Conventional wisdom would have us believe that if we want to get good at something, we should do our best to surround ourselves with people who are already good at it. In this case, modern economic research has found conventional wisdom to be dead on the money. Being in an environment full of people who are experts at what you do can have huge benefits from everyone to artists to businesspeople. The benefits of “clustering” as this phenomenon is sometimes called have played a significant role in numerous important endeavors, from the rise of Silicon Valley, to the success of Picasso.
So what is clustering? In essence, it’s the idea that grouping creative people and industries together will lead them to produce significantly better results than they would have produced if they were alone or scattered about the place. Clustering together in cities makes sense in part because it reduces transport costs and allowed businesses to share infrastructure. But even after the age of mass communication, companies have still grouped together in city centres, rather move to the outskirts where rents are cheaper and the traffic isn’t as heavy. The reasons? Being clustered together is just better for both the corporations and their employees because people can learn from each other and take advantage of insights from other walks of life. These creative spillovers and collaborations between people are though by some economists to be major factors in increasing productivity, and thus economic growth.
Learning from the best
A 2008 paper by Christiane Hellmanzik and John O’Hagan had some interesting observations about how to succeed in the art world. They found that there were two specific cities, Paris and New York, where most of the world’s most prominent visual artists (measured by the number of column inches about them in art journals) lived at different points. And they really do mean most; around the time of World War I a majority, 53%, of the world’s most successful painters lived in Paris, and after World War II a full 43% of these kinds of artists lived in New York.
Sure, you might ask, artists seem to gravitate to each other, but what does that matter? For a start, it was pretty profitable. In a separate paper Hellmanzik calculated that paintings by artists living in these locations commanded a “cluster premium”, that is to say works painted in pre-World War I Paris fetched on average 14% more than comparable works painted elsewhere at the time. In the years between the end of the war and 1975, the cluster premium on New York artists’ work was a whooping 74%. People knew that these cities were making art of quality and were willing to pay top dollar for it.
Additionally, Hellmanzik found that it wasn’t just artists who benefited from clustering. She though that art was a subject that required a great deal of “know how”, meaning you can’t learn to paint or play an instrument from reading a book, you have to be shown how to do it an practice. She also thought this was also true of many modern industries that rely on their practitioners to come up with creative innovative solutions, from programming to management consultancy. This goes a long way to explaining places like Silicon Valley and Wall Street; it’s not enough to be good at what you do, you need to surround yourself with experts and innovators in order to learn the nuances of your craft. Doing this ensures you’re combined reputation can be leveraged in the marketplace.
But not only does clustering allow you to charge more for your work, it can also ensure you produce more of it. Karal Borowiechi did a study that looked at classical music composers’ output and cross-referenced it with their location. He found that being in creative clusters increased the musicians’ productivity; on average they produced one extra work every three years. Usually living in the same city as other musicians drove up productivity by 33%, but those living in Paris benefited even more, producing one extra work every two years. Boroweichi also found that the benefit of these effects could extend beyond composers, meaning that working in the right place has the potential to drive your productivity up by a whole 50%. In short, working near the leaders in your field helps you produce more and charge more for it.
Learning from the rest
People who do what you do aren’t the only ones that you can learn from though. In 1920, Robert Park, one of the grandfathers of American Sociology, noticed the link between successful cities and Bohemian culture. Applying this to modern times, Richard Florida developed a “Bohemian Index” which measures the proportion of highly creative individuals such as writers, artists and musicians living in a city. He found that in recent years the Bohemian index was an incredibly strong indicator of technological growth: 12 of the 20 US cities with the highest Bohemian index also number among America’s top 20 highest technology cities, and 11 of the cities in the Bohemian Index’s top 20 are counted in the top 20 most innovative cities in the United States.
Despite being the leader of on of the world’s more successful technology companies, Steve Jobs was a firm believer in the value of face-to-face meetings. Talking to the Harvard Business Review, Jobs stated, “There’s a temptation in our networked age to think that ideas can be developed by e-mail and iChat. That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say, ‘Wow’ and soon you’re cooking up all sorts of ideas”. In fact, Jobs was so committed to this idea that during his tenure at Pixar, he designed the company headquarters to encourage collaboration and creativity. Because many of the things people needed, such as the coffee and the mailboxes, were located in the central atrium rather than in individuals’ offices, people kept bumping into each other and ideas started flying.
In clusters, meeting a fellow creative from a different industry can do wonders for providing you with inspiration. Whether it’s a bank manager meeting a cyber-security expert and learning better protect her customer’s savings, or an artist being about to retain control over his work after meeting an intellectual property lawyer, clustering can give you a fresh perspective from a peer you haven’t seen in a while or a completely new way to look at things from a different walk of life. So if you’re a recent graduate trying to decide which city to move to, an entrepreneur figuring out where’s best to start their new business or just looking to see where is best to go for your next career move, pay attention to location, it makes a bigger difference than you might think.