Cluster basics: Cluster Development in Twelve Steps

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By Ifor Ffowcs-Williams at the 14th TCI Global Conference, Auckland, 2010

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Cluster basics: Cluster Development in Twelve Steps

  1. 1. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20111TCI Auckland conferenceIfor Ffowcs-WilliamsCluster Navigators Ltd29 November 2011Cluster Developmentin 12 Steps1.  Introducing a process forstarting a clusteringinitiative2.  For renewal, revitalisationof a current clusteringinitiativeCluster Developmentin 12 StepsStep 1 Cluster developmentA centre stage strategy, rather than‘another project’A comprehensive framework for a range ofeconomic development agendas, including:•  Skills, training; workforce development•  SME development; New business start-ups•  Investment attraction; migrant attraction•  Export development, internationalisation•  Rural, community development;•  Incubators; Industry/Technology Parks…Step 2 Identifying, prioritisingclustersSegmenting the local economy•  The majority of jobs and businesses inevery local economy are the same:•  Restaurants, retail, health care, housebuilding, vehicle repair…•  In general around one third differ:•  The traded sector•  Firms in this sector drive the localeconomy, pull in the wealth
  2. 2. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20112Step 3 Initial cluster analysisBuilding the baseTwo thrusts:•  Initial competitiveness diagnosis,fact based, understanding cluster’scurrent situation: structure, scale,opportunities, constraints, culture …•  Establishing platform for action,Introducing the process; motivating keystakeholders to participate; identifyingpotential leaders ...Cluster analysisDeveloping a shared understanding acrossthe cluster on competitivenessIt takes time to get:1. The right people on the bus, in theright seats2. The wrong people off the busCluster Leadership BusForming the Leadership Group,the cluster’s Governance
  3. 3. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20113Step 5. The preferred futureThe VisionBuilding on the cluster’s currentcompetitive position … with a challenge,a s t r e t c h factorStep 6Identify stepping stones•  Looking backfrom the future…Back casting•  Not acontinuation ofthe present …Forecasting1stGenerationInitiatives2ndGenerationInitiativesEasy, quick Complex, long termStrategicTacticalStep 7: Short term, tactical agendaImmediate projects that demonstratethe value of collaborationProject implementationMoving quickly into action•  Build teams around the priority actionprojects•  CATs…Cluster Action Teams•  Teams work best if members selectthemselves•  And self-destruct on task completion
  4. 4. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20114Step 8: Take time in formalising thecluster’s structure•  Firms, especially SMEs, wantearly benefits•  Not lengthy discussions onstructure•  Can take time for:•  The cluster’s boundaries to emerge•  The cluster’s Leadership Group tobe identifiedStep 9 In-depth analysis,benchmarkingFact based, outward focussed analysis•  Fundamentally understanding the cluster’scompetitive position, the localspecialisation•  Benchmarking v. reference clustersBenchmarking visitsExample: Norway’s MountainTourism cluster visit to Banff, Canada•  Benchmarking visits provide acollaborative learning opportunity•  Builds connections, trust, socialcapital amongst the travellers•  B2B links often develop during avisit•  Visits can provide importantmotivating data shocks
  5. 5. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20115Step 10: Long-term strategic agendaEstablishing a portfolio of initiativesthat could include:• Market development, exporting, clusterbrand• Training, up skilling• Technology/R&D; test beds• SME development: incubator, equity $...• Developing local connections• FDI & talent attraction….Step 11 Linking the clusterBuilding on a solid understandingof the cluster’s strengthsThree levels of leverage:1.  With other regional clusters2.  Nationally, with related clusters3.  Internationally•  Fostering specialisation between clusters•  Building B2B and academic linksA portfolio of clustering initiativesGävle, Sweden’s Cluster suitcaseThe RegionalInnovation System
  6. 6. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20116Step 12 Review, evaluation36 months after launchA health check with two dimensions:•  Clustering process impact•  Is the competitivness of the clusterbeing upgraded?Upgrading a cluster’s competitiveness12 Step process design principles1.  Change from the status quo never comeseasy2.  Successful transformation needs to bedriven by a coalition of volunteers3.  Real transformation takes time4.  Short term wins build the credibility toaddress bigger problemsCluster developmentDrawing on both sides of the brainLogicDetailsSafeFeelingsBig pictureRisk taking•  Open to all; consensus building•  Depoliticise decision-making; gatherthe facts•  Not the ‘wisdom of the elite’•  But the ‘wisdom of the crowd’•  Capture hearts as well as mindsCluster strategy workshopsA mutual learning processCluster DevelopmentResults from an interactive workshopTCI Delhi, December 2010REALLY UGLY PRACTICESIN CLUSTER DEVELOPMENT1.  EXCESSIVE GOVERNMENT CONTROL2.  OVER EMPHASIS: PLANNING & REPORTS3.  UNDER EMPHASIS: ACTION & RESULTS !Source: TCI Delhi Workshop
  7. 7. TCI Conference, Auckland, NZCluster Development in 12 Steps© Cluster Navigators Ltd 20117Bad practices in cluster development1.  Inappropriate government incentives2.  Limited inclusiveness3.  Failure to find, map common ground4. Facilitators lose neutralitySource: TCI Delhi WorkshopGood practices in cluster development1.  Industry led2.  Clear articulation of public service needs3.  Making connections, bridging gaps4.  Full Triple Helix engagement5.  Emergence of natural leaders6.  Professional cluster facilitation management7.  Cluster platform for cross-sectoralcooperationSource: TCI Delhi WorkshopAdvice to a new cluster facilitator1.  Listen!2.  Build relationships; make connections3.  Have Passion4.  Start with what requires low trust5.  Energise others; Find the cluster champion(s) thatothers trust6.  Analyse and initiate; Identify goals7.  Create benefits buy-in; Get things done8.  Be patient; Be transparent; Keep smiling9.  Long term orientation to goals strategiesSource: TCI Delhi WorkshopLars AlbaekBornholm, Denmark‘It is easier tocooperate insmallergroups of firms’Mats WilliamsCenter for Strategy CompetitivenessStockholm School of Economics‘Find theBIG QUESTIONSthat are common’Ifor Ffowcs-WilliamsCEO, Cluster Navigators Ltd22 Examiner St, Nelson 7010New ZealandE4@clusternavigators.com+ 64 3 548 0606www.clusternavigators.comwww.linkedin.com/in/clusterdevelopmentSkype: ‘clusterguy’Blog: www.e4oncompetitiveness.com

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