TCI 2015 conference – part 2

Wednesday the 4th was jam packed with great speakers, parallell streams, and great conversations in the corridors. It is not possible nor fair to try and summarize everything here, but I wanted to share just a few thoughts. Please excuse the formatting of this post, I have written this on the fly on my iPad.

In the opening plenary session, Prof Christian Ketels made an excellent presentation that laid a foundation for the event. He emphasized that clusters emerge and are not created. Of the many things he said this stood out for me, as my own experience is that a lot of people are trying to create clusters out of groups of homogenous firms – what I would call a collection and not a cluster.

During the afternoon I could listen to many excellent presentations about entrepreneurial ecology, measuring and evaluating cluster performance, etc. Melissa Pogue (Martin Prosperity Institute) made a great point that it is important to find ways to harness the creativity of people in domestic companies that was not focused on global competition (the so-called traded clusters). This involves findings ways  to unleash the potential of people employed in “average” or local companies, increasing their ability to make decisions and to exercise their judgement. She used a great dataset from the US to show how important this is, as focusing only on the “creative” companies lead to increasing inequality created by rapidly increasing prices of housing, services, etc. in more creative or innovative regions. I thought this was a very valueble point because my practice is also focused on trying to get the more traditional sectors to become innovative, however, much of the cluster discussion is focused on the leading or more creative companies. 

In the closing session of the day I heard that Singapore coordinates R & D and innovation interaction with the private sector from the Prime Ministers office. While my opinion that this should be done from the bottom up is well known, the problem we often face is that top down support is often poorly coordinated or maybe even inconsistent.

A second point was raised by one of the wise men of cluster practice, Ifor Ffowcs-Williams. He made several important points, but one in particular is worth pondering. He stressed that clustering should be more about relations and dialogue. While everyone would agree with this statement, many clusters are completely dependent on a hierarchical arrangement with a cluster manager keeping the whole thing together. Resilient clusters emerge from a dense interaction between members, covering a wide range of topics and issues. However, many cluster managers biggest concern is not about building trust nor is it finding ways to stimulate collaboration between members. Rather, it is about raising funds (often public) or justifying continued support to industry.

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Shawn Cunningham

I am passionate about how organisations and institutions change in developing and transitioning countries. I essentially work between organisations, communities, industries and experts.

One thought on “TCI 2015 conference – part 2”

  1. Several very interesting observations on clusters. There were several initiatives/projects in the area trying to establish clusters, so it was interesting to read that “clusters emerge and are not created” and I would agree with this. Many of these clusters established within different projects, including ones focused primarily on clusters, have limited reach of activities and dynamics is gradually decreasing (of course, these are just some observations and it would take properly prepared research(es) to clarify things in this area). On the other hand, there are clusters (at least I would call them so) which are not officially registered, but are quite functional. E.g. in a city where a large truck and car service center used to be men that used to work there established several small shops, providing different services in vehicle maintenance, using their knowledge, skills, and experiences, but also building on already existing mutual trust. What is interesting is that when you go to one of these shops to repair a car, you may be offered more services than that shop provides. In fact, they offer services of other small shops with which they cooperate, to make their offer complete and so more competitive, since their competitors are newly opened dealers offering also maintenance services. Several conclusions (this word is here used in quite ambitious manner, but still) may be drawn from this:
    • established patterns of behavior prevail existence of formal structures (these shops do not have formal agreements, contracts or any kind of coordinating structure, yet they manage to combine their resources and enrich each of individual offers, on basis of previous experience of cooperation within a large company),
    • trust between members is essential, since cluster members recommend each other to customers, moreover, they in fact incorporate offer of other members into their own offer, which means that quality of offer is evaluated by customers as a whole, often including services of several small shops,
    • it is essential to have clearly defined relations and obligations (that might be one of reasons why they never formally joined),
    • formal establishing of clusters creates costs that are often not necessary (by this, I mean that almost every cluster establishing initiative starts with decision to establish function of a coordinator, with some premises, equipment, and staff members supporting companies etc. however, their sustainability proved to be highly questionable, and problems may be in fact that companies in the cluster can get service these structures offer for lower price by engaging their own resources, or established structures do not offer/deliver services and support that companies demand).
    Regarding efforts to “create clusters out of groups of homogenous firms”, usual justification in our area was that this would enable companies to join capacities and take some bigger orders, exceeding individual capacities of each of them. However, not much happened there, I hope our ongoing research on business networking (current Sensemaker research) will result in some new insights about this.
    Coordination of measures on different level is important, since some initiatives would produce more results if coordinated better, e.g. subsidies provided from different level of authorities may be focused and coordinated to achieve synergies rather than isolated results.
    Role of “cluster manager keeping the whole thing together” is also important, but often it turns into trying to establish or develop private company (which is fine, but then one should establish his/her own company and start there, it would be more fair than to gradually undermine anyway fragile confidence and trust, leading in the long run to cluster failure).
    Regarding innovations in clusters, it may be possible to provide similar support to cluster as to a company of similar size, taking into account (this depends on how is the cluster organized) that cluster is innovative as cluster’s least innovative member (if a cluster offer is observed as a whole).
    I now see that this is not only late, but also quite long, apologies for that.

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