Debate 10 - Paper 3

E.Com and the design of the City

Charles Leadbeater, Independent writer, author of ‘Living on Thin Air - the New Economy’ has been Labour Editor and Industrial Editor of the Financial Times. He is a member of the government’s competitive Council and an adviser to Tony Blair’s Downing Street Policy Unit.

I should just explain where I come from, to explain what I am going to say. My book is called Living on Thin Air, but my kids rather unkindly call it Living on Thin Hair. I suppose if I called it that it would be my autobiography. I spend my time mainly working at home, and have to raise money to fund what I want to do, by going to see various people. I go and pitch ideas to people and try and get them to back them. One of the things you notice working at home is some of the value, the residual value, in working for large organisations. And one of those is brand. If you walk into someone’s office and say ‘Hello, I’m Charlie Leadbeater and I’m from McKinsey’ they take you very seriously. If you walk into their office with exactly the same idea and exactly the same critical values and say ‘Hello, I’m Charlie Leadbeater and I’m from my bedroom’; it just doesn’t have the same meaning.

But that is the world we are in, in a way, where people can walk into people’s offices and say I’m from absolutely no where and have a fantastically good idea and be as good as any of the people from Goldman Sachs or from KPMG, or what have you. My working life, in a sense, is a sort of transport between various worlds. I started work at the Financial Times, when the Financial Times was in a fantastic office near to St Pauls. And the logic of the Financial Times being there was that it was not just a good production centre, it was a centre of knowledge about journalism, because of Fleet Street, and you were very close to your customers. You felt that you could walk out and there were your customers. Printing was then transferred out to Canning Town, and I ended up, via a horrible building in Southwark, working for the Independent in Canary Wharf. And that all was within the space of about five years. There, the only common denominator is that you deal with information. Suddenly, the idea that you were in a specific place because you had specific knowledge was eroded. And actually you could occupy the same building if you had been in financial information, in advertising information, in newspaper information, or travel information. They are all just information.

This is one aspect of the new economy. It is terribly homogenising in ways. So I left that. I was working 70 hours a week and never saw the kids. Four years ago I started working from home. I love working from home. I am fantastically productive. It is very easy. I suffer hugely from all the problems that Alex has described, because, from home, armed with a laptop and a modem, you can achieve a huge amount that you couldn’t before, and then I get stuck in Holborn. Sometimes I look at the buildings and the traffic and think this is completely obvious and very familiar and yet deeply deeply weird that we are still doing this. What will people think in 50 years of people like me spending large chunks of the day entirely wastefully doing all this stuff and in inhabiting buildings which were designed for a completely different purpose; and is this something we will put up with for life or is something we will find very odd.

Working from home actually turns out to be no different, because our homes are designed for the industrial era as much as are our buildings. We are trying bargain with four kids of various ages. Both my wife and I work from home. There are no homes designed for people who work at home with that many kids. You can’t find them. They are huge and very very expensive. We have ended up buying a plot of land and building a home designed for working at home. So actually where can you go to find this modern place Alex was talking about, this flexible, fluid hyper world be forced within this rather rigid constraints. The flexible and the rigid economy in tandem.

I just want to say five things about how to think about what that means and to just highlight some specific things about cities.

The first is that I think it is completely wrong to think about the new economy in terms of e-commerce. We should think about the new economy much more in terms of an economy driven by knowledge creation and innovation wherever that lies. It might be innovation in financial terms, in legal services or in education services, in health grants - what have you. The driving force of the economy these days in innovation, it is not technology. Instead, it is the ability to generate and apply new ideas which are distinctive in their value. And this, I think, is the key to the role of the city. It is not about technology, it is about how can the city further and amplify that process.

The second point is that the new economy is as much about the old economy as it is about the new; in fact it is more about the old economy in many ways. A lot of our biggest challenges organisationally are not about creating new organisations. Creating new organisations is very very easy. I spend half my time advising venture capital companies and they see people coming to them the whole time who want to create new organisations overnight. It is simple. What is really really difficult is taking old organisations with vested interests, existing companies with strong assets and long traditions and getting them to change. And this is also the problem with cities actually. It is partly a physical problem but it is also a huge cultural problem as well. So it is about the new and the old and how you combine them.

The third is that it is very important to think about unintended consequences or improbably consequences alongside the intended and the obvious. Let me give you a couple of examples. Everyone talks about this as the knowledge economy, where knowledge is available to everyone to learn. Actually we are all getting more ignorant all the time. That is the logical corollary of an economy which is creating more and more ideas. How many people here use mobile phones? How many people here can explain in five sentences how a digital mobile phone works? Obviously we are all completely ignorant, but as a result we are much richer because we rely on the knowledge of other people. So, in a way, the knowledge economy is as much about managing ignorance as it is about managing knowledge. In a world awash with information, how do you generate understanding - sense as it were? In a world of apparent endless choice in this fantastic world of consumer choice on the internet why is it that the world is dominated by a handful of brands that crop up time and time again wherever you go. So that, rather than talking about what is obvious, think about what isn’t. Think about the flip side.

The forth point is that because we live in this innovation-knowledge creation economy there are no single routes into the future. In the industrial economy, where the goal of the organisations was to optimise performance, reduce cost and find the one best way of doing things. You end up with one or two ways of organising steel production, and one or two ways of mining coal because those turn out to be the least cost ways of doing things. If you are in an economy where the key is generating new ideas, new and different possibilities of how communicate, produce entertainment, deliver financial services, whatever it is, there are all sorts of ways you can begin to organise that activity, and there is no one steel route, no one car route no one route to sell advertising. So actually the new economy should through organisations and the cities open up many different routes to the future and the menu of possibilities expands. And in the city of London, Hoxton is as much a part of the new economy because it is where digital content and multi-media broadband is created, as it is in London which is less than a mile away. They are both distinctly part of the new economy, although in completely different ways and there are completely different approaches to them. And in general, there is, in the new economy/the knowledge economy, a demand for efficiency and scale, but also a demand for specialisation and creativity. Those two sides to this. Canary wharf - that’s one vision of the knowledge economy and the other, Hoxton, Spittalfields, Brick Lane. Where should cities think about this? Is efficiency something we can just leave to corporations and the market? I suspect not. Go to Silicon Valley and the biggest problem there, which, by the way is the heart of the new economy, and the defining characteristic there is that it is completely ugly. There are no civic buildings there are no city parks, there are no city spaces and the quality of the environment is dominated by two roads, and the rest of the time it is filled with warehouses. If this is the culture of the new economy then we are in deep trouble. Indeed, Silicon Valley’s big problems are all down to public policy. No one can buy a house, the transport is dreadful, the environment is degrading the education system is poor below university, so even for efficiency’s sake, you need a counterpart in the form of public policy.

But for creativity’s sake you certainly do. Creative milieus and environments only develop if there is a way of managing and nurturing public spaces which promote the kinds of interaction, innovation and tacit learning which is the key to innovation. That, it seems to me, is why we have so many coffee shops, because actually, that is where people do a lot of work these days, and that is the kind of space that I need.

Another trend which I think is very important is just-in-time ownership. I mean, why should people own buildings longer than they need to? The whole trend towards leasing in the States of one’s assets will I suspect move to all sorts of products, even cars, in the next few years. Why would people own a physical asset that adds no value to your business or to your life longer than you have to when you can lease it or share it? So there may well be new kinds of ownership emerging.

And finally there is the flip side of this hi-tech, distended distance world is that experience and services will become more and more important. Actually this is what cities might have to succeed in providing and well as providing world-class infrastructure. As a way of illustrating this, I will tell you the two stories. When Tony Blair came to power, I wrote something soon after, suggesting that if the government really wanted to show modernity, they should turn No. 10 Downing Street into a tourist attraction. It would pay for itself ten times over, and would have people queuing round the block to go round Downing Street. It would be a fantastic case of open government. The Cabinet wouldn’t wear it, because buildings convey not just functionality, but you have got to have some kind of emotional experience.

And the other piece of work I have done recently is with a major supermarket change about what is the future of the supermarket. Supermarkets are a kind of signature building. The answer is fairly obvious. If you go into e-commerce in a big way you need a new sort of distribution system. You might have the milkman delivering your shopping.