Just as management directly influences the level of innovation within an organisation, leaders of cities, states and nations are increasingly trying to create a climate conducive to ideas and the clusters of expertise that foster high levels of productivity and innovation. Economic powerhouse China, for example, is moving to decrease its dependence on exports by boosting levels of domestic innovation. Its record on this score is mixed, writes strategy expert Gordon Orr, but in 2010 it still accounted for something like 12 per cent of global R&D spending. “Significantly, this R&D spending is shifting from government-controlled research institutes to large- and medium-sized enterprises,” he says. Interestingly, “much of the best innovation in China today is built around developing creative business models in addition to, or instead of, new physical products,” he adds. “Policymakers have learned some important lessons from earlier innovation failures—the biggest being that it’s hard to impose innovation from the top down.” At the other end of the economic scale is the French provincial centre of Montpellier, which Monocle magazine recently named one of Europe’s top cities for business and innovation. Within easy reach of the Mediterranean and the Pyrenees, this laidback city of 250,000 has not relied on its natural assets, observes Sophie Arie. “It has set itself apart…through a mixture of ambitious town planning, a lively cultural scene and a strategy of helping innovative small businesses and research organisations to make their base here,” she says. The result? Montpellier has become a magnet to new-economy high-tech, internet and environmental businesses and is now the fastest-growing city in France.