Towards a Globally Competitive Urban Innovation Ecosystem: Sydney’s Opportunity

John Howard, 12 August 2025

Sydney is often described as Australia’s pre-eminent global city—diverse, talented, and economically significant. Its innovation assets are impressive: top-ranked universities, a vibrant tech sector, leading health precincts, and a rich pool of knowledge workers. Yet, in a comparative perspective, Sydney underperforms as a unified innovation ecosystem.

The city has not, however, yet achieved the coherence, connectivity, and collaborative intensity that define globally competitive innovation systems. The early evidence from comparative research currently underway by the Acton Institute for Policy Research and Innovation supports this: Sydney must lift its game if it is to seize the opportunities and meet the challenges of the next decade.

Although Sydney boasts many ingredients of global excellence, it has yet to achieve the integration, trust, and collaborative momentum found in the world’s most effective innovation cities. With global competition intensifying, and with new international benchmarks set by cities such as Amsterdam, Boston, Singapore, and Stockholm, Sydney must improve if it is to secure lasting advantage and relevance.

Where Sydney Stands: Assets without Integration

Sydney’s innovation geography is broad but fractured. Its principal districts, including Tech Central, Westmead, Macquarie Park, Randwick, Liverpool, Parramatta, Bradfield, and the Aerotropolis, each show distinctive strengths. However, these districts too often function in isolation, competing for attention, funding, and talent rather than acting as parts of a dynamic, integrated and interconnected metropolitan innovation ecosystem.

Internationally, successful urban innovation ecosystems are defined by the network effect: the value generated by interconnection, trust, and purposeful collaboration across sectors and geographies (Katz & Wagner, 2014; Wagner, 2020). Many cities have institutionalised collaboration through deliberate governance, shared infrastructure, trusted intermediaries, and a sustained culture of partnership.

Sydney is marked by jurisdictional boundaries, inter-institutional rivalry, and duplicative support structures, an absence of a metropolitan governance/coordination framework, and a state that has a limited focus on Sydney as a metropolitan innovation ecosystem. These fractures limit the flow of knowledge, people, and capital, and undermine the city’s capacity to compete at the global frontier. Although we do have institutional rivalry, this has improved in recent years.  The problem is acknowledged in many circles, but progress is glacial. 

International Lessons: Stop Mimicking Silicon Valley

A fundamental mistake in Australian innovation policy circles is the persistent urge to “replicate Silicon Valley.” This is a flawed and self-defeating ambition for two reasons.

• First, what most people call Silicon Valley is actually the San Francisco Bay Area—a sprawling regional ecosystem of multiple cities, universities, corporates, and networks, not a single district or campus in Palo Alto.

• Second, the Bay Area’s success is historically contingent, fuelled by a unique blend of Cold War-era defence funding, proximity to Stanford and UC Berkeley, a culture of risk-taking embedded in the US national psyche in a way that is just not seen in Australia, and decades of cumulative learning.

No city, including those in the United States, has succeeded in “cloning” Silicon Valley. The most successful urban innovation ecosystems have done the opposite: they have built on their own contexts, assets, and histories, taking cues from global benchmarks while pursuing local differentiation (Feldman & Lowe, 2018). Sydney may learn from the Bay Area, not mimic it. It should study the importance of connectivity, system integration, and talent flow, while adapting those principles to Sydney’s urban form, economic realities, and policy frameworks.

Governance Fragmentation: Sydney’s Structural Barrier to Innovation

Sydney’s innovation performance is constrained by its fragmented governance. With 33 local government areas and no empowered metropolitan authority, apart from the State Government, which operates in its own silos, the city struggles to deliver an integrated strategy, infrastructure, and innovation policy at scale.

This “balkanisation” leads to duplication, diluted impact, and missed opportunities for collaboration across world-class districts. Internationally, global cities like London, Amsterdam, and Singapore have overcome similar barriers through strong metropolitan governance, dedicated agencies, and strategic integration.

For Sydney to compete globally, it must move beyond parochial interests and invest in metropolitan-scale coordination and collaboration. Without reform, Sydney risks remaining a collection of assets, rather than a genuinely world-class innovation ecosystem.

This is broadly symptomatic of the Australian challenge: excessive competition between the states, driven by a lack of national coordination (Gill, 2023). Unfortunately, this national fragmentation flows down to metropolitan fragmentation due to the absence of a higher-order logic to apply at a city level.

What Must Change: Principles for Systemic Lift

Move Beyond Asset Aggregation to System Integration: Sydney must progress from being a collection of high-performing districts to a systemically connected urban innovation ecosystem. This means prioritising integration across geographies, sectors, and institutions, delivering shared purpose, measurable collaboration, and joined-up international positioning.

It also means a stronger strategic alignment between national innovation and industry priorities and their potential clustering around assets, existing agglomerations, concentrations, and infrastructure at a metropolitan or sub-metropolitan or district level.

Establish a Metropolitan Systems Integrator: The absence of an influential, neutral “integrator” is Sydney’s most significant deficit. International experience (for example, Amsterdam’s Science and Business Organisation or Singapore’s master planning authorities) shows the necessity of an entity with the mandate and resources to convene, coordinate, broker, and align actors across districts, universities, industry, government, and NGOs.

This system integrator must be independent, trusted, and accountable for delivering cross-district value, not captured by any single institution or jurisdiction. The Committee for Sydney is currently taking a lead in this direction through the Innovation District Alliance. 

Strengthen Collaborative Governance: Sydney’s governance of innovation is diffuse and often contested between levels of government and between anchor institutions. What is required at the moment is a coalition that champions the formation of a metropolitan innovation council or similar mechanism, comprised of public, private, and civic leaders, with a clear mandate for strategy, coordination, and measurement.

Sharpen Specialisation and Global Branding: World-class ecosystems focus on domains where they can be globally distinctive, such as quantum in Amsterdam, life sciences in Boston, and culture and AI in Montréal. Sydney should avoid spreading resources too thinly and instead double down on sectors where it has genuine global potential, for example, digital technology, medtech, fintech, and smart infrastructure. Specialisation, supported by integrated marketing and international engagement, is critical for standing out in a crowded global field[2].

Embed Networked Infrastructure and Mobility: Physical and digital connectivity must be at the heart of Sydney’s innovation strategy. The Sydney Metro and public transport system are foundational, but more is required: cross-district mobility of talent, shared research infrastructure, open data platforms, and digital collaboration tools. Investment should be targeted at projects that tangibly link people, firms, and ideas across the metropolitan area.

Foster Trusted Intermediaries and Boundary Spanners: Effective ecosystems invest in people and organisations that bridge divides—innovation agencies, accelerators, translational research institutes, and civic platforms. These intermediaries should be empowered to help with collaboration, mediate conflict, and support experimentation. Critically, they must operate with “soft power” rather than command-and-control, building trust through repeated engagement and delivery.

What Must Stop: Avoiding the Pitfalls of Fragmentation and Parochialism

Jurisdictional Rivalry and Institutional Protectionism: Sydney’s universities, health providers, and government agencies must move past competitive branding and siloed strategies. The era of “going it alone” is over: systemic value will only be delivered through shared ambition and the pooling of resources. Funding arrangements and evaluation metrics should be adjusted to reward collaboration, not just individual achievement.

Duplicative Infrastructure and Support Structures: Multiple accelerators, incubators, and venture funds spread across districts dilute impact and confuse entrepreneurs and investors. Rationalisation and consolidation—guided by the metropolitan integrator—should become the new norm.

Short-Termism and Political Cycle Thinking: World-class innovation takes decades to mature. Policymakers and city leaders must avoid reactive, “announceables-driven” investment and instead commit to long-term strategies, patient capital, and the slow accumulation of trust.

“One-Size-Fits-All” Approaches: Each district should be encouraged to build on its unique assets and context. Attempts to impose uniform templates across diverse districts ignore the lessons of international best practice, which emphasise local specialisation and adaptive governance.

Default to “light touch vibrancy”: Placemaking activities, such as vivacious streetscapes, attractive facades, and activated spaces, are important for supporting social and cultural connectedness, but should not move attention away from the fundamental infrastructure that enables genuine innovation ecosystem outcomes.

While activation and visual appeal matter, true place-based innovation requires robust data transfer systems, specialised research infrastructure, advanced telecommunications networks, and sector-specific facilities. These harder-to-deliver, capital-intensive elements create the technical foundation upon which sustainable innovation communities can flourish. But they often receive insufficient attention compared to more immediately visible urban design interventions.

Action Agenda: How Sydney Can Win Globally

1.     Establish a Metropolitan Innovation Council or Systems Integrator: An entity independent of existing institutions, but supported by all, should be tasked with convening actors, coordinating cross-district strategies, and reporting on system-level outcomes. The council should include government, university, business, and civic leaders, and have an explicit mandate for integration and global positioning.

2.     Incentivise and Measure Collaboration: All public investment in innovation districts, precincts, and related infrastructure should be contingent on demonstrable collaboration and contribution to metropolitan-level goals. Success should be measured not just by outputs in individual districts, but by the scale and quality of inter-district, cross-sector activity.

3.     Develop a Specialisation and Branding Strategy: Based on genuine comparative advantage, Sydney should identify and invest in two or three globally distinctive domains. These should support international branding and targeted attraction of investment, talent, and partnerships.

4.     Support the Development of Trusted Intermediaries: Invest in agencies and organisations whose sole remit is to connect, convene, and accelerate collaboration across research, industry, and government. These intermediaries must be adequately resourced and given autonomy to operate across traditional boundaries.

5.     Champion Integrated Mobility and Digital Connectivity: Prioritise infrastructure projects that enhance cross-district movement, both physically (transport) and digitally (open data, shared R&D platforms). Create incentives for talent and knowledge to circulate, not concentrate.

6.     Embed Global Benchmarking and Continuous Learning: Adopt the practices of leading global ecosystems by embedding ongoing benchmarking, peer learning, and international partnership. Sydney should take part in global innovation alliances, learn from best-in-class peers, and adapt strategies based on what works elsewhere.

7.     Commission an Independent Innovation Ecosystem Review: The Committee for Sydney should start a comprehensive, evidence-based review benchmarking Sydney against leading international ecosystems, with recommendations on integration, governance, and investment priorities. The review should be transparent, inclusive, and solution-oriented, drawing on voices from across the innovation spectrum.

Conclusion: The Courage to Integrate

The story of Sydney’s innovation potential is not one of under-resourcing or lack of talent. It is a story of untapped value—of world-class assets awaiting the spark of integration, trust, and strategic intent. The next decade will be shaped by cities able to orchestrate collaboration at scale, turning fragmented brilliance into system-level impact.

Independent organisations such as the Committee for Sydney, or coalitions such as the Innovation District Alliance have critical roles as champions, conveners, and honest brokers. The challenge is to connect and align what already exists, stop the habits that fragment and frustrate, and to start the practices that build trust and deliver enduring value. 

Other metropolitan ecosystems mirror the issues confronting Sydney. The effective performance of all metropolitan innovation ecosystems is critical, in the aggregate, for Australia's national innovation and productivity performance.

References

Etzkowitz, H., & Zhou, C. (2018). The Triple Helix: University–Industry–Government Innovation and Entrepreneurship. Routledge.

Gill, J (2023). Sectoral, Systemic and Spatial: Rethinking Australia’s Approach to National Industry Policy, https://sgsep.com.au/assets/main/SGS-Economics-and-Planning_Australia-needs-a-new-spatial-industry-strategy.pdf

Katz, B., & Wagner, J. (2014). The Rise of Innovation Districts: A New Geography of Innovation in America. Brookings Institution.

OECD. (2022). Regions and Cities at a Glance 2022. OECD Publishing.

Start-up Genome. (2024). Global Start-up Ecosystem Report.

Howard, J. H. (forthcoming). Thinking in Public 3: Distributed Excellence– Lessons from Leading Global Urban Innovation Ecosystems: Comparative Insights and Policy Implications for Cities in the 21st Century. Acton Institute for Policy Research and Innovation.

Note

[1] For example, see the Committee for Sydney’s reports, Transforming Sydney’s Economy, which covers metropolitan industry opportunities, and Sydney’s Global Brand.