Archive for March, 2008

Clusters will grow in importance, says Welsh expert

March 5, 2008

Professor Philip Cooke (University of Wales) has been a keynote speaker at various TCI conferences in recent years, and is an active collaborator with other academics and economic development professionals around the world, including us. Herewith is a summary of one of his recent presentations.

 To talk about clusters properly, one needs to build in ‘localised enterprise support infrastructure’ which helps the organic growth of firms. The advantage of clustering is that it facilitates:
·          inter-generational transfer of knowledge.
·          imitation of successful practices and innovations.
·          inter-personal face to face contact.
·          inter-firm cooperation.
·          tacit circulation of commercial and technical knowledge. 

There are probably 20-30 really strong clusters in the UK – some are old such as ceramics in Stoke on Trent. A good, newer example is around Reading (Oxfordshire) where the Silverstone race circuit has facilitated the growth of a F1 motor sports cluster involving construction, testing, training – nine racing car groups (e.g. Williams and Benetton) have clustered there, with many suppliers nearby. There was poaching of skilled technicians until the authorities called a meeting and asked for cooperation.  

Other examples are in IT and biotech around Cambridge and multi media around Cardiff. Germany also has four biotech clusters, including Munich and Hamburg. Most of these are located close to a source of knowledge.   Cluster agendas conform with the realities of the New Economy:

Old Economy                                                                                       New Economy

 A skill                                                                                                       Lifelong learning

Labour conflicts                                                                                   Teams

Environmental limits                                                                          Growth

Security                                                                                                  Risk taking

Monopolies                                                                                          Competition

Plants                                                                                                    Intelligence

Standardisation                                                                                   Customer choice

Status Quo                                                                                            Agility

Hierarchical                                                                                          Distributed

Wages                                                                                                   Shared ownership

 Certain features of the New Economy are important in the context of innovation systems – venture capital search laboratories, IP-driven development and incubators.  

Clusters will grow in importance in the New Economy, given that it requires the revitalisation of old sectors, knowledge transfer and creativity, collective learning, untraded interdependence (favours), spill-over effects from new business formation, and project-based collaboration. 

Some concluding remarks:

It is hard to build clusters from scratch.
·          supportive infrastructure is very important.
·          clusters enhance new firm formation.
·          there is a role for government if market failure exists.
·          need to understand that firms in clusters have other priorities – a sense of collective order or thinking about clusters is not always there.
·          Agricultural areas can benefit from clusters, but this is not fully appreciated.
·          ‘A cluster is not a cluster without a governance structure’.

Contact: phone 029 20 874945,

‘Confident and generous outlook’ required for networks

March 5, 2008


An Australian Government official (formerly a consultant) sent me an email recently. It was such a intelligent insight about getting networks functioning properly.   

‘I joined a network once but I was disappointed that, as consultants fostering networking, they demonstrated little networking themselves. All a bit too desperate in their own businesses perhaps.  

To make a network or cluster work, it needs people with confidence in themselves, a generous outlook to the effect that there is plenty of work available in the world, and a preparedness to take on and carry out action, with open reporting back. 

In terms of establishing clustering agendas, the challenge is finding a market first, and designing/inviting the participants after that, will be the most effective.

Australia’s low population density combined with, in my observation, the extreme individualism will be the major challenges. A longer term view, with all resources mustered positively, is needed to achieve the result.

Even (or perhaps particularly) at the federal level of government, the time frame for results expected is too short. We need more vision. And not just vision, but goals specified and reported against, with details filling in the vision’.