Tecnological Cluster: Theory and example for Algarve. My Opinion and hope

1. is a small Silicon Valley possible?
Algarve: Is a small Silicon Valley possible?
by Francesco Berrettini
October.2010 | Francesco Berrettini | page 1

2. Index
FRANCESCO
CLUSTER DEFINITION
BASIC CONDITIONS: 2 MODELS
MAIN INNOVATION CLUSTERS IN THE WORLD
THE ALGARVE: MY POINT OF VIEW
CONTACTS
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 2

3. FRANCESCO
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 3

4. Francesco
algarve
Economist
MBA Bocconi
Consultant & Teacher
C.E.O. Inesting
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5. CLUSTER DEFINITION
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 5

6. Origin of the term
Location of several producers of small
dimensions in the same area or few producers
of bigger dimensions.
“Industrial Districts” by Alfred Marshall (1892)
High concentration of firms within the same
business area, on both vertical and horizontal
ways of the value chain.
Analysis of the Italian Regions by Beccatini (1979)
Clusters are geographic concentrations of
interconnected companies and institutions in
a particular field.
M. Porter’s Article in the Harward Business Review (1998)
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 6

7. Definition
“Concentration of companies
within the same business area on
a defined geographical area:
country, region or city.”
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 7

8. Technological Innovation Clusters
Cluster is composed by companies that make
a strong bet in technological innovation.
Lead the production of wealth in the regions
where they are.
The role of information technologies is the
main predominant in its products.
Base Applied
Development
Investigation Investigation
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9. BASIC CONDITIONS: 2 MODELS
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10. Model #1: McKinsey
Key elements which constitute the necessary
conditions for the development of the innovation
clusters:
Intervention of the big innovative companies
Availability of public funding
Existence of New Talents
Presence of Venture Capitalist
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11. Model #2: Paul Graham
To have a technology hub we need 2 kinds of
people:
rich people nerds
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12. Model #2: Paul Graham
A place where investors would like to live and
students would like to stay after studying.
sun & beach
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13. Model #2: Paul Graham
A Check-list…
No bureaucracy Nerds
No buildings Youth
Universities Time
Personalities Competition
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14. MAIN INNOVATION CLUSTERS IN THE WORLD
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15. Silicon Valley
Stock market performance is 8 times better than other
companies.
Large companies were first used as an anchor, but later
on as a start-up source.
According to Wall Street Journal, 10 of the 20 most
innovative cities of the USA, are in Silicon Valley.
Silicon Valley in California, was born as a military technology development area.
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16. Silicon Wadi
Attraction of big international companies speeded up
the development of the project.
The great engine behind this cluster was the Defense
Industry.
Founders of several companies are ex-officials from
the army.
NASDAQ has more Israeli companies than European.
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17. Other Innovation Clusters
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18. THE ALGARVE: MY POINT OF VIEW
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19. Conditions for Atractiveness
To IMD, the competitiveness conditions of a country
are individualized in 323 criteria that can be divided in
4 areas:
Economical performance
Quality of government/institutions
Companies efficiency
Infra-structure
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20. Conditions for Atractiveness
The 2010 Global Competitiveness Ranking:
Portuguese economy dropped from number 34 to
number 39.
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21. Conditions for Atractiveness
Singapore, city-state, attracts many talents for its life
quality (green spaces, urban organization, public
transportation and security).
Mainly the PMET (Professional, Managers, Executive
and Technicians).
The quality of life offered has to be related to the cycle of life of the professionals you want to attract.
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22. Conditions for Atractiveness
Important elements to create a Cluster:
Human capital
Financing
Venture capitalist
Big anchor companies
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23. Conditions for Atractiveness
Universities have to be partners
for companies. Companies have to
cooperate with universities.
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24. Mains Obstacles in Algarve
Elements of competitiveness referenced by IMD:
Economical performance +/-
Quality of government/institutions +/-
Companies’ efficiency +/-
Infra-structures (connections) +
Can the Algarve be competitive in
innovation and knowledge?
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25. Mains Obstacles in Algarve
The Quality of Life demanded by the PMET:
Green Spaces +
Urban Organization -
Public Transportation -
Security +
And relating it with the Cycle of Life?
Beginning of professional life, no family
With family set and other needs
Can the Algarve attract talents?
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26. Mains Obstacles in Algarve
Difficulties in a short term period:
Human Resources
Offices
Infra-structures/Public Transportation
Difficulties in a medium term period:
Absence of professional Venture Capital
Partnership and active business networking
Lack of anchor companies of medium dimension
Offer of quality of life for senior professionals
(PMET), in the different phases of the cycle of life
Low social interest in Entrepreneurship
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27. Conclusions
In order to have innovative cities we need to
have innovative people (nerds).
The entrepreneurs are the ones that transform
knowledge by Universities into the innovation
incorporated in the products/services.
They need Talents from Universities.
The future of the territories is played in this
ability to attract and retain talents and VC.
Creativity + Innovation + VC
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28. Conclusions
The Algarve has:
Universities
Some life quality but still not enough to
influence the choice of entrepreneurs of the
innovation area.
We should work in this to improve
conditions and TED event is great
opportunity!
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29. Conclusions
Is a small Silicon Valley possible in
the Algarve ???
Yes! But it’s a long journey.
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 29

30. CONTACTS
Algarve: Is a small Silicon Valley possible? October.2010 | Francesco Berrettini | page 30

31. Contacts
http://pt.linkedin.com/in/francescoberrettini
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