Industry clusters would benefit R.I., neighbors

PBN Staff

04/05/2010

I recently heard U.S. Small Business Administration Administrator Karen Mills keynote a panel session about regional innovation clusters at the Washington, D.C.-area energy conference. She described her efforts to link, leverage and align the federal government’s agencies behind this economic-development approach, which she wrote about in her April 2008 Brookings Institution report, “Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies.”
I wrote about Mills’ cluster focus in Providence Business News (“SBA nominee Mills likely to favor clusters,” March 2, 2009), and noted that the Obama administration’s push for innovation clusters as a core economic-development theory could benefit Rhode Island if it were to link, leverage and align its resources in a similar fashion.
Industry clusters are measured by the relative regional intensity of a sector’s ecosystem – number, size and diversity of businesses, and related institutions and organizations within that sector. In addition to the principal cluster actors (producers), the ecosystem includes innovation, entrepreneurship and economic-development organizations: universities, investors, incubators, technology/trade councils, economic and community-development organizations, professional services and specialized service firms.
Clusters typically reference vertical markets (e.g. medical devices), though horizontal markets (defense, manufacturing) have cluster characteristics and benefits as well.
And there are several cluster characteristics beyond vertical-horizontal – the paper industry is a mature cluster, whereas clean technology is a growth/innovative cluster. There are sustaining clusters, emerging clusters and potential clusters as well.
A cluster is defined by the existence of an ecosystem with sufficient relative density – concentration of companies and related institutions – versus comparable states/regions. Emerging and potential clusters have elements of the cluster but perhaps not the quantity and/or depth to consider them clusters that sustain a local or regional economy. Regions looking to promote the development of emerging or potential clusters can do the following to accelerate cluster development:
• Inventory cluster assets. In New England, three of six states (Maine, Massachusetts and Connecticut) have taken a cluster-informed inventory of their assets, such as companies, work force, universities and early-stage investors. Rhode Island has doubtless done tangential work but would benefit from a formal cluster study.
• Activate and grow the cluster. An inactive cluster is one whose elements are less connected. Activating or accelerating one is a matter of making and sustaining connections through live events, such as conferences and seminars that engage all players in the cluster, as well as relationship management powered by the Web, newsletters, social media and mobile devices.
Trade and/or technology associations can have a central role in cluster activation and development. Regional economic-development organizations and institutions are also important actors. Professional service providers – banks, law and accounting firms – provide know-how and services, and are often sponsors and supporters of cluster events. Early stage equity funds (whether from angel groups or venture capitalists) are more often sector-specific and can activate the small-business side of the innovation spectrum.
Increase the linkages between cluster elements, so goes the theory, and you increase innovation and productivity, and so competitiveness, and drive regional economies forward with high-wage jobs and robust economic activity. So cluster development, it follows, is a matter of increasing the frequency, content and context of interactions. The thing about clusters is that they really don’t care about political borders. Many clusters’ strengths and weaknesses are shared by regions with a common work force and a common set of business and educational assets. So, while it is necessary and appropriate that governors focus on economic-development strategies that are “inside the borders,” they should be cognizant of the shared opportunity for each state in cultivating clusters that straddle borders and regions.
All of northern New England and upstate New York, for example, share a common set of challenges and opportunities stemming from their industrial heritage (paper and textiles) and natural rural assets (wood, wind, solar and water). The recently funded Northern Borders Regional Commission is one multistate initiative designed to focus attention on ways to catalyze growth in the forested regions of those four states.
Regions must mirror, and so take advantage of, the federal government’s focus on innovation clusters; those that do stand to benefit from increased federal focus on states that are cluster-ready. Linking, leveraging and aligning our regional assets will only serve to help our greater New England, and perhaps the entire Northeast corridor, to be a more competitive innovation and economic force delivering jobs and GDP growth that this region and country very much need right now. •

Michael Gurau is president of Clear Innovation Partners in Freeport, Maine. He can be reached at
mgurau@clearinnovationpartners.com.

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