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

1. .
Cluster Development in Practice:
Twelve Steps
The Competitiveness Institute
11th
Global Conference
Cape Town, South Africa
October 2007
Ifor Ffowcs-Williams
Cluster Navigators Ltd
New Zealand

2. .
Cluster-based economic
development
Moving from
clumps & clutter
to integrated
innovation systems

3. .
Clumps & Clutter v. Innovative Clusters
Clumps 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. .
Clumps & Clutter v. Innovative Clusters
Clumps 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
Clutter of public agencies
• Silos with individual (divergent?) development
agendas for the cluster
• Absence of teamwork, alignment, trust
• Remote from the private sector
• Priorities set in isolation;
• And ever changing

5. .
Innovative Clusters
Common elements
1. Deep specialisation, competencies
• Supported by public investments, academia
2. Local buzz: dense networking
• Rivalry yet collaboration, co-opetiton
• Rapid movement information
• Teamwork between firms
• and with university, government agencies
• Leadership, tight alignment
3. Global pipelines
• Connections beyond the region
• Attracting customers, new investment…

6. .
Innovative Clusters
Common elements
1. Deep specialisation, competencies
• Supported by public investments, academia
2. Local buzz: dense networking
• Rivalry yet collaboration, co-opetiton
• Rapid movement information
• Teamwork between firms
• and with university, government agencies
• Leadership, tight alignment
3. Global pipelines
• Connections beyond the region
• Attracting customers, new investment…

7. .
Innovative Clusters
Common elements
1. Deep specialisation, competencies
• Supported by public investments, academia
2. Local buzz: dense networking
• Rivalry yet collaboration, co-opetiton
• Rapid movement information
• Teamwork between firms
• and with university, government agencies
• Leadership, tight alignment
3. Global pipelines
• Connections beyond the region
• Attracting customers, new investment…

8. .

9. .
Cluster Development
The How
• Creating a collaborative,
demand driven, process
• For starting a clustering
initiative, or
• For renewing, revitalising
a clustering initiative

10. .

11. .

12. .

13. .
Resource cluster
development
for 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 firms
and support infrastructure
• Facilitator is much more than a ‘Project
Manager’

14. .

15. .
Cluster boundaries
Take care on two dimensions!
1. Geographic dimension
• Clusters don’t respect
political borders
• Boundary may be ‘one
hour’s drive time’
2. Industry dimension
• Clusters include support
firms, soft infrastructure…
broader than an ‘industry’

16. .
Clusters: Building on specialisations
US Baby Silicons: each differentiated
San Francisco
‘Multimedia Gulch’
Internet activity
concentrated on
digital media and
B2C.
Los Angeles
‘Digital Coast’
Strongest Internet
segments:
Content services,
alternative media
Chicago
‘Silicon City’
B2B segment,
leveraging the city’s
strong industrial
expertise.
Miami
‘Silicon Beach’
Hub for Latin
American Internet
companies
New York
‘Silicon Alley’
Financial services,
new media
leveraging New
York’s traditional
industries.

17. .Quote Courtesy Tom Peters

18. .
OR
Quote Courtesy Tom Peters

19. .

20. .
The Cluster Muster
High profile, kick-off public meeting
Rounding 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 to
be available for an early 1-on-1 meeting

21. .
Step 3 Initial cluster analysis
Building the base
Two thrusts:
1. Initial competitiveness diagnosis,
fact based, understanding cluster’s
current situation: structure, scale,
opportunities, constraints, culture ...

22. .
Step 3 Initial cluster analysis
Building the base
Two thrusts:
1. Initial competitiveness diagnosis,
fact based, understanding cluster’s
current situation: structure, scale,
opportunities, constraints, culture ...
2. Establishing platform for action
Introducing the process; motivating key
stakeholders to participate; identifying
potential leaders ...

23. .
History matters!
Understand the cluster’s foundations
• How did the cluster start?
• How did it grow? What changes?
• What have been the cluster’s
knowledge flows?
• Development of links, trust
• Level of social proximity?
Subcontracting? Interdependencies?
Joint actions? University activity?
• Development of global connections
• Exports? FDI? Internationalisation?

24. .
History matters!
Understand the cluster’s foundations
• How did the cluster start?
• How did it grow? What changes?
• What have been the cluster’s
knowledge flows?
• Development of links, trust
• Level of social proximity?
Subcontracting? Interdependencies?
Joint actions? University activity?
• Development of global connections
• Exports? FDI? Internationalisation?

25. .

26. .
Step 4
Forming the Leadership Group
Active clustering needs:
• Public commitment from
preferred leaders who
understand and care about
the big picture
• A Group with a balance of
skills, able to work as a team
Facilitator has a key role in
establishing Group

27. .

28. .
The preferred future
The Vision
Building on the cluster’s current
competitive position … with a challenge,
a s t r e t c h factor

29. .

30. .
Preferred future
ICT, Cape Town
Cape Town as the IT gateway
and training centre of Africa

31. .
Bangladesh knitwear cluster
Initial preferred future, 2010
• Bangladesh is a world-class supplier of
quality knitwear.
• We have earned a reputation for service,
product innovation, market
understanding.
• Exports have doubled to $5-6 billion,
with strong growth in the US market.

32. .

33. .
Standing in the Future
Identifying the Stepping Stones
• Looking back from
the future:
Back casting
• Not a continuation of
the present
(Forecasting)

34. .
Example Bangladesh
Knitwear cluster workshop

35. .
Bangladesh
Knitwear stepping
stones
Conclusions from
two workshops
Export marketing: USA focus
Training programs: leaders to operators
Improved support from banks
Invest in joint facilities and services
Improve Utilities (e.g. electricity)
Improve transportation and logistics
Develop culture of co-operation
Comply: US codes of conduct
Develop culture of innovation
$5-6 Billion
in 2010

36. .

37. .

38. .
Cluster launch
Lake Katwe salt cluster, Uganda

39. .

40. .
Benchmarking visits
Example: Norway’s Mountain Tourism
cluster visit to Banff, Canada
• Identify an appropriate (model)
reference cluster
• Benchmarking visits provide a
collaborative learning opportunity
• Business + public agencies +
academics sharing their learning
• Builds connections, trust, social
capital amongst the travellers
• B2B links often develop during a
visit

41. .
Benchmarking visits
Example: Norway’s Mountain Tourism
cluster visit to Banff, Canada
• Identify an appropriate (model)
reference cluster
• Benchmarking visits provide a
collaborative learning opportunity
• Business + public agencies +
academics sharing their learning
• Builds connections, trust, social
capital amongst the travellers
• B2B links often develop during a
visit
• Visits can provide motivating
data shocks

42. .
Ocean
Technologies
(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 Urban
Infrastructure
(Regina)
Nutrisciences
(Charlottetown)
Benchmarking against other relevant clusters

43. .
Benchmarking
against other
relevant
clusters

44. .

45. .
Step 10
Long-term, strategic agenda
More substantive, more strategic initiatives
Moving 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. .

47. .
Step 11 Linking the cluster
Building on a solid understanding
of the cluster’s strengths
Three levels of leverage:
1. With neighbouring clusters
2. Nationally, with clusters in the same sector
3. Internationally, with clusters in the same
sector

48. .
BUILDING A EUROPEANBUILDING A EUROPEAN
FOOD CLUSTERFOOD CLUSTER

49. .
FINE project
Food Innovation Network Europe
Objectives:
Building a lasting network of EU food regions
Learning from each other on:
 policy,
 innovation instruments
 regional food networks
Developing interregional RTD and innovation
projects

50. .

51. .
FINE regions
Collaboration 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. .
Cluster policies
Traditional economic
development policy
Individual needs of specific
firms and industries
Current policies Firms and industries as a system
for regional development
The challenge The international approach in
cluster promotion

53. .

54. .
Step 12
Review, Evaluation
Two levels of review
1. Reviewing the overall contribution of the
clustering intervention:
• Is the clustering initiative significantly
adding value?
1. Is the competitiveness of the cluster being
upgraded?
• Movement from a clump and clutter to a
more innovative cluster?

55. .
Strengthening the conditions for
commercialisation?
• Is the cluster becoming a more demanding
customer for R&D centers and universities?
• Setting priorities for needs-driven R&D?
• And becoming an incubators without walls?

56. .
Cluster evaluation

57. .
Cluster evaluation

58. .
Cluster evaluation
Elephant & mouse syndrome

59. .
Avoiding the lions
Three tips

60. .
Value of cluster workshops
Identifying development priorities
• Key element in the cluster process
• Transparent, open to all
• Gaining broad agreement on the
cluster’s development strategy

61. .
Value of cluster workshops
Identifying development priorities
• Key element in the cluster process
• Transparent, open to all
• Gaining broad agreement on the
cluster’s development strategy
• Capturing ‘the wisdom of crowds’

62. .
Move quickly into action
Avoid 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 risks
Just do
it!

63. .
Don’t underestimate
the central role of a
neutral facilitator
• Facilitating linkages:
• Between firms, removing clumps
• Between government agencies, removing clutter
• Continually moving the development agenda
forward
• Requires long term public funding
• And high level facilitation skills

64. .

65. .

66. .
On competitiveness
There is no rest!
• Upgrading competitiveness …no end point…it’s a
relentless journey
• Local (micro) not national (macro) focus
• Global specialisation; Winner takes all
• Distributed competitiveness, internationally
linking local specialisations…local clusters
• New competencies emerging where existing
clusters converge
• Often combining technologies in new ways

67. .
Upgrading competitiveness
Common 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. .
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 other
public investments:
• Universities; R&D; training; investment &
talent attraction; export development;
incubators; industry/science parks…

69. .

70. .
Ifor Ffowcs-Williams
CEO, Cluster Navigators Ltd
22 Examiner St, Nelson,
New Zealand
E4@clusternavigators.com
+ 64 3548 0606
www.clusternavigators.com