Cluster 101 for Northland Interactive Workshop

iforThis workshop by Ifor Ffowcs-Williams was hosted by Northland Inc on 15 July at Barge Park in Whangarei.

Ifor is an extremely experienced facilitator of business clusters and founder of Cluster Navigators. Based in Nelson, he consults and conducts training all round the world concerning the development of clusters.

A Brief Summary:

Ifor is a great advocate of moving from isolation into teamwork. This is what clustering is all about – collaboration for the sake of empowerment. He gave great examples from round the world of how groups coming together were able to leverage their commonality to great advantage to the local economy – providing employment where there was great lack and poverty. In many cases businesses that on one level were competitors could still find synergies. He calls this co-petition (as opposed to competition). Wonderful!

He talked about studies that have been recently carried out in Northland – theTai Tokerau Regional Growth Study Report and The Tai Tokerau Maori Growth Strategy: ‘He Tangata, He Whenua, He Oranga – both in depth studies, but his impression seemed to be that while they captured the situation well, the failed to reach conclusions concerning real local action that we can take. Their focus was too much on needing support from Government. This is where clusters come into their own – as bottom up rather than top-down initiatives. I see the similarity to the Health Promotion model where the outcomes are exponentially better if community initiated and locally contextualised.

His experience is that all the reports in the world do nothing until local groups start to form that share “tacit information” – that is knowledge that can only be gained and shared by face to face interaction and knowledge that is often native to a place.

He pointed out that of all the OECD countries we are the most centralised. While this may have been more appropriate in the past when NZ had a more uniform economy it is not really appropriate now where we have such diverse local specialisations emerging. Local clustering is likely therefore less likely to obtain as much central government support (i.e. financial help)  as in other countries but this shouldn’t stop us either.

Ifor took us though small group break-outs to identify what our Northland specialities are in order to see the potential for clustering – things like dairying, horticulture (kumara, kiwifruit, citrus, tamarillo etc), honey, fisheries, timber, boat building and repairs etc. The next step is to develop what he called “deep specialisation” – gaining a full knowledge of your product top to bottom, from production to finished goods to other alternative uses – implying partnership with research and education and complimentary types of processes and knowledge. I can see how this deep knowledge, when centred in a location, brings an intangible “something” that goes way beyond what intellectual property can protect.

As well as emphasising “tacit knowledge” he also emphasised the importance of trust in relationships. In a way this is something that can only grow over time, and in face to face interaction. Cluster interaction has a natural way of filtering out the “bad apples” and bringing unethical practices into line.

Ifor then took us through the process of cluster development. The more naturally and organically the development happens the better. He warned against formalising too quickly. It was important to identify the key stakeholders, as all may have input into the cluster. We used a diagram like this to identify the key people and companies in particular sectors:

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Next we discussed the vital role of the cluster manager. We looked at the skills and qualities needed, primarily the ability to listen and engage and facilitate – not doing too much but bringing people in gently – one at a time preferably, building relationships and trust. The cluster manager should also have a broad skill and knowledge base and should be neutral and able to keep confidences. They need not be a specialist in the particular industry but be able to pick it up quickly.

He breaks the cluster process into 12 steps as follows:

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Ifor pointed us to a free download from his website of his Cluster Development and Management Manual which includes a full analysis of the the process above plus much more – a great resource for further study. He also has his full book Cluster Development: The Go-To Handbook
– Building Competitiveness through Smart Specialisation available for sale on the website.

How does this work with Localisation?

I liked how Ifor recognised the engagement required across sectors and across interest groups. It’s really important that we don’t just stand back and throw stones at each other just because we are coming from some diverse and sometimes polarised perspectives. It is only through patiently linking together that we begin to see others’ perspectives better and come to a place of a better working understanding, and therefore better outcomes for our communities. This was evidenced on the day by the diverse interests represented.

While his focus seemed to be primarily on a global context – developing specialisations for the global market – he did seem to also grasp the importance of a resilient local economy/community. Where localisation can offer much to economic thinking is in the concepts of stopping leakage of wealth from a region. This was considered in terms of taking raw materials to finished goods, but the other aspects of leakage reduction were not really discussed or considered.

While from his perspective it seemed to me that the future is going to entirely global-driven, I would argue that global-scale specialisation is ultimately unsustainable – environmentally and socially – and we must build diverse local economies for food security, ecological sustainability and regional resilience, as local will eventually become the dominant economic model again for most essentials.

I would also argue that wealth ultimately does not come from trade – it comes from the soil, the sea, our waterways, the energy of the sun and is in our people. This is where our true wealth lies and we must do all we can to maintain and enhance these for the wellbeing of future generations.

However for now the local and global will sit together and can be complimentary – and the wisdom of clusters is highly relevant to both.

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