Editor’s note: As London’s Tech City area stands to benefit from fresh investment, Mary Turner, CEO of cloud-based smart energy company AlertMe, urges caution.

Earlier this month the UK government announced a flurry of initiatives to further bolster Tech City’s growing reputation as a global technology hub. Most headline-worthy among these was the £50m investment to transform dowdy, traffic-snarled Old Street roundabout into “Europe’s largest indoor civic space, dedicated to start-ups and entrepreneurs in East London”. Additionally it revealed technology development and innovation plans for the area from tech titans including Microsoft, IBM and Cisco, as well as financial and management support from KPMG and Barclays, among others.

Don’t get me wrong. The grassroots-led transformation of Old Street, which is now home to more than 1,000 Internet-based companies, is a momentous achievement, with notable breakout success stories such as Mind Candy and Moo. It has already attracted other household names like Vodafone, Google, Qualcomm and Intel, who have opened R&D spaces with titles such as ‘development hub’, ‘campus’, ‘incubator’ and ‘lab’. Yet while these and the latest wave of Government announcements are to be applauded, there are potential elephant-traps too.

Innovation for innovation’s sake

The first of these is the risk that we become a centre for innovation for innovation’s sake, creating kindergartens for techies or ‘science park projects’ for multi-nationals. As a long-time visitor to Silicon Valley, and more recently, to China too, I have witnessed how those nations foster a very different attitude towards innovation to our own. For companies in the world’s two leading economies, innovation is never an end in itself – rather, it is only truly celebrated when it leads to commercialisation through successful products and services.

In Britain, however, our tendency simply to applaud innovation is damaging our ability to create world-beating businesses. So how do we produce a climate in Tech City in which R&D is routinely commercialised? Most urgently we need to inspire cross-pollination by promoting a richly varied ecosystem. Seed companies need to be rubbing shoulders not just with other tech companies, but with a broad spectrum of businesses from design to transaction, smart energy to telecoms – and companies of all sizes, too, both early and mature – to create a multicultural market place, from a business perspective.

old street roundabout1 520x346 Old Street, new start: The pitfalls that Londons Tech City needs to avoid

Old Street’s so-called ‘Silicon Roundabout’

While Downing Street’s announcement placed great emphasis on the next batch of big names opening up innovation hubs in Tech City, the UK has a history of setting-up what I would term ‘self-serving’ R&D centres. Yet the real value in attracting these tech goliaths will come from encouraging them to partner with – and, crucially, invest in – independent, fleet-footed start-ups. This is because entrepreneurial ventures have a very different attitude, approach and culture to slower-moving corporations. They are, by necessity agile, risk-taking, highly innovative and bureaucracy-lite. More importantly, they are good at survival through commercialisation, because they have to be. Other countries have long since grasped this. In the US, for example, companies like Cisco, Qualcomm, Comcast and Verizon are serial investors in start-ups and have been for years. But where are their UK counterparts?

At a recent roundtable with tech leaders, the Prime Minister asked how the Government could help to ensure this new climate of innovation continued to evolve – not just in Tech City, but across the UK? My view is that while the £50m investment in Old Street is to be applauded, Government also has a responsibility to be more strategic in its use of public money. The Internet economy has evolved and matured so successfully in the UK, chiefly because in the mid-1990s, the administration of the day had the foresight to identify broadband and the Internet as a key strategic sector.

We weren’t quick out of the blocks. In the early days of the Digital Economy 1.0, we were Europe’s poor relations, due to our low broadband penetration rate. However, that changed thanks to strategic thinking and collaboration between policy-makers, regulators and, of course, the industry itself. Three years later we’d gone from also-rans to leading lights. Today the UK digital economy is worth some £85bn and in 2010 the Internet accounted for more than 8% of GDP, outpacing both the US and China. Of course we must continue investing in the digital ‘here and now’. But there’s another digital economy hurtling towards us – the Internet of Things – which is fast-emerging from the boom in smart technologies, particularly in the energy sector.

Connected devices, of which Cisco predicts there will be 15 billion globally by 2015, will spark a ‘domestic revolution’ that is set to be every bit as game-changing as the arrival of broadband. Once companies in this space connect customers to almost every new appliance in their homes, a host of new Internet services will come on stream, creating an environment for efficiency, convenience and peace of mind. My advice to Government is identify the next wave of companies in the ‘smart digital’ space now, and back them, otherwise we risk being left behind. Bringing them to Tech City, will help future-proof the area, ensuring it becomes a brand name in the next phase of the Internet Age.

Stop talking ourselves down

Old Street roundabout 220x117 Old Street, new start: The pitfalls that Londons Tech City needs to avoidThis new start for Old Street should also be accompanied by a pledge to stop talking ourselves down. We can start by dropping the moniker ‘Silicon Roundabout’, with its whiff of irony and down-at-heel self-deprecation. Crucially, it’s time to call a moratorium on repeated claims that Tech City can one day rival Silicon Valley. All comparisons between the two are irrelevant.

With its unique ecosystem, access to capital, scale and heritage, we can never recreate Silicon Valley in London. But nor should we want to when London has myriad advantages of its own, as a global financial centre, a world-beating Internet economy, a peerless business, arts, design and media hub – not to mention its relative proximity to cities as diverse as Paris, Berlin, Tallinn, Tel Aviv, Moscow and Mumbai.

Similarly, comments – such as the one from an unnamed luminary of the Cambridge technology scene, aired by the BBC recently – that Cambridge didn’t need to worry about Tech City, as it had a host of real hi-tech firms built by scientists, as opposed to the “munchkins” starting businesses in East London – must stop. Infighting is a luxury we cannot afford, when the real competition rages beyond our shores.

Another luxury we cannot afford is time. While the Smart Revolution is still at the ‘white chalk line’ stage, it is an increasingly crowded place to be. We will not win this particular race by default, by chance or by dint that we ‘did it last time around’. Nor will the market wait. Yet with collaboration between Government, regulators and the key players in the industry resulting in clear-headed, strategic decisions, we have the chance to blaze a trail once again – this time, with Tech City at its heart.

Image credits: Oli Scarff / Getty Images: 1, 2, 3