Cluster processes typically disregard obstacles, says Danish expert

 Bjarne Jensen of Oxford Research in Denmark is a regular correspondent, and has filed the following report. 

Three years ago, industry leaders in the Danish county of Funen and the City of Odense initiated the project known as www.4Frontregion.dk

It sought to develop long-term support of four clusters considered vitally important to the future of the region – Horticulture, Robotics, ICT and bio-tech. 

Although still at an early stage of development, the four clusters are showing great promise. There have been significant improvements regarding networking competencies, and projects have resulted in new, innovative products. Many synergies were found as the clusters interacted to create new products, such as new robotics for greenhouses and plants for medical use.  

Challenges have also been identified:
·           A lack of critical mass. How is it possible to sustain growth in a potential cluster?
·           The cluster’s focus is primarily local. How can it be integrated into national and international networks?
·           How can a new organisation be structured to maintain the benefits of vertical co-ordination and cooperation, yet avoid becoming bureaucratic?
·           How can the many initiatives be effectively coordinated, and diverse interests appropriately balanced?

Many other cluster practitioners seem to be facing these same challenges. One reason why the cluster development processes often appear more straightforward than they actually are is the abundance of so-called best practice cases available. The descriptions are typically written with a focus on vision and strategy, but rarely results, and they typically disregard the obstacles encountered. One cluster presented as a success story that we cross-checked had actually been terminated due to organisational problems.  

Contact: bej@bjarneejensen.dk

Guides to regional branding

Brent Nolan advises of some regional branding guides in the marketplace.    

I am the director of a brand agency called Immere (http://www.immere.com).

 

We are based in Melbourne, with a regional office in Bendigo. I believe there is huge potential for regional companies to brand themselves effectively, although one thing I have found is the lack of brand innovation with regional companies.

 I agree that from an international and national viewpoint there is little recognition of regional companies and products. A decisive factor that affects the perception of regional brands is their acceptance of being a ‘Me too’ brand – one that is happy to be like its competitors and becomes ‘’one of many’, rather than establishing their own unique brand position.

Regional brands (product, communities, states etc.) can develop their own unique branding identity, but this does not necessarily come with time.  Good luck with everything, if you (or you clients) would like further points on branding a couple of brand guides can be downloaded from the Immere site. 

Contact Brent at brent.nolan@immere.com or mobile 0421 857 600. 

(www.regional.org.au/articles/development/us_reg_brand.htm),

EU support for innovation

 

Nikhil Treeboohun of the National Productivity & Competitiveness Council (Mauritius) has alerted us to a new EC document: ‘Entrepreneurial innovation in Europe: a review of 11 studies of innovation policy and practice in today’s Europe’. Brussels: European Commission, 2003. ISBN: 9289444487

It summarises reports in the ongoing series of Innovation Policy Studies, to improve understanding of the innovation needs and behaviours of firms, research institutions and investors, to assess the impacts of existing policy measures, and to explore opportunities for further policy intervention.

The studies are designed to help regional, national and EU policymakers to strengthen Europe’s innovative capacity and competitiveness through the introduction of effective, well-targeted and mutually reinforcing legislation and support measures.

See www.cordis.lu/innovation-policy/studies/ca_study4.htm

Philippines reins in investment incentives!

 We argue that if governments and aid agencies focused more on getting regional infrastructure right, it would take the heat out of the subsidy game. So it’s heartening to see the following report. 

The Arroyo administration is grooming the Board of Investments (BOI) as the sole incentive-granting agency of the government in its bid to prevent abuses and plug financial leakages that had bled the national coffers.  

A government source notes the concern about the massive abuses in the current investment incentive system wherein billions of pesos worth of potential revenues are being lost. The Department of Finance and the Department of Trade and Industry have agreed in principle to appoint the BOI as the sole agency to oversee the granting of incentives in the Philippines.  

There are about 150 laws providing tax incentives to various industries. The tax credits and exemptions, narrow the tax base and increase the opportunities for tax avoidance. Besides the BOI, other agencies in the field include the Department of Finance, the Philippine Economic Zone Authority, the Bases Conversion & Development Authority, the Subic Bay Metropolitan Authority, the Cooperative Development Authority.  

Trade Undersecretary Hernandez says there is a need to offer attractive set of incentives to prospective investors to compensate for the lack of the much-needed infrastructure in the country. “While we are building the necessary infrastructure there is a need to offer attractive investments to prospective investors. We have to make up for one market imperfection such as lack of infrastructure,” he said.

The semantics of clusters – lessons from Brighton UK

Paquita Lamacraft (Cockatoo member) addressed the Creative Industries Conference in Brighton UK in May 2004. She has filed her report.

English is a rich and diverse language. We have several words to denote gradations of nuance in description of a single thing, but other words can mean different things depending on the context. The word “Cluster” fits that category.  

Having worked on cluster development from the practitioner level for 12 years, the truth of this diversity was never more emphatic than at this conference – 300 people attended from 22 countries.

I presented a paper on the development of the Music Industry Strategy in New Orleans. It pulled no punches about the reality of grass roots development. Don’t start if you’re not prepared for the community of interest you are facilitating to take you places you may not have expected to go, and often at an uncomfortably fast pace. 

However what fascinated and at first frustrated me, was the use of the term “Cluster”. It was variously used in such contexts as “Brighton City is an example of a Creative Cluster” or “These buildings make a cluster” or “There are twenty businesses in the region that are in the same sector. This cluster has great potential.“

In this last example, discussions followed about what agencies have done to develop the “cluster” and then would come a query of how to engage the leaders of the relevant industry. Being a writer I get excited about semantics. I had to calm down and agree with myself that each of these uses was quite valid. It just illustrated what happens when a useful mechanism for development becomes a by-word and industry panacea. “Cluster development” has become trendy. Add “Creative” and it’s seriously popular.

What struck many attendees from outside Britain was the huge investment being made within Britain in this Creative Cluster Development focus, and the government funds being invested.  

The question that became a focus for several days was “Does a large government investment always require government-led development plans, or can large investments of government funds be more effectively used to enhance industry-led development?”

The Louisiana State experience suggests that it was possible – they augmented the funds of local Development Boards and fast tracked cluster-led initiatives that required government support, guidance, legislative effort or additional funding or influence.  Apart from this differing focus there were some fascinating presentations:
§          Creative London – wide range of programs with focus on Creative Hubs, Showcasing Support, Export, and local networks.
§          Amsterdam – theme of Creativity is doing well there, so why fix it? They are unashamedly who they are. You don’t need a business plan for the idea to get funding – you need to sell it. Emphasis is more on the individual enterprise or project than on a collaborative cluster development. If you live and work in Amsterdam then you are eligible. This attitude draws talent.
§          Austria discussed a network approach.
§          Port Moody in Canada relayed the movement from Mill Town to Arts Enclave.
§          Rural Montana spoke of their Cultural Corridors Cluster.
§          Kiwis spoke on how they’re using The Lord of the Rings to kickstart broader development.
§          Australia – Brecknock Consulting, Larry Quick & Associates – talked about Brisbane and Adelaide.
§          Taiwan has set aside large funding, and is standing at the diving board wondering which steps to climb to get the best result from their splash.
§          Mexico – a story of cultural destruction by Costco and the grass roots development from local artisans to preserve their heritage.
§          Japan – astute assessment of the measurement of success.  For people who came to learn about creative clusters, the semantics clouded the question: How do you get industry around the table? One answer is someone putting their ear to the ground, finding the key issues, then getting industry to sit down and examine how, through collaboration, they can address the challenges to mutual benefit. Perhaps labeling things a “cluster” is detrimental to the end result.   

The conference outlined the greatest opportunity for all clusters with a strategic objective – export of talent, skills, product and service. There are real openings for inter-regional export in the UK where there is a whole range of export assistance and a great support infrastructure. Effective collaborative partnerships can tap into this. 

 

Whatever the ultimate translation of the word “cluster” it doesn’t alter the opportunity for international collaboration in this field.

ICT clusters – Melbourne and Sydney

Every 3-4 months, Leon Gettler of the Melbourne Age writes a perceptive, well-researched article on industry clusters.

On 3 August his feature ran in the Age and Sydney Morning Herald. Excerpts follow. 

Sydney. Travel down Sydney’s Victoria Road and you hit what’s officially known as the Western Sydney IT cluster backed by the NSW Government – 1,500 ICT companies with combined turnover of $4.5 billion.

They make their money from software development, products and services. About 60 cents in the dollar comes from markets in Europe, the US and Asia. The cluster has links with clusters in the Hunter Valley, Illawarra and central coast and works closely with Scottish Enterprise and technology clusters in Cambridge, Yorkshire, British Midlands and NZ.  

The Western Sydney IT cluster meets monthly. Chris Jocelyn (Australian Projects) says those who joined a cluster expecting good fortune to fall their way without contributing would be disappointed. ‘It’s not just a networked environment, it’s a learning environment if you are prepared to put in. But in those cases where people don’t see themselves sharing, you find that they drop away pretty quickly’. Andrew Madry (Madry Technologies, Castle Hill) says ‘It’s nice, if you have a problem, to just drive down the road and talk to someone about it. It’s handy to do things locally.’ 

Melbourne. The other big technology cluster is in Melbourne’s south-east, covering Clayton and Mulgrave. Some of it falls into the industrial complex in the City of Monash, a precinct that boasts 11,500 companies that employ 90,000 people.

The IT industry there is part of a swathe of companies in manufacturing, wholesale and retail, health and education, and services. Companies such as NEC, Toshiba, Vision Systems, Telstra Research Laboratories, the CSIRO and the Monash Technology Research & Innovation Precinct are powerful magnets for drawing business into the area.  

Ian Dennis (Whitehorse Strategic Group) says Melbourne’s technology cluster evolved through a confluence of forces – one was Monash Uni’s decision to embrace technology to differentiate itself from Melbourne Uni. The best hubs are driven by a mix of forces – similar business, strong anchor tenants, solid civil infrastructure (schools, roads, public transport, research institutions, public sector support).

 For the complete article, try lgettler@theage.fairfax.com.au

‘Universities not rewarded for collaboration’ says UK expert

A colleague in the federal industry portfolio (Canberra) has referred us to the Lambert Review in the UK. It delves into the big S&T issues common across the world. Worth a read. Summary follows. 

The UK Government published its 10-year framework for science and innovation in late 2003. It sets out the Government’s ambitions and responds to the Lambert Review. Main points:
§          The links between universities and industry are increasing, but room for improvement.
§          “I have been impressed by the efforts of universities over the last 10 years to disseminate and create knowledge, but the business side is less impressive – apart from pharmaceuticals and aerospace, there are relatively few research-intensive businesses in the UK…the question is what can be done to encourage more businesses to collaborate with universities.” (Richard Lambert).
§          Government funding for knowledge transfer activity in universities (“third stream funding”) has generated a cultural change in universities and has built up their capacity to transfer knowledge.
§          Areas for improvements include:
-          Stronger engagement from SMEs which often do not collaborate with universities. Universities commented on the difficulties in engaging with SMEs (build network and cluster agendas?)
-          Greater clarity over intellectual property.
-          Improved skills and experience in tech transfer offices.  
-          Better financial incentives for collaboration. Universities seeking increased third stream funding plus a move away from competitive bidding process (very interesting!)
-          A greater role for Regional Development Agencies in making links to business and universities. 

Lambert said, “The big question is whether there is scope to manage universities in a different way – for the Government to specify measures of success, which if met by the universities would mean that they could be given greater freedoms to behave in a more entrepreneurial way.”  

www.lambertreview.org.uk

Aftercare of investments – key role for local players

Mr. Garry Draffin, CEO of Invest Australia, has emphasised the role of local and state government in the ‘after care’ of foreign investment in Australia.

At the Manufacturing Prosperity Conference, he explained that there are a myriad of things that local government can do to make their locality more investor friendly, and that a Team Australia approach is critically important.   

Aftercare and embedding of investments is the mostly the province of state/local government and industry bodies because of their proximity. Strong collaboration at the local level is important. Examples of aftercare and embedding activity that CAP members have identified are:
§          Assisting companies to meet key personnel in local business, education & research communities.
§          Facilitating the involvement of companies to consultative forums.
§          Addressing infrastructure deficiencies that impact adversely on commercial operations. 
§          Making connections on behalf of companies into new markets e.g. with Austrade posts. §          Introductions to state/federal ministers, parliamentary members, key business groups and officials.
§          Highlighting companies in press articles and marketing features.  

Stirring words from NZ Trade official

NZ Trade & Enterprise chairman, Phil Lough, says NZ cannot “sleepwalk its way” to its growth targets.

“There remains a tendency to believe that someone, somewhere is looking after our best interests…The fact is that we are a small, remote country in a globalised world which simply doesn’t give a toss as to whether we sink or swim. Today’s borderless world is a tough marketplace. The competition doesn’t take prisoners. We need to be savvy, determined, always on our toes.  NZ needs to be savvy in the way it utilised the power of the market…We are too small and too remote to take our hand off the tiller and trust the trade winds to take us where we want to go.”  

He argued that NZ shouldn’t shy away from strategies that might be seen as radical e.g. use of migrant labour to fill labour shortfalls. The big challenge is to lift productivity, requiring emphasis on innovation, investment and selective targeting of global value chains

See www.nzte.govt.nz

‘Connectivity’ – the new industry policy

At the Manufacturing Prosperity Conference in mid 2004 in Adelaide, we tabled a document analysing the issues associated with attracting foreign investment into the northern Adelaide region. It is to serve as background for an OECD expert group. A key point in the analysis is the importance of ‘connectivity’. Let me explain.  

 Industry policy in Australia is characterised by eras. The 1970s were the Protectionist Era, followed by the Positive Adjustment Era of the 1980s (adjusting the economy into growth areas), then the Competitiveness Era with micro reform, privatisation and asset sale agendas. This has run its course.  

We are now in the Facilitative Era, where governments extol their facilitative role – the basic ethos is that governments should focus on removing constraints to private sector growth.  

This passive approach has nought to do with the big challenge for industry policy (manufacturing, agriculture and services) namely the fragmentation of world markets and rise of trading blocs. There is growing evidence that world trade and investment flows are blossoming where there is trust and confidence.

Equally, where there are major cultural and religious differences overlaid with terrorist concerns, trade and investment are going into reverse.  

This means that the trust and connectivity between governments, companies and societies are now critically important. It provides the framework for doing business, attracting investment, and bedding down joint ventures and technology transfer.

Full article in September 2004 edition of Local Government Focus magazine.