be their way of life in the early days, a constant cycle of fast learning through experiment and (intelligent) failure, pivoting towards a viable solution. So having a ‘safe space’ within which to experiment -and the opportunity to test ideas out on a wide and different audience — is a real asset.
And it’s particularly relevant for established organizations where spaces like the Caldeira offer somewhere different in which they can temporarily suspend the ‘rules’ which apply in their mainstream operations.
· Boundary spanning — bridging different worlds. Innovation spaces aren’t a new idea. Back in the 17th century places like Oxford were full of coffee-houses, sometimes called ‘penny universities’ because that was the price of admission including coffee. But it wasn’t the hot beverage which drew people but rather the opportunity to mix and exchange ideas — a place where the ‘normal’ rules of society governed by status and economic position were left aside and people could meet and explore new possibilities on an equal footing. And they weren’t just about talking; new ventures were explored and support for them secured — an early version of today’s venture capital pitching.
What made these places work — and what continues to do so — is the chance to exchange ideas across boundaries, meeting up with people from different backgrounds and contexts. Bridging different worlds is at the heart of new knowledge breakthroughs and it’s something which can be ‘engineered’ into the operation of a place like Instituto Caldeira. Deliberately bringing diverse players together, enabling creative collisions.
· ‘Activation energy’ — giving a sense of drive and purpose. It’s hard it is for someone with a new idea to swim upstream alone, trying to launch their innovation — but equally there’s a risk in creating a support environment which is too comfortable. What we’re looking for is the sweet spot between the harsh external world (which can sap entrepreneurial energy) and being so pampered there’s no incentive to progress.
It’s not just start-ups who face this kind of problem; new venture units and similar groups in established organizations can often find themselves in a similar place. Being removed from the day-to-day constraints and given the licence to ‘explore future opportunities’ can also drain energy if there’s no clear focus.
So a key task for effective innovation spaces is to engender a sense of ambition and purpose coupled with an urgency. It’s a culture thing — ‘the way we do things around here’ — and in a well-managed environment like Instituto Caldeira there are constant reminders of the ‘rules of the game’. Experiment, share, test early, fail fast — but always against a sense of mission and purpose. And it’s here that there’s a scale effect; being surrounded by other enterprises and with multiple role models means that such behaviour becomes the norm and embeds the culture.
Call them what you will — labs, hubs, centres, whatever — there’s a role for innovation spaces. Somewhere within which creative and shared exploration can happen. But they need to be managed spaces and for this we need ‘boundary agents’; players who act as the gardeners in our extended horticultural metaphor. They need to create the environment and the operating routines to enable not just a handful of seeds to flourish but for a regular crop to grow each year. It’s a craft, something which involves a deep understanding of the underlying biology of growth but which also draws on experience in putting it into practice.
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