Inside the Knowledge Quarter: an ideas factory for the UK

The move has piqued interest in the Knowledge Quarter development, which has turned a deprived area of London into a base for some of the world’s biggest companies. But what can the quarter tell us about building better businesses? And can its lessons be applied elsewhere?

For starters, it is in an unbeatable location, home to the British Library and outposts of nearby academic institutions such as Imperial College London and University College London. It is also a ten-minute Tube ride from the City for start-ups wanting to meet investors, and has transport links to the rest of the country through King’s Cross and Euston railway stations, and to Europe via St Pancras.

Kohli said the ready access to science graduates had helped recruitment. “We are very close to Imperial and UCL but also only a 45-minute train ride to Cambridge. So we are in the midst of this amazing collection of research activities.”

All of that has been a big pull for companies: the area is home to about a quarter of London’s life science businesses and a third of the city’s AI companies. In 2020, drugs giant GSK set up an AI hub just 100 yards from Google’s headquarters and within walking distance of the Alan Turing Institute, the UK’s national centre for data science. Kim Branson, GSK’s head of AI, explained: “You have the institute next door to the left, then Google and DeepMind just over there … that makes it easy to recruit.”

Last year, GSK’s main competitor, Astra Zeneca, also moved its administrative HQ to the Knowledge Quarter. “Being here allows us to recruit great people and work more effectively with partners,” said Tom Keith-Roach, head of Astra’s UK operations.

In that spirit of partnership, DeepMind has formed close ties with the Francis Crick Institute, a biomedical research centre just a four-minute bike ride away. DeepMind has its own laboratories at this institute, where scientists test its algorithms to see if they can correctly predict how proteins fold. Better understanding the shape of proteins means scientists can fight a range of diseases by designing treatments that bind to them.

The Francis Crick Institute’s deputy chief executive, Dr Sam Barrell, said that alliances like this were typical of the Knowledge Quarter. “To make science work, you can’t have boundaries.”

The institute was founded in 2016 with funding from the surrounding universities and from charities so that scientists could have an open lab space to collaborate on research. Forming a partnership with the institute allows private companies to draw on its scientists’ expertise and equipment. Today its labs are home to the world’s largest drug giants, including both GSK and Astra Zeneca. They will soon be joined by MSD, which is kitting out a “sky lab” on one of the top floors.

Since it was founded, the Francis Crick Institute has spun out ten of its own life science companies to develop research commercially. For Barrell, who cut her teeth as the manager of an NHS trust, the process is rewarding. “As a medic, it is like I have the keys of a sweet shop,” she said. The ten companies are mainly developing their own ways to fight cancer and autoimmune diseases.

When complementary businesses cluster together like this, they can have positive spillovers, or “agglomeration” effects. William Kerr, a professor at Harvard Business School, said: “The basic point about clusters is that it means the productivity of a firm is enhanced by being co-located together versus being apart.” He added that when workers from similar disciplines are meeting, lunching and commuting together, it can spark fresh ideas — and provide a wider labour pool for employers.

“That is why firms try to make sure people are back at the office and rubbing shoulders in the cafeteria. In clusters, that happens not just in the workplace but also outside of it,” he said.

King’s Cross has not always been as salubrious as it is now. While the universities have long been resident, the neighbourhood was for decades a rundown jumble of yards and railway buildings. Since then, massive redevelopment work has brought new offices, homes, restaurants and money to the area. The Knowledge Quarter was set up in 2013 after universities and businesses realised that they were losing out by not collaborating.

“There were opportunities being missed,” said Jodie Eastwood, chief executive of the quarter. “Neighbours weren’t talking to neighbours, research collaborations were few and far between and people were stuck in institutional silos.”

The realisation that opportunities were being spurned led to the creation of a membership organisation that held conferences for local businesses to meet and find potential partners. Eastwood said the bulk of her time was still spent setting up conferences and forums for members to meet one another. But unlikely partnerships have been struck: for example, DeepMind has used Central Saint Martins college of art to draw up visual representations and exhibitions of AI in order to make it more intuitive to understand.

Sam Barrell is the deputy chief executive of the Francis Crick Institute

The spillover effects have had property developers clambering over each other to buy space in the area. British Land, one of the country’s biggest landlords, owns 13 acres of property at the heart of the Knowledge Quarter, much of which is fitted with labs for life science companies. Simon Carter, chief executive of British Land, said demand for space in the area was insatiable: “The idea of having all these complementary institutions within a stone’s throw is so valuable.”

As part of the cluster’s commitment to collaboration, British Land signed an understanding with UCL that businesses spun out from the university would have the company’s space as the first port of call. In return, any tenants on its campus would also be allowed to use some of the scientific facilities at UCL.

Successive governments have sought to spread the cluster model across the country. Strategies for everything from decarbonisation to levelling up to freeports have sought to create clusters out of deprived areas. Kerr said a cluster can be formed from any industry so long as it can be “sold from a distance” — meaning that it does not matter where a product is made geographically.

He explained that it makes sense for pharmaceutical companies to cluster because where their drugs are manufactured is irrelevant; on the other hand, supermarkets, by design, have to be geographically dispersed.

But clusters often perform better if two conditions are met: a large labour pool and readily accessible transport links. The biotech clusters of Cambridge and Oxford have been spurred by the ready pipeline of workers coming from both the universities and the train networks that link them to other parts of the country.

Clustering can also make areas less economically diverse and more volatile to shocks. Take Detroit, which declined sharply when its car industry foundered. However, Kerr predicted that the Knowledge Quarter would be able to innovate its way through any rough patches: “There is going to be the opportunity for the cluster to kind of morph.”

That will be music to the ears of Pushmeet Kohli, who is keen for his business to forge deep roots in the quarter. While some of the capital’s other technology companies flee across the Atlantic to list in the US, or set up in San Francisco, he feels that DeepMind’s unique business belongs in the capital.

“While we do use a lot of the machine learning that they do in Silicon Valley, we need access to more scientific institutions — which is why we are flourishing in this area of London.”