Recipes for the cluster stew

It is a given that clusters are a significant driver of high-tech growth. So it is curious that to date they have not featured as a specific focus of the Lisbon Strategy.

That is about to change. The European Commission is preparing a policy statement on clusters that is due to be published in June.

“When we started to discuss clusters at a European level two years ago, it was considered unusual,” said Reinhard Büscher, Head of the Support for Innovation Unit, DG Enterprise. “Then they didn’t make it to the top ten issues of innovation policy of the Commission. But following discussions with Member States now clusters are in the top nine of the innovation policy agenda.”

Speaking in Brussels on 16 April at a high-level symposium, “Successful Innovation Clusters: How to make them happen”, organised by Science|Business and sponsored by Microsoft, Büscher said there is now a “strong mandate” for the development of an overarching cluster policy. The recent Spring Council meeting called for more work to promote world class clusters and regional development through clusters. Furthermore, France has indicated that it will make innovation one of the central themes of its upcoming EU Presidency and, said Büscher, “We have been encouraged to prepare for further discussions at Council level.”

A conference devoted to the theme of innovation and clusters is to be held at Sophia Antipolis, one of Europe’s leading and longest-established clusters, in November.

In the meantime, the symposium, held in Brussels on 16 April, weighed the views of leading academics, practitioners and policy makers to come up with policy recommendations to inform the debate and feed into possible European Union or Member State actions.

Although the EU has no central policy on clusters, it has, over several years, studied the factors that prompt their formation and the role they play in economic development. Building on this research the Commission recently established the European Cluster Observatory, a database to inform policy makers, practitioners and researchers on the broad range of national and regional cluster policies in place across the EU and the relative strengths of clusters in Europe.

According to the European Cluster Observatory there are at least 70 national cluster policies across the EU. Layered on top are hundreds of regional policies that often pit neighbour against neighbour, or put regional ambitions before national objectives.

For Büscher, one positive conclusion of the proliferation of national and regional policies is that there is plenty of money available to support cluster initiatives. “Our pre-occupation is to make good use of this money in support of innovation,” he said.

The inspiration behind an EU-level policy is to promote excellence, enabling clusters to look beyond regional or national boundaries, and become significant globally.

Given this, Büscher told delegates that one of the next moves in developing the EU’s policy may be to set up an external group of experts to identify the scope for potential cooperation in support of clusters in the direction of world-class excellence.

The symposium debated the merits (or otherwise) of the unending stream of initiatives – across Europe and elsewhere – to foster Innovation Clusters. As Büscher commented, “It is indeed a cluster stew: nobody knows what exactly is in it. Clusters are supported for many different reasons and they all have their own rationale, whether it is the support of regional development, the valorisation of research or promoting SMEs.”

The overall recipe may be obscure, but it is possible to pull out key ingredients – for which read policy actions.

Delegates mapped these actions across five areas: universities; knowledge transfer; global pipelines; small and medium enterprises; and regions, to generate a primer for policy formulation. The aim was to single out the most important and potent measures in the cluster policy stew, and add the spice that would heighten their individual contributions.

A.  The University Sector: Universities are acknowledged as the engines of some of the world’s leading clusters. How can all Europe’s universities develop the same motive force? Here are some suggestions to help.

1. Create multidisciplinary universities. While there is a growing acknowledgement that different disciplines need to mix and communicate, inertia or unsuitable buildings prevent this happening.

2. Enlist undergraduate and postgraduate students to contribute through providing internships and grants to help them spend time with companies, enabling both the students and academic staff who supervise them to build links with industry.

3. Make universities compete for funding. Most are allocated public money under old-fashioned schemes that do not consider the standard of research. A possible model is the UK’s system of assessing research excellence in different disciplines and funding accordingly. The European Research Council is trying to set a similar example in its system for awarding grants.

4. Consider the use of tuition fees as a route to making universities benchmark themselves and ensure the courses they offer are what people want to study.

5. Promote philanthropy as a route for European universities to raise funding. Most do not have strong alumni organisations, as is the case in the US. Universities need to get over the embarrassment of asking wealthy former students for funding.

6. Universities need to be set bold goals – both in terms of technology, but also in relation to the contribution they can make to solving social problems.

7. Universities must be places where serendipity can happen. This goes beyond an interdisciplinary approach to the sciences, mixing chemists and virologists, say; it is about designing campuses so that scientists, artists, economists and business students can interact. This action would also involve setting problems for such heterogeneous groups to discuss together, to try and spark serendipity.

8. Incentive structures should be changed so that academics get recognition and advancement for working with industry and not just for publishing papers.

B.  Knowledge Transfer: If you don’t have knowledge transfer you won’t have a cluster. Universities are the source of much of Europe’s knowledge. But how can this be tapped to feed cluster development, and how can companies be encouraged to share the knowledge and expertise they generate?

1. The process of knowledge transfer is different in different industrial sectors. The clusters policy needs to articulate and exemplify specific approaches to transferring knowledge sector by sector.

2. Knowledge transfer needs to be professionalised, not left as an ad hoc process.

3. Use cluster policy to encourage entrepreneurship as a channel for knowledge transfer.

4. Knowledge transfer also takes place from company to company. Policy must recognise and support this, by encouraging companies to discuss their respective technologies in neutral fora so they can understand how one technology complements another.

5. At one level knowledge transfer implies knowledge creation: the joint endeavour adds to what was there before. This requires policy to support a collective approach, and not just a one-way channel.

6. Ensure that the imperative on universities to patent research for technology commercialisation does not become a barrier to sharing knowledge.

7. Attempt to create metrics for measuring knowledge transfer.

C.  Global Pipelines: current cluster policy operates on a national or regional level. How can an overarching EU policy shift perspectives and encourage clusters to focus on the global horizon?

1. Cluster policy should recognise the need for global sourcing of talent.

2. Set up “Cluster Clubs” to provide a single source of expertise and access to global markets. For example, the Cambridge cluster has Chinese Business Services to help with access to the Chinese market.

3. Address the cultural issue of getting people to think globally.

4. Entice global companies to embed themselves in the local milieu.

5. Carry out foresight exercises to pull in information on upcoming developments from around the world.

6. Address the contribution that inward investment policy can make to building global pipelines.

7. Create policies that help people to go abroad, to bring people in and to collaborate with external partners.

D.  Small and Medium Enterprises: Europe’s high tech start-ups are the fountainhead of innovation clusters. The policy challenge here is to promote their formation and support their development without undermining their competitiveness.

Help SMEs get access to government procurement contracts for both high tech products and R&D.

1. Give SMEs access to education, training and consultancy through clusters.

2. Outlaw non-competition contracts, which exist in some parts of Europe (whether legally enforceable or not) because these inhibit the flow of expertise.

3. Reduce the costs and time taken to form a company.

4. Encourage venture capital culture to change so VCs become more interested in start-ups and seed funding.

5. Bring forward the European Small Business Act.

E.  Regions: Much of the money potentially available for cluster formation is channelled through regional development policy. A unified European policy should set out to inspire regions to aim for global excellence.

1. Recognise that regions, and clusters, can cut across national and regional boundaries and ensure they can be funded and supported as single entities.
2. Reduce bureaucracy for regional development agencies applying for European support.

This article is based on a report written by Science|Business to be published on 12 June in Microsoft Futures Magazine.