New video series ”ON CLUSTERS” released by the European Cluster Observatory

The European Cluster Observatory has release a three-part video series addressing cluster development. The three presentations are given by Professor Örjan Sölvell from the Stockholm School of Economics and the topics are: Cluster Dynamics, Cluster Policy and Cluster Management. Enjoy the presentations here

Russia: Federal Funding for Cluster Development

Following suit of recently announced US federal funding for cluster development, the Russian Economic Development Ministry hasindicated a forthcoming funding commitment dedicated to cluster development.

There are about 10 well developed clusters, and about 100 emerging cluster in Russia. In the past, cluster development and policy has more or less been managed solely by regional government. In the new initiative the federal government will provide matching grants to regional governments as well as establish centers for cluster development that also will be developed in the regions with co-financing from the federal budget. The centers will coordinate the activities of cluster participants, provide informational and consulting services and will function as intermediaries between entrepreneurs and the authorities

More info

Industry Cluster Development In Remote Regions: Desert Knowledge Australia

Desert Knowledge Australia is an organization dedicated to drive and support “the know-how, ideas, innovations and perspectives of that Aboriginal and non-Aboriginal people of the Australian desert”  Australian Desert has posted two videos that provide insight into two of the organization’s cluster development initiatives.

The video from Desert Knowledge Australia Mining Services Network, shows how a network of small and medium sized companies in a remote regions is working together to jointly create a better offering to the major mining and metal companies operating in the area.

The agri-food cluster Bush Products and Local Foods Network has developed a video that shows the dynamics of the clusters, as well as provides testimonials from the members about their experiences and the benefits of being apart of the network.

Lessons Learned from an Industry Cluster in India

Clusterpreneur is back after a hiatus over the holidays. The first posting of 2010 is a reference to a very interesting article in Business Week, written by Vivek Wadhwa who is a is senior research associate at the Labor & Worklife Program at Harvard Law School and executive in residence at Duke University.

Among the things he emphasizes in the article is the importance of having a bottom-up approach to cluster development and let the industry set the direction for cluster and economic development. We have previously touched upon this very important are of cluster activation vs. cluster creation in this blog.

You can read Wadhwa’s article here.

North Carolina Aerospace Cluster

In 1903 the Wright Brothers took the first flight in North Carolina. Today the state has a booming aerospace cluster, much thanks to Governor Bev Perdue’s foresight  during her tenure as lieutenant governor a few years back.

Thanks to the the expertise of personnel leaving the military, strong academic R&D as well as the dedicated effort from the Governor’s office, the North Carolina Aerospace cluster today counts 160 companies and is growing. This in a time where economic downturn is hampering growth elsewhere in the aerospace industry.

Site Selection magazine as an informative write-up of the cluster.

Cluster Activation vs. Cluster Creation

When I am interacting with cluster stakeholders, either through project work or presentations, there is always a significant interest on the issue of cluster activation vs. cluster creation when planning and launching a cluster initiative.

The vast majority of clusters are a result of an activation effort – or more specifically the government or policy makers have taken on the role as a catalyst and enabler in a collaborative process to engage stakeholders and activate a cluster around the resources, strengths and assets native to the region. Leaning on the industry and existing asset base, this approach will typically have a strong market pull. In other words, the need of industry and the market will define the cluster.

On the other hand, there are also examples of how policymakers attempt (and succeed) in creating a cluster around a technology sector industry that is not significant or perhaps native to the region.  Hence these economic development efforts will typically be a “push” effort, where economic incentives, investments and asset creation from the government will be important ingredients.

When a cluster activation approach is executed, the government and policy makers will focus on removing the most serious bottlenecks and hurdles for higher productivity, improved collaboration and innovation within a cluster by mobilizing the capacity of a cluster and participants to act jointly.

One will see cluster development efforts by changing the business environment, and by creating institutional structures that help to speed up the process of cluster evolution over time.  This approach can obviously be applied to any industry, but will perhaps be most applicable to a sector that has critical mass by numbers and activities. Further on, there are many motivations to launch such an effort. It can be the need to better coordinate efforts and assets in a growing industry (life sciences) or perhaps used as a tool to rejuvenate industry sectors that has reached more of a mature level with regards to innovation and entrepreneurship (food and agriculture).

Cluster creation on the other hand, is typically found within emerging sectors (one example could be the effort of creating a solar energy cluster in New York) or where there is a policy decision in place to create new set of assets or a skill base within a jurisdiction/region.

Another example of a cluster creation effort could be the effort to attract The Scripps Research Ins

Scripps Florida

titute to the Jupiter campus of Florida Atlantic University in 2004. Authorities committed at the time US $310 million in state

incentives, opened a 40,000 square foot research facility on the campus. An analysis by Florida economists predicted that Scripps would generate about $1.6 billion in additional income and boost the state’s GDP by $3.2 billion in 15 years.

Both cluster activation and creation are feasible approaches – each building on different policies and commitments. Both will have a fairly similar end-objective, economic development through increased commercialization, entrepreneurship and inward investment.

French approach to cluster based innovation policy seems to pay off

In 2004, the French government  announced shift towards a “functional approach” in their national innovation policy. This was anchored in an initiative (Pôles de Compétitivité initiative) to develop a number of Cluster Initiatives around the country.

As a part of this process, a consortium of French governmental organizations committed to fund the development of 66 clusters with 1.5 billion Euros over 3 years.

The clusters selected to receive funding was selected based on 105 proposal submitted by regional economic and industrial development organizations.

The selection was based on the following criteria:

• The clusters must be anchored into a regional dynamic economy, able to compete internationally. The fit with local industry and strengths was perhaps the most critical criteria.
• The clusters must be built around leading and world-class technology, being able to provide credibility and take a leadership role in its sector worldwide.
• The cluster must incorporate R&D partnership among academia, R&D centers, industry etc.
• The cluster must demonstrate a governance policy / model.
• The overall goal of the cluster is to help bring R&D and innovation to market, and further grow the knowledge based economy in France – improving the country’s competitiveness and create jobs.

Since the initial launch in ’04/’05, an additional 5 clusters have been launched.

Following the Cluster Initiative model, each cluster has a governance model, membership structure, central management and marketing activities.

Since the inception, more than 2,000 R&D projects have been launched within the clusters, and  more than 5 billion euros have been committed (half funded by the French government).

In all, there are 10,000 researchers working on these projects with 5,000 businesses, including SMEs. The French government has committed to maintain the funding until 2011,  with 1.5 billion euros over three years.

Local and regional authorities are funding projects launched by their respective clusters.

As of today, 500 foreign businesses are involved in the clusters and their projects.

Backed by a significant public funding, it seems that the French government continue to believe in the Cluster Initiatives as a central pillar in the country’s innovation and economic development policy.

Milwaukee receives federal funding to develop water technology cluster

In September of this year, the city of Milwaukee was awarded a federal grant to explore the opportunity to develop a water technology cluster. The grant was awarded to The Milwaukee Water Council, who will match the funds in order to study will develop  research and development plan for the water cluster. The study will look at the regulatory as well as technology landscape for water technology.

Previously Michigan Economic Development Corporation launched an effort to develop a water technology cluster. The US water technology market is valued at US$ 14 billion and MEDC is looking to capture a significant share of this market.

The overarching objective of the initiative is to fuel innovation and corporate growth by linking public and private R&D, manufacturing and capital investments in the areas of water technologies for industrial and municipal use.

Clusterpreneur.com founders publish article on cluster alliances

Increasingly clusters are forming alliances, domestically as well as internationally. This is often done as a strategic effort to better meet the goals of the cluster and its stakeholders. There are different approaches for developing such alliances. Some clusters have a very structured and deliberate approach, other reach out in a less structured and even a serendipitous manner.

Despite the approach, establishing alliances is increasingly critical to the successful growth of the cluster, and depending on the maturity stage of the cluster, can become a major driver for economic development and the cluster’s growth.

The article is available in the Life Science Clusters journal.

Clusters vs. Cluster Initiatives; The little extra makes a big difference

Porter and others used the cluster theory as a framework for analyzing and describing economic factors and innovation. Looking at the basic definition of a cluster, throughout the developed world, literally every region and jurisdiction has cluster in the particular industries important to that region, where private corporations, government, academia and R&D are participants and stakeholders.

Since the mid 90s, the idea of building on clusters to create a competitive regional structure, accelerating innovation, achieving critical mass, encouraging entrepreneurship, etc., in an organized manner, has become increasingly dominant in economic development and innovation policy. These deliberated efforts are often referred to as Cluster Initiatives (CI).

The possibility of creating a formal structure and program around a cluster – develop a Cluster Initiative is an issue that we often see the organizations we work with finds quite compelling.

Clusters and Cluster Initiatives are often used synonymously in practical terms. However, whereas clusters describe existing economic structures (independent from political initiatives), Cluster Initiatives are defined as:

Organized efforts to increase growth and competitiveness of clusters within a region, involving cluster firms, government and/or the research community.

The Cluster Initiative Greenbook 2003 (Sölvell et al. 2003)

Central to the idea of a Cluster Initiative are several key factors; creating a central management organization for information sharing and joint representation, developing a governance model. strategy development and reporting procedure, membership offering (in many cases membership is a for-fee arrangement) and branding and marketing of the cluster.

Our research has identified several factors that are critical to the development, launch and viability of Cluster Initiatives. Some of these are quite obvious, including industry involvement (market pull strategy vs. technology pull), creating CIs around technologies and focus areas that are native to the region, sound development of vision and mission etc. We will cover these and more in postings to follow.