Jun 29. 4 min read

Bright lights, smaller cities

Why the future belongs to Eastern European cities that dare dream

When Donald Trump embarked on his post-election international tour in early 2017, many were surprised that he chose Poland as his first stop.

His critics put it down to his diplomatic gaucheness or perhaps something more sinister. They were  accustomed to more traditional destinations such as 10 Downing St. or the Elysee Palace.

But in his visit to Poland, Trump revealed (to those who want to see) an imminent re-shuffle in the world order. Needless to say, he was received like a rock star, by a population that sensed opportunity and for whom the American dream is much more appealing than the old European dream.

As Mark Steyn noted in his book ‘America Alone’’ Western Europe is like that dandy from an Oscar Wilde book – looking sharp on the outside but being eaten by syphillis from the inside. Overly generous social plans, the migrant crisis, the European Union, the rise of Islam have all combined to bring large parts of Western Europe into a state of stasis and decay. Many of its productive classes are already leaving the continent in mass migration, the French to Quebec, the Brits to North America and Australia and the rest to wherever they can. While all of this is happening, Eastern Europe intuitively senses that the future belongs to her.

The Un-sustainability of the West

The West is already starting to feel the burden of maintaining its standard of life. The increasingly rising costs of the world’s major cities are driving many locals out of the city centers and this is also making it more difficult for multinationals and big business to retain local talent. The cost of retention is constantly growing and there is no end in sight.


This is forcing big business to look elsewhere, especially when it comes to R&D. They are looking for something different, but not too different.

Into this vacuum, a number of cities are jockeying for attention, and more importantly, for position. Eastern Europe is the next destination, from Belgrade to Gdansk, from Kiev to Budapest.

The Mediterranean Pearl:

Eastern European cities could learn a thing or two from an opportunistic Mediterranean pearl that is doing things right.

Haifa is a beautiful port city situated on the coast of the Mediterranean Sea, with a population just shy of 300,000 inhabitants but with companies such as Yahoo, Microsoft, HP, Google and Phillips that have extensive R&D presence.

What makes Haifa most attractive is undoubtedly the Technion – a world-renowned university – recognized for its outstanding contributions to science and technology. It is known as the 2nd M.I.T and provides the city with a skilled labour pool of engineers, researchers, and professionals across countless disciplines.

However, it’s not only the Technion and the constant stream of engineers that it provides that makes the city so attractive. It’s a balance between the different powers at play. The low cost of living, the excellent public transportation, the beaches, the infrastructure and the proximity to Tel Aviv.

More importantly, Haifa is challenging the country’s leading city, Tel Aviv in attracting foreign investment and multinationals and it’s hitting all the right notes. It’s capitalizing on the fact that Tel Aviv, just like many leading world cities, has simply become unsustainable and are living on the vapors of the past.


What Attracts Such Companies?

Two decades ago, early adopting cities managed to attract these companies with a slew of attractive incentives and tax breaks. However today, that is not enough and big business is looking at places that will help them attract talent, retain it and fit with their long term objectives.

HR departments within these companies are promoting an agenda of wellbeing and are pushing forward a more holistic approach to what makes a happy employer.

This includes a broader perspective of what kind of life the city can provide and what kind of people it has or can possibly attract.

Cities that have the right balance will make a strong case for attracting big business and foreign investment. Only cities that will attract foreign interest will be able to make a compelling case to their young professional class to buy into the city’s vision and retain them.

Otherwise they risk losing them to cities who are more geared towards the future, embracing change and capitalizing on the opportunities of the time.

Business climate and hyper-regulation:

According to The World Bank’s annual report Doing Business, the effort required to start a business and the process of acquiring construction permits are highly indicative of a city’s business climate. This can be summarized as “the quicker the better” – especially when international business norms and safety protocols are followed. This also touches upon the city and government track record and attitude towards corruption. Another important factor is regulation. Many multinationals are bogged down by hyper-regulation, however a total lack of regulation will trigger an alarm and be indicative of hyper-corruption. There is a fine line here, but there is also opportunity to allure companies with a more lax approach to regulation. This pertains to environmental issues as well as unionism.

A progressive and ambitious mayor plays a key role as well, defining a strong vision and conveying a sense of leadership and purpose that resonates on the global stage.

Infrastructure & Transportation:

A good mix of public and private transportation options (cars, bikes, trains, etc.) as well as preparedness for growth is something to look at.

Traffic is also a strong indicator. Too little traffic shows there isn’t much going on, while too much traffic is indicative that the city has already exceeded its potential, especially is there are no plans in place.

Human capital:

Human capital is much more than the percentage of the population with a degree. Education is obviously important, but so is the proficiency in additional languages as well as levels of tech savviness. Other factors are how open to Western and democratic values the young professional population really is.   

Education / R&D:

A city with easy and affordable access to great education can ensure a steady stream of high-skilled human capital well into the future. A city with a diverse mix of universities and technical (trade) schools can provide a steady stream of talent for multinational businesses including engineers and programmers equipped with the requisite skills to power the future.  

Arts, Culture & the Creative Class:

A city is much more than work-home-work. A city has a spirit and a quality of life. Creative people need something to look for besides home and work and a cultural atmosphere is a pre-requisite for attracting talented. Theatre, dance, a thriving arts community, an art-cinema house are all strong indicators. They also require fellow creatives to truly feel at home. A city is well advised to showcase their cultural assets as well as their creative class in order to attract global interest.

Natural Resources:

Green areas, parks, beaches, ski hills are all strong assets in attracting talent to a city, as these are the places where time is best spent when not working (and not consuming culture)

Housing:

According to the OECD, affordable, accessible, quality housing is paramount towards ensuring a population is satisfied with their QOL. This is because good housing ensures safety, security, and privacy for the people within – all factors that directly contribute to their health, well being, and overall economic productivity.

In Conclusion:

Just like in marketing any product, there are two parts to the equation: telling the story and the product itself. In our case, the product itself is the city and telling the story remains the same.

If the city doesn’t have anything to sell, the best story in the world isn’t going to help. However, if the city has all the right pieces, yet has yet to make the desired leap, the answer lies in telling the story in a more compelling way and making sure it reaches the right audiences. Today, more than ever, there is a need for this and there are available tools to make it feasible. Cities that will capitalize on the unique opportunities that await them will be the cities of the future.

<Br>

Clients

Some of our clients, past and present