The Good Oil by Rod Brown *
Clustering concepts are gradually becoming appreciated in Australia. It’s sometimes misinterpreted as trying to recreate Silicon Valley – but it’s essentially a powerful engagement process that draws on the collaborative instincts of people. The focal point is usually a development agenda that builds on the competitive advantages held by a locality and/or industry.
Many accounts of clusters skirt around the fundamental role of the civic entrepreneur, the business owners and managers who bring their vision and commitment into the arena.
Dr Alec Hansen, President of the Economic Competitiveness Group Inc, a leading cluster practitioner group in the USA, says that folks looking to launch a cluster process do so with some trepidation. They read about private sector leadership, but then find themselves organising meetings with only a handful of private sector participants, or propping up private sector leaders as chairs of committees. Familiar story?
But there are exceptions, and Dr Hansen provides the following examples.
Robert Mondavi is the founder of the Napa Valley wine cluster in California. His family owned thousands of acres but were producing what could best be described as table wines in an industry dominated by ‘jug wines’.
In 1962, Mondavi was inspired by the European wine makers and returned home with a vision. But it wasn’t matched by his brother, so Robert branched out to combine European craft and tradition with the latest US technology, management, and marketing know how. He changed the relation between growers and producers, and introduced educational programs for growers.
He was also devoted to R&D. His open and inclusive style was actually motivated by his self interest. He couldn’t market a premier product unless growers of grapes, suppliers of barrels, label producers, agronomists, in short, the entire cluster surrounding him was operating at his level.
His techniques spread to other winemakers, and in 1976 Napa wines swept the top rankings at Europe’s premier wine tasting competition in Paris.
Fred Terman arrived in Palo Alto in the 1950s. It was another ‘random’ catalytic event.
He was Dean of Stanford University’s Department of Electrical Engineering, and had a vision of close industry/university partnerships. It had already encouraged several spin offs, including William Packard and David Hewlett, but the Valley had not yet taken off.
The big break came when Terman convinced Dr William Shockley, the inventor of the electronic transistor, to come to Palo Alto, rather than go to MIT (Boston), where the leading electronics researchers were based.
In 1956, Shockley Transistor Laboratory was established in the new Stanford Industrial Park, with a brains trust of young engineers from MIT and other East Coast universities. But eight of the brightest were frustrated and alienated by Shockley’s caustic personality, and left to form the Fairchild Semiconductor Corporation.
More than 70 high tech companies, such as Intel and Motorola, are now descendants of Fairchild. Alan Hald cofounded MicroAge, a Fortune 500 company based in Phoenix, Arizona. It has grown from a single location in 1976 to a systems integration powerhouse with turnover of $4 billion.
However Hald still felt that Arizona had become a branch plant State, attracting mainly low wage, low skill jobs. So he became involved in cluster agendas, and eventually became co chair of the Governor’s Strategic Partnership for Economic Development (GSPED).
He has served in this position for ten years, helping shape the State’s responses to education issues, the New Economy, and the challenges of developing 11 industry clusters.
When asked why, he said, “There is a certain part of me that wants to ‘do good’ – I derive satisfaction from what we’re accomplishing here. But at every one of these events I also find something that helps my company – an idea, a new contact, a possible connection. That’s what keeps me going.” Ray Gilmartin is the CEO of the multinational Merck & Co.
At a recent conference in Washington, the issue of the motives of civic entrepreneurs arose, and he took the microphone and explained, “I enjoy this work, but I don’t do it out of charity. I do it because I think it will profit Merck.
“I used to pay attention to my accounting staff when they told me that the most cost effective place to locate our research laboratories is right next to our headquarters in Whitehouse Station, New Jersey.
“However, since learning about clusters of innovation, I am now building new research labs in San Diego and Southern Connecticut, so that my researchers can take full advantage of the climate of innovation in those regions.”
Alec Hansen believes that there are potentially dozens of Robert Mondavis and Fred Termans in any given region.
He is so correct, and I can’t wait to tell him about some of Australia’s clusters in wine, food, film and TV, tourism and mining engineering – and the roles of Leo Buring, George Gramp, Margaret Lehmann, Maggie Beer, Graeme Kennedy, Norm Spencer, Bruce Small, John Monash and more who have (unknowingly) facilitated the development of clusters.
These types of people play a critical entrepreneurial and/or catalytic role. How many times do we see initiatives lose momentum just because ‘it couldn’t be organised’ or there was nobody to take the lead. Sometimes these people are in the wings, just waiting to be encouraged. That’s where a cluster based approach can act as the catalyst.
Starting a cluster agenda
Alec Hansen correctly says that for every cluster development that transforms a region, there are an equal number that lead nowhere. The difference often lies in the role in which private business leaders have been cast.
Cluster practitioners therefore use cluster facilitation methods to craft events and structures to convince industry leaders to take the plunge.
There are cluster practitioners operating in Australia, and a few Aussie experts are now working in the USA. The good news for readers is that Cairns is hosting the annual world conference of cluster expertise on 7-11 October.
If this subject intrigues you, visit the conference website which can be found at www.competitiveness.org and invite Alec Hansen for a chat en route to Cairns (ahansen@ecgroup.com).
We are busily linking world cluster experts with Australian groups right now. So contact me if you’re interested.
Declaration – I am also a member of the clustering fraternity because it makes so much uncommon common sense.
* Rod Brown’s Canberra based consultancy group, Australian Project Developments Pty Ltd, specialises in industry/regional development and government liaison. For further information telephone (02) 6231 7261 or email apd@orac.net.au
