Monday, August 23, 2004

Clusters Theory: Is Geography Relevant? 

I know that most people who read this weblog are involved in some way in R&D. I then assume that you have heard about the Clusters Theory, which is now supporting a large part of the R&D funding structures in Western countries.

An oversimplification of clusters:
A region needs basic components to become internationally competitive in a given industry: internal demand, supporting industries, favorable conditions and internal rivalry. One of the most spectacular examples of a cluster is the IT industry in Silicon Valley. Governments see clusters as the best strategy for creating prosperity in a region and are trying to supply to 2 basic components through R&D : supporting industries and favorable conditions.

A cluster is about creating a critical mass for an industry in a region, which explains the popularity of business incubators and all sorts of regional associations. Good first steps! We are acting on the geographical limitations. There is however a growing debate as to determine if clusters can be constructed or if they just happen by accident. I don’t have an answer for that but I know that if clusters can be made, it takes many years (decades?) to do so.

The question I want to ask today is: should we focus on the geographical concentration of an industry or on creating strong links among many competitors irrespectively of their location? In New Brunswick for instance, we have finally understood that it’s better for the NB e-learning industry to cooperate in order to become more competitive externally. This is indeed an interesting first step. But wouldn’t the NB e-learning industry be better off to also start to cooperate with foreign competitors in order to become even more competitive? A cluster doesn’t necessarily have to be geographically bound. I am not fond of frontiers anyway. I don’t care about New Brunswickers, Canadians or Americans. But I do care about the people who live in these places. Walls exist around countries too.

I don't think that clusters can be made by the powers that be. I think that clusters, like communities, have to grow organically. Funding can help to create a cluster, but I'm not sure if it can actually create one. In working with the NB elearning R&D community, I found that there was as much, if not more, interest outside the province, especially PEI and Nova Scotia. I also found that the community grew in its own directions, not where I wanted it to go. These were not the initial intentions.

Effective clusters seem to exhibit emergent properties. Silicon Valley is the result of many relationships between individuals and organizations like UC Berkeley and Xerox PARC. Forgive the cliché, but it seems to be greater than the sum of its parts.

For New Brunswick, I think that we need to cultivate fertile soil, but avoid any preconceived notions on what will actually grow. We may be surprised.
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