By Ifor Ffowcs-Williams at the 14th TCI Global Conference, Auckland, 2010

1. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
1
TCI Auckland conference
Ifor Ffowcs-Williams
Cluster Navigators Ltd
29 November 2011
Cluster Development
in 12 Steps
1. Introducing a process for
starting a clustering
initiative
2. For renewal, revitalisation
of a current clustering
initiative
Cluster Development
in 12 Steps
Step 1 Cluster development
A centre stage strategy, rather than
‘another project’
A comprehensive framework for a range of
economic development agendas, including:
• Skills, training; workforce development
• SME development; New business start-ups
• Investment attraction; migrant attraction
• Export development, internationalisation
• Rural, community development;
• Incubators; Industry/Technology Parks…
Step 2 Identifying, prioritising
clusters
Segmenting the local economy
• The majority of jobs and businesses in
every local economy are the same:
• Restaurants, retail, health care, house
building, vehicle repair…
• In general around one third differ:
• The traded sector
• Firms in this sector drive the local
economy, pull in the wealth

2. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Step 3 Initial cluster analysis
Building the base
Two thrusts:
• Initial competitiveness diagnosis,
fact based, understanding cluster’s
current situation: structure, scale,
opportunities, constraints, culture …
• Establishing platform for action,
Introducing the process; motivating key
stakeholders to participate; identifying
potential leaders ...
Cluster analysis
Developing a shared understanding across
the cluster on competitiveness
It takes time to get:
1. The right people on the bus, in the
right seats
2. The wrong people off the bus
Cluster Leadership Bus
Forming the Leadership Group,
the cluster’s Governance

3. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Step 5. The preferred future
The Vision
Building on the cluster’s current
competitive position … with a challenge,
a s t r e t c h factor
Step 6
Identify stepping stones
• Looking back
from the future
…Back casting
• Not a
continuation of
the present …
Forecasting
1st
Generation
Initiatives
2nd
Generation
Initiatives
Easy, quick Complex, long term
Strategic
Tactical
Step 7: Short term, tactical agenda
Immediate projects that demonstrate
the value of collaboration
Project implementation
Moving quickly into action
• Build teams around the priority action
projects
• CATs…Cluster Action Teams
• Teams work best if members select
themselves
• And self-destruct on task completion

4. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Step 8: Take time in formalising the
cluster’s structure
• Firms, especially SMEs, want
early benefits
• Not lengthy discussions on
structure
• Can take time for:
• The cluster’s boundaries to emerge
• The cluster’s Leadership Group to
be identified
Step 9 In-depth analysis,
benchmarking
Fact based, outward focussed analysis
• Fundamentally understanding the cluster’s
competitive position, the local
specialisation
• Benchmarking v. reference clusters
Benchmarking visits
Example: Norway’s Mountain
Tourism cluster visit to Banff, Canada
• Benchmarking visits provide a
collaborative learning opportunity
• Builds connections, trust, social
capital amongst the travellers
• B2B links often develop during a
visit
• Visits can provide important
motivating data shocks

5. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Step 10: Long-term strategic agenda
Establishing a portfolio of initiatives
that could include:
• Market development, exporting, cluster
brand
• Training, up skilling
• Technology/R&D; test beds
• SME development: incubator, equity $...
• Developing local connections
• FDI & talent attraction….
Step 11 Linking the cluster
Building on a solid understanding
of the cluster’s strengths
Three levels of leverage:
1. With other regional clusters
2. Nationally, with related clusters
3. Internationally
• Fostering specialisation between clusters
• Building B2B and academic links
A portfolio of clustering initiatives
Gävle, Sweden’s Cluster suitcase
The Regional
Innovation System

6. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Step 12 Review, evaluation
36 months after launch
A health check with two dimensions:
• Clustering process impact
• Is the competitivness of the cluster
being upgraded?
Upgrading a cluster’s competitiveness
12 Step process design principles
1. Change from the status quo never comes
easy
2. Successful transformation needs to be
driven by a coalition of volunteers
3. Real transformation takes time
4. Short term wins build the credibility to
address bigger problems
Cluster development
Drawing on both sides of the brain
Logic
Details
Safe
Feelings
Big picture
Risk taking
• Open to all; consensus building
• Depoliticise decision-making; gather
the facts
• Not the ‘wisdom of the elite’
• But the ‘wisdom of the crowd’
• Capture hearts as well as minds
Cluster strategy workshops
A mutual learning process
Cluster Development
Results from an interactive workshop
TCI Delhi, December 2010
REALLY UGLY PRACTICES
IN CLUSTER DEVELOPMENT
1. EXCESSIVE GOVERNMENT CONTROL
2. OVER EMPHASIS: PLANNING & REPORTS
3. UNDER EMPHASIS: ACTION & RESULTS !
Source: TCI Delhi Workshop

7. TCI Conference, Auckland, NZ
Cluster Development in 12 Steps
© Cluster Navigators Ltd 2011
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Bad practices in cluster development
1. Inappropriate government incentives
2. Limited inclusiveness
3. Failure to find, map common ground
4. Facilitators lose neutrality
Source: TCI Delhi Workshop
Good practices in cluster development
1. Industry led
2. Clear articulation of public service needs
3. Making connections, bridging gaps
4. Full Triple Helix engagement
5. Emergence of natural leaders
6. Professional cluster facilitation
management
7. Cluster platform for cross-sectoral
cooperation
Source: TCI Delhi Workshop
Advice to a new cluster facilitator
1. Listen!
2. Build relationships; make connections
3. Have Passion
4. Start with what requires low trust
5. Energise others; Find the cluster champion(s) that
others trust
6. Analyse and initiate; Identify goals
7. Create benefits buy-in; Get things done
8. Be patient; Be transparent; Keep smiling
9. Long term orientation to goals strategies
Source: TCI Delhi Workshop
Lars Albaek
Bornholm, Denmark
‘It is easier to
cooperate in
smaller
groups of firms’
Mats Williams
Center for Strategy Competitiveness
Stockholm School of Economics
‘Find the
BIG QUESTIONS
that are common’
Ifor Ffowcs-Williams
CEO, Cluster Navigators Ltd
22 Examiner St, Nelson 7010
New Zealand
E4@clusternavigators.com
+ 64 3 548 0606
www.clusternavigators.com
www.linkedin.com/in/clusterdevelopment
Skype: ‘clusterguy’
Blog: www.e4oncompetitiveness.com