I am always struck by the complexity and simplicity of ‘Clustering as concept” in the Irish context.
This rising tide notion of bringing competitors and other actors together to produce something more resilient and capable of real scale is common in Ireland. The cooperative movement in the dairy sector is a prime example where 14 big players bring together the mix bag of farmers and producers to use their combined muscle to create world leading organisations. Indeed industry associations seek to do similar but can struggle to create the full alignment necessary to exploit the shared knowledge, invest in the drivers, advanced productivity, innovation, access to new markets and operate as a collective. Competition, which is necessary for a cluster to survive and grow, can sometimes be the enemy especially in industries with a limited client base. Yet even well funded companies can struggle to advance all of these with their own internal resources.
In her article ‘The role and underpinning principles of clusters: exploring the crowded space of the Australian Innovation Ecosystem’ Dr Nicola Watts does a good job of unpicking the landscape of ‘peak bodies’ (mainly industry and advoacy bodies) and clusters, but also bringing in the myriad of other entities (from research bodies to academia) that are attempting to achieve similar aims.
It easy to see the reason for confusion when she quotes the definition of ‘Clusters’ by Ifor Ffowcs-Williams, one of the world’s most influential cluster practitioners, “clusters are an umbrella concept. With variations in usage across industries and across geography, and variations between academics, public agencies and private sector groups, ‘clusters’ are not a precisely defined term. At its simplest level, a cluster is a group of businesses that are operating in the same sector and are in close geographical proximity to each other. A cluster may also have a range of support organisations such as trade associations, chambers of commerce, technical and training institutes, government agencies, universities and schools and Cooperatives.”
Taking his and Porter’s (the grandfather of the concept) learnings further she points to the Smart Specialisation (S3) process in Europe as an ambitious experimental example of tackling Clusters in a different way using a combination of top-down (normally policy) coupled with bottom-up approaches to innovation aided through the transfer of power and decision making. This thinking is not unique to Europe with other regions further harnessing ‘active involvement across the quadruple helix of industry, researchers, government and community’.
Considering the wide range of definitions and overlap on Clustering as a term, Dr Watts share her thinking on 7 principles that underpin clustering.
- Commitment to act
I agree with her points that “the agility to act, adapt and pivot underpins successful clusters”, as well as the more elusive human element of trust and social capital. Regardless of policy the real glue remains human. Dr. Watts includes solid examples of the type relationships the wide variety of other entities can have with Clustering. This demonstrates the role of relationships with other actors in the formation and successful deployment of a clustering strategy.
Lessons for Ireland
Ireland also has a similarly wide spread selection of ‘peak bodies’ and top down traditional policy making. This article generates room for thought on our own Clustering performance:
- Improved shared awareness on the power & potential of clustering
- How to harness the collective power of the various actors in an ecosystem
- Increase ‘bottom up’ decision making and flexibility on cluster formationation
- Focus on communication and building of trust
The potential of what successful clustering can offer is clear. As the road can be difficult, old thinking and chasing shrinking customer bases with intense competition will not realise the rewards that a global economy can offer. Like any new business approach clustering could falter on early failures to address fundamental issues and require a systematic approach. The clear message is the collective is more powerful than the individual.
You can read the entire article by Dr Nicola Watts on LinkedIn