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Haydn Shaughnessy

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March 29, 2011, Haydn Shaughnessy:

Clusters Not Relevant to Innovation

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It’s going to break many hearts around Europe where innovation clusters have been strongly advocated at all levels of policy making but a recent Norwegian study found that a firms international connections were far more important than local clusters. That means the future for many regions and companies lies in building those international pipelines (partnerships, ideas, possibilities) rather than relying on local cluster subsidies.

Of course clusters remain relevant to support an industry – it would be interesting to know how often clusters are effective when a sector is in decline as opposed to the growth potential of clustering.

As I picked up on this story at Canada’s Globe and Mail – via my LinkedIn page – I will let them tell it. Suffice it to say in conclusion though that I think firms should be seeking to extend their connectivity, build more international connections and live more in the Cloud.

“The analysis of 1,604 companies in the five largest Norwegian cities found that regional and national clusters are “irrelevant for innovation.” On the contrary, international cooperation or “global pipelines” were identified as the main drivers of innovation.

“We found interaction through pipelines was as much as four times more powerful than local interaction when it came to innovation,” said Rune Dahl Fitjar of the International Research Institute of Stavanger, who wrote the report with Andres Rodriguez-Pose of the London School of Economics. “The idea about global pipelines has become quite prominent in research over the past few years but you don’t see much of a policy impact yet. We are mainly relying on cluster policies still. Certainly that’s true in most of Europe.”

GO to the article to learn more about how just one international connection increases your productivity innovation potential.

By Haydn Shaughnessy

About the author

Haydn Shaughnessy, senior editor, has worked at the epicentre of innovation in a 25 year career spanning journalism, consultancy and research management. He began his technology career as a manager of application research in broadband, mobile and downstream satellite services and has maintained a continuous production of analysis and intellectual material around innovation since then, having written on Wired Cities, Fibre to the Home, Future Search Engines, and international collaboration. He is an emerging thought leader in systemic innovation building on his PhD research in large scale economic transformations. He was previously a parter at The Conversation Group, the leading global social technologies consultancy where he helped companies such as Alcatel Lucent, Volvo, General Motors, Symbian Foundation, and Unilever adapt to the current transformations in the global digital economy. He has written for the Wall St Journal, Forbes.com, Harvard Business Review, and many newspapers as well as making documentaries for the BBC, Channel 4 and RTE. His consultancy and research work encompasses changing enterprise structures, new business models and long-term trends in attitudes. He is in demand as a speaker on the impact of changing attitudes on business and on gearing innovation to new consumer requirements. More information about Haydn can be found at fiveideasthatmatter.com

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http://tedshelton.blogspot.com tshelton

But perhaps the study is making the wrong conclusion from their data — perhaps all they have discovered is that their own clusters are inadequate. What is the critical tipping point when a cluster actually adds value to its participants? Until then it is the connection to OTHER CLUSTERS that will be a greater determinant of successful innovation.

Haydn Shaughnessy

that’s possible Ted – one of the authors looked at the wider arena of European clusters a couple of years back and concluded that clusters were important without being critical and their effectiveness waned over time: http://ideas.repec.org/p/imd/wpaper/wp2010-15.html. I did some analysis of World Economic Forum data on clusters and found that the decisive factor in economic performance might be the intensity of local competition. Neither of these says exactly what the report says – that clusters are not the most important element of innovation but they do point to the need to be more circumspect about clusters as an economic development policy – above al clusters will get plenty of support from companies that want public funds so there will be no shortage of advocates for them!

Judith

Hi Hydn,

very interesting contribution. However, to fully understand their findings it would be helpful to have a look at the report. Is it available online?

Haydn Shaughnessy

Yes – here is the link Judith: http://repec.imdea.org/pdf/imdea-wp2011-05.pdf

http://www.youtube.com/managingcreativity managing-creativity.com

The international element is all about intellectual cross-pollination. But the clusters are necessary to execute and commercialize. So both are important. It’s a bit like the film industry – the ideas can come from around the world but making it into a Hollywood blockbuster requires competencies which are concentrated in LA.