Build a cluster organization in 8 steps — Intro

A series of practical guides and explorations on how to build a cluster organization in eight steps. Overview and a brief introduction to the series and how it came to be.

by Wadim Baslow

This is the introduction to a series of articles on cluster development.

Derek Light, Linkedin comment on Designing business models, value propositions & sustainable funding for clusters

How to build a cluster organization in 8 steps | overview

Fundamentals

  1. Understand the cluster — is it a cluster?
  2. Know people, needs, motivations and existing assets — the who
  3. Define what you want to achieve — the why
  4. Make a plan how to get there — the how and what

Building

  1. Create governance and organizational model — how do we organize?
  2. Finance the cluster organization — how do we finance the cluster organization?
  3. Communicate the cluster organization’s value-add and activities — “sharing is caring”
  4. Measure and learn — what works and what doesn’t

Plenty of resources exist on clusters, cluster development and cluster organizations. The first time I got in touch with the topic was when I started working together with Nicolai S. Rottbøll. He was a key figure in setting up and later managing the Copenhagen Cleantech Cluster — now called CLEAN. Nicolai went on to share his practical experiences through training and advisory. My learning journey around cluster development meant the encounter with a field that appeared to be heavy and difficult to access — sometimes very academic and sometimes too bureaucratic.

In the next few months, I will share a series of articles on how to build a cluster organization in eight steps. The goal is to keep it simple and basic, pragmatic and practical, as well as explore fields that might benefit from the cluster development field or vice versa might add new perspectives to cluster organizations, their managers and those who drive cluster development.

My hope is to help to navigate the process of setting up a cluster organization and create the basis for conversations with cluster practitioners and those interested in the topic.

This article marks the start of the series. As I progress, I will continuously edit and revise it.

Introducing the eight steps on building cluster organizations

1. Understand the cluster — is it a cluster?

Nothing comes from nothing. Respectively, a cluster organization evolves from an existing cluster. The first step of building a cluster organization is thus to check: is it a cluster? This entails understanding what a cluster is and getting to know the cluster through research drawing for example from market and sector analyses. I also believe this step might benefit from system thinking and its respective tools.

If it is a cluster, the next question is whether it needs a cluster organization. It can benefit from one where an existing cluster and network of organizations either falls short in performance (something could be better) or showcases gaps (not yet performed benefits).

Eoin Byrne, Cluster Manager at Cyber Ireland, wrote an excellent article, I believe, sits nicely with this first step. Initial Cluster Analysis

2. Know people, needs, motivations and existing assets — the who

A cluster organization is a multi-stakeholder project involving many hands and minds. Typically, a cluster organization brings together businesses, governments and academia. Knowing what motivates them, what is challenging, what capabilities and goals they have, is the very basis for pretty much everything else.

The second step is about reaching out, understanding better, mobilizing and a critical point to create momentum.

Eoin also shared a helpful article from his work that fits well here, too. Identifying the Need — Opportunities and Challenges for Industry

3. Define what you want to achieve — the why

A deeper and better understanding of the challenges and needs, as well as existing assets and capabilities of the cluster as a whole and the actors within, provide the basis to define what the cluster organizations aspire to achieve. This basis is important, because it helps to stay clear of fluffy vision/mission formulations, and formulate statements instead that are rooted in the lived experiences of the cluster participants.

This is a collaborative step. The results must be shared and co-owned with the core group of people and organizations that are in it to shape the cluster organization together.

4. Make a plan how to get there — the how and what

Develop a guiding policy that informs how the cluster organizations intend and plan to implement a coherent set of actions. Both the guiding policy and the coherent actions must clearly link to the challenges, needs, and existing assets, as well as the vision.

5. Create governance and organizational model — how do we organize?

Cluster organizations are intermediaries. They are stewarding a process of collaboration. What model of collaboration works best in each cluster’s context depends on the answers to the initial four steps. It will most likely be a balancing act between bottom-up/top-down, decentral, and self-organized/centralized and tightly managed, horizontal/vertical steering mechanisms, infrastructures and components, and channels and transactions.

6. Finance the cluster organization — how do we finance the cluster organization?

The financing model of the cluster organization is tied to its value proposition, activities and services. The challenge of financing cluster organizations is often to set it on a stable, long-term footing beyond initial public grant funding, or any other single source of financing. The diversity of stakeholders in the cluster is a challenging aspect of cluster development. At the same time, it is one of the cluster organization’s core assets. Make use of it when developing a cluster business model.

7. Communicate the cluster organization’s value-add and activities

A marketeer ideally knows her/his company inside-out. What its mission is? What problem does it solve? How it solves the problem? How does the product work? etc. They must know everything to be able to market effectively. Honestly, I am not a pro in communication or marketing at all. The point of this step is that it is a result of the effort that went into getting the basics right.

8. Measure and learn — what works and what doesn’t

Talking of eight steps might create an impression of a linear process, but it is really not in practice. The eight steps here are meant as a rough guide. The process instead comprises continuous iteration and feedback loops. Yes, it is key to track key metrics of the cluster organization and the cluster in itself over a period of time.

More so, I believe, it is fundamental to establish mechanisms of learning as means to find out what works and what not, and as means to instill mutual learning across different actors, which is so fundamental to innovation. Development Evaluation is a domain that provides useful support.

History of the eight steps, bias and intention

Where is this coming from?

The eight steps stem from Nicolai’s practical experiences in cluster development, who used and uses these steps as a silver lining in his trainings on cluster development in more than 20 countries across Europe and other geographies. In some trainings, he partnered with Jacob Stoumann (then Oxford Research, now Proptech). I will lean on their framework and models, and training materials in this emerging series, and my own experience working with them.

Dear Jakob and Nicolai,
thanks again for a brilliant training course. I have attended many courses since I started my professional career 22 years ago. Some I have forgotten, some were really good and made an impact in the way I work. But these five weeks, and especially the two weeks spent in Copenhagen, have helped me see things differently in my cluster, and, I am tempted to say, in my professional life as a whole. I now see possibilities where I once saw constraints. And it’s thanks to you, not only for the knowledge and experience you have shared with us, but because you have had the intelligence to create a space of continuous dialogue and sharing that has allowed everyone in the room to learn from the others, you have made sharp comments when we were expressing real concerns, thus, at the moment they were more effective, and, in essence, you have shown a great ability to LISTEN and to put yourselves in our shoes (believe me, a not so frequent ability in training courses). Congratulations, I wish you every success. Take care and keep in touch ”- Veronica Buey Cieslak, Spanish deputy cluster manager attending our Cluster Manager Training, March 2017

The series on how to develop a cluster organization will draw

  1. from Nicolai’s work and experiences,
  2. how I worked with it and how I make sense of it, and
  3. my own background in sustainability as well as fields of interests/expertise such as collaborative governance, systems thinking, facilitation or social innovation.

Few notes on bias

I would like to work out in the open, which means I would like to supplement this introduction with a few notes on my bias towards cluster development:

  • My main interest in cluster development is collaboration. Collaborating with multiple and different types of organizations and people is a challenging and exciting endeavor. My perspective on cluster development is bottom-up and inclusive.
  • Clusters are often mentioned in conjunction with economic growth. This series will not contain much of it, because I am impelled to be more critical of growth, just for the sake of growth. It is my background in sustainability. Instead, I am more interested in bringing together diverse perspectives in the innovation process, and how to use it for sustainable development.
  • The series will most likely present little novel or original insights. It will read more like a remix bringing together different strings of concepts, ideas, experiences and practical tools.
  • The focus will be on practical aspects of cluster development.
  • I would like to learn from those who know more or have more experience. Perhaps this becomes a small wiki including various comments and suggestions.

The intention behind the series

Finally, allow me to disclose my intentions in writing this series over the next few months:

  • Contributing to close the perceived lack of practical guidance on building cluster organization beyond research and bureaucratic resources.
  • Contributing to the conversation and thereby connect and build relationships with cluster managers, those that shape clusters and cluster contexts, as well as those that are interested.
  • Explore connections between cluster development and other fields and geographies.
  • Learning from others.
  • Marketing. The team at Quercus Group has more than 10 years of experience working with cluster development. We have worked with clusters in two ways: 1. providing trainings, 2. Advisory on the single or all steps of the cluster development process.

Thank you,

Wadim

If you find this blog post helpful, or if you have any feedback, comments, suggestions or questions, I’d be glad to hear from you.

Write me an e-mail at wadim@quercus-group.com or connect on Linkedin.

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