Cluster basics: Cluster Development in Practice - Twelve Steps

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By Ifor Ffowcs-Williams at the 11th TCI Global Conference, Cape Town 2008

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Cluster basics: Cluster Development in Practice - Twelve Steps

  1. 1. .Cluster Development in Practice:Twelve StepsThe Competitiveness Institute11thGlobal ConferenceCape Town, South AfricaOctober 2007Ifor Ffowcs-WilliamsCluster Navigators LtdNew Zealand
  2. 2. .Cluster-based economicdevelopmentMoving fromclumps & clutterto integratedinnovation systems
  3. 3. .Clumps & Clutter v. Innovative ClustersClumps of firms• Local agglomerations of self-contained, stand alone,vertically integrated, isolated firms;• Little trust, limited interaction;• Little out sourcing, subcontracting, collaboration• Geographic but not social proximity
  4. 4. .Clumps & Clutter v. Innovative ClustersClumps of firms• Local agglomerations of self-contained, stand alone,vertically integrated, isolated firms;• Little trust, limited interaction;• Little out sourcing, subcontracting, collaboration• Geographic but not social proximityClutter of public agencies• Silos with individual (divergent?) developmentagendas for the cluster• Absence of teamwork, alignment, trust• Remote from the private sector• Priorities set in isolation;• And ever changing
  5. 5. .Innovative ClustersCommon elements1. Deep specialisation, competencies• Supported by public investments, academia2. Local buzz: dense networking• Rivalry yet collaboration, co-opetiton• Rapid movement information• Teamwork between firms• and with university, government agencies• Leadership, tight alignment3. Global pipelines• Connections beyond the region• Attracting customers, new investment…
  6. 6. .Innovative ClustersCommon elements1. Deep specialisation, competencies• Supported by public investments, academia2. Local buzz: dense networking• Rivalry yet collaboration, co-opetiton• Rapid movement information• Teamwork between firms• and with university, government agencies• Leadership, tight alignment3. Global pipelines• Connections beyond the region• Attracting customers, new investment…
  7. 7. .Innovative ClustersCommon elements1. Deep specialisation, competencies• Supported by public investments, academia2. Local buzz: dense networking• Rivalry yet collaboration, co-opetiton• Rapid movement information• Teamwork between firms• and with university, government agencies• Leadership, tight alignment3. Global pipelines• Connections beyond the region• Attracting customers, new investment…
  8. 8. .
  9. 9. .Cluster DevelopmentThe How• Creating a collaborative,demand driven, process• For starting a clusteringinitiative, or• For renewing, revitalisinga clustering initiative
  10. 10. .
  11. 11. .
  12. 12. .
  13. 13. .Resource clusterdevelopmentfor the long haul• Take a 5-10 year perspective• Primary need is the facilitator:• Relationship builder, broker, neutral corner• Central to this role is knowledge of key firmsand support infrastructure• Facilitator is much more than a ‘ProjectManager’
  14. 14. .
  15. 15. .Cluster boundariesTake care on two dimensions!1. Geographic dimension• Clusters don’t respectpolitical borders• Boundary may be ‘onehour’s drive time’2. Industry dimension• Clusters include supportfirms, soft infrastructure…broader than an ‘industry’
  16. 16. .Clusters: Building on specialisationsUS Baby Silicons: each differentiatedSan Francisco‘Multimedia Gulch’Internet activityconcentrated ondigital media andB2C.Los Angeles‘Digital Coast’Strongest Internetsegments:Content services,alternative mediaChicago‘Silicon City’B2B segment,leveraging the city’sstrong industrialexpertise.Miami‘Silicon Beach’Hub for LatinAmerican InternetcompaniesNew York‘Silicon Alley’Financial services,new medialeveraging NewYork’s traditionalindustries.
  17. 17. .Quote Courtesy Tom Peters
  18. 18. .ORQuote Courtesy Tom Peters
  19. 19. .
  20. 20. .The Cluster MusterHigh profile, kick-off public meetingRounding up the ‘usual suspects’Objectives:• To publicly announce the initiative• Explain the reasons for selecting this sector• To introduce the facilitator(s)• To request the cluster’s stakeholders tobe available for an early 1-on-1 meeting
  21. 21. .Step 3 Initial cluster analysisBuilding the baseTwo thrusts:1. Initial competitiveness diagnosis,fact based, understanding cluster’scurrent situation: structure, scale,opportunities, constraints, culture ...
  22. 22. .Step 3 Initial cluster analysisBuilding the baseTwo thrusts:1. Initial competitiveness diagnosis,fact based, understanding cluster’scurrent situation: structure, scale,opportunities, constraints, culture ...2. Establishing platform for actionIntroducing the process; motivating keystakeholders to participate; identifyingpotential leaders ...
  23. 23. .History matters!Understand the cluster’s foundations• How did the cluster start?• How did it grow? What changes?• What have been the cluster’sknowledge flows?• Development of links, trust• Level of social proximity?Subcontracting? Interdependencies?Joint actions? University activity?• Development of global connections• Exports? FDI? Internationalisation?
  24. 24. .History matters!Understand the cluster’s foundations• How did the cluster start?• How did it grow? What changes?• What have been the cluster’sknowledge flows?• Development of links, trust• Level of social proximity?Subcontracting? Interdependencies?Joint actions? University activity?• Development of global connections• Exports? FDI? Internationalisation?
  25. 25. .
  26. 26. .Step 4Forming the Leadership GroupActive clustering needs:• Public commitment frompreferred leaders whounderstand and care aboutthe big picture• A Group with a balance ofskills, able to work as a teamFacilitator has a key role inestablishing Group
  27. 27. .
  28. 28. .The preferred futureThe VisionBuilding on the cluster’s currentcompetitive position … with a challenge,a s t r e t c h factor
  29. 29. .
  30. 30. .Preferred futureICT, Cape TownCape Town as the IT gatewayand training centre of Africa
  31. 31. .Bangladesh knitwear clusterInitial preferred future, 2010• Bangladesh is a world-class supplier ofquality knitwear.• We have earned a reputation for service,product innovation, marketunderstanding.• Exports have doubled to $5-6 billion,with strong growth in the US market.
  32. 32. .
  33. 33. .Standing in the FutureIdentifying the Stepping Stones• Looking back fromthe future:Back casting• Not a continuation ofthe present(Forecasting)
  34. 34. .Example BangladeshKnitwear cluster workshop
  35. 35. .BangladeshKnitwear steppingstonesConclusions fromtwo workshopsExport marketing: USA focusTraining programs: leaders to operatorsImproved support from banksInvest in joint facilities and servicesImprove Utilities (e.g. electricity)Improve transportation and logisticsDevelop culture of co-operationComply: US codes of conductDevelop culture of innovation$5-6 Billionin 2010
  36. 36. .
  37. 37. .
  38. 38. .Cluster launchLake Katwe salt cluster, Uganda
  39. 39. .
  40. 40. .Benchmarking visitsExample: Norway’s Mountain Tourismcluster visit to Banff, Canada• Identify an appropriate (model)reference cluster• Benchmarking visits provide acollaborative learning opportunity• Business + public agencies +academics sharing their learning• Builds connections, trust, socialcapital amongst the travellers• B2B links often develop during avisit
  41. 41. .Benchmarking visitsExample: Norway’s Mountain Tourismcluster visit to Banff, Canada• Identify an appropriate (model)reference cluster• Benchmarking visits provide acollaborative learning opportunity• Business + public agencies +academics sharing their learning• Builds connections, trust, socialcapital amongst the travellers• B2B links often develop during avisit• Visits can provide motivatingdata shocks
  42. 42. .OceanTechnologies(St. John’s)Ag-Biotech/Nutraceuticals(Saskatoon)Astrophysics(Victoria,Penticton)Fuel Cells(Vancouver)Medical Technologies(Winnipeg)Photonics(Ottawa)Biopharmaceuticals,Industrial Materials(Montreal)Life Sciences & Wireless(Halifax, Sydney)e-Business(Fredericton, Moncton,Saint John)Aluminium(Ville Saguenay)Aerospace(Ottawa, Montreal)Nanotechnology(Edmonton)Sustainable UrbanInfrastructure(Regina)Nutrisciences(Charlottetown)Benchmarking against other relevant clusters
  43. 43. .Benchmarkingagainst otherrelevantclusters
  44. 44. .
  45. 45. .Step 10Long-term, strategic agendaMore substantive, more strategic initiativesMoving beyond the initial activity…the ‘low hanging fruit’ e.g.• Technology & SME related• R&D centers; Centers of Excellence; Incubation facility• Technology Park; One-stop-service centre• University links; Technology mapping• Internationalisation• Cluster branding; Export strategy development• Cluster-to-cluster links; Investment attraction• Skills development• Workforce training; Learning circles• Tertiary course development; Partnership with local schools• Finance• Equity and debt funding, venture capital, angels, seed funding
  46. 46. .
  47. 47. .Step 11 Linking the clusterBuilding on a solid understandingof the cluster’s strengthsThree levels of leverage:1. With neighbouring clusters2. Nationally, with clusters in the same sector3. Internationally, with clusters in the samesector
  48. 48. .BUILDING A EUROPEANBUILDING A EUROPEANFOOD CLUSTERFOOD CLUSTER
  49. 49. .FINE projectFood Innovation Network EuropeObjectives:Building a lasting network of EU food regionsLearning from each other on: policy, innovation instruments regional food networksDeveloping interregional RTD and innovationprojects
  50. 50. .
  51. 51. .FINE regionsCollaboration between eight regional food clusters: East Netherlands (NL) Øresund food region (Denmark/Sweden) Rogaland (Norway) Castilla y León (Spain) Flanders (Belgium) Wielkopolska (Poland) Scotland (UK) Emilia Romagna (Italy)
  52. 52. .Cluster policiesTraditional economicdevelopment policyIndividual needs of specificfirms and industriesCurrent policies Firms and industries as a systemfor regional developmentThe challenge The international approach incluster promotion
  53. 53. .
  54. 54. .Step 12Review, EvaluationTwo levels of review1. Reviewing the overall contribution of theclustering intervention:• Is the clustering initiative significantlyadding value?1. Is the competitiveness of the cluster beingupgraded?• Movement from a clump and clutter to amore innovative cluster?
  55. 55. .Strengthening the conditions forcommercialisation?• Is the cluster becoming a more demandingcustomer for R&D centers and universities?• Setting priorities for needs-driven R&D?• And becoming an incubators without walls?
  56. 56. .Cluster evaluation
  57. 57. .Cluster evaluation
  58. 58. .Cluster evaluationElephant & mouse syndrome
  59. 59. .Avoiding the lionsThree tips
  60. 60. .Value of cluster workshopsIdentifying development priorities• Key element in the cluster process• Transparent, open to all• Gaining broad agreement on thecluster’s development strategy
  61. 61. .Value of cluster workshopsIdentifying development priorities• Key element in the cluster process• Transparent, open to all• Gaining broad agreement on thecluster’s development strategy• Capturing ‘the wisdom of crowds’
  62. 62. .Move quickly into actionAvoid paralysis by analysis• Analysis simply provides the platform for action• Businesses, especially SMEs, seek early pay-offs• Pick the ‘low hanging fruit’• Engage only when there is momentum• Move at the speed of business• Build a portfolio of initiatives, projects• Spread benefits and risksJust doit!
  63. 63. .Don’t underestimatethe central role of aneutral facilitator• Facilitating linkages:• Between firms, removing clumps• Between government agencies, removing clutter• Continually moving the development agendaforward• Requires long term public funding• And high level facilitation skills
  64. 64. .
  65. 65. .
  66. 66. .On competitivenessThere is no rest!• Upgrading competitiveness …no end point…it’s arelentless journey• Local (micro) not national (macro) focus• Global specialisation; Winner takes all• Distributed competitiveness, internationallylinking local specialisations…local clusters• New competencies emerging where existingclusters converge• Often combining technologies in new ways
  67. 67. .Upgrading competitivenessCommon responses• Developing deep, deep competencies• Local specialisations… central role of universities• Building local connections, the internal buzz• Connectivity - Productivity – Competitiveness• Self-destruct task forces, collaborative alliances• Building global pipelines, the external links• C2C links, attracting customers, new investment,new technologies, new people…
  68. 68. .Is the focus on a ‘cluster programme’ ?Or fundamentally creating a culture shift?• Towards private sector collaboration?• And Private - Public alignment?With the cluster as the lens to focus otherpublic investments:• Universities; R&D; training; investment &talent attraction; export development;incubators; industry/science parks…
  69. 69. .
  70. 70. .Ifor Ffowcs-WilliamsCEO, Cluster Navigators Ltd22 Examiner St, Nelson,New ZealandE4@clusternavigators.com+ 64 3548 0606www.clusternavigators.com

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