What are Clusters?
Harvard Business School professor Michael Porter was the first to frame the idea of an economic cluster in works such as The Competitive Advantage of Nations and On Competition. Since that time, the details of what constitutes a cluster have been dissected by academics, and the term has probably been overused, but the basic notion remains useful: the competitive advantage found in a local community where shared knowledge and close relationships motivate companies to excel.
The idea of clustering for mutual economic advantage is probably as old as the first marketplace. Bringing buyers and sellers together in close proximity was essential in a world without modern communications devices.
Some clusters are location driven, the overriding consideration being easy access to natural resources. There is almost always a geographic imperative to locate near waterways and transportation routes to facilitate shipping and trade, including the exchange of news and ideas.
Other clusters concentrated in locations in order to take advantage of accurate and timely information, which allowed for competitive pricing. Familiar examples include the diamond centres of Antwerp and New York's garment district. In the absence of phones or computers, being able to pop in next door or to a shop around the block, is the only way to know what your competitors are up to, in other words, to gain vital market information.
Some clusters arise spontaneously, usually around a central pivotal business or institution, which then stimlulates the formation of new companies or spin-offs. In hindsight, it seems almost pre-ordained that Stanford University, Fairchild Semiconductor and Hewlitt-Packard emerged as the cradle of Silicon Valley civilization. It is almost impossible to imagine Boston's Route 128 without MIT and Harvard as its anchors. There is an oft quoted anecdote about the early days of Vancouver's wireless industry: it was possible to trace nearly everyone back to one or two companies, either MacDonald Dettwiler or Motorola/MDI.
Other clusters are planned by governments such as Research Triangle Park, a life sciences hub in the Raleigh-Durham area of North Carolina, although again, one of the main supports is Duke University. Since the launch of its innovation strategy in 1992, the federal government of Canada has been actively pursuing the theme of clusters in partnership with other levels of government and private organizations.
In British Columbia, five clusters were identified by Industry Canada - information & communications technology (ICT), new media, wireless, fuel cells and biotechnology. The first 3 clusters are profiled in our New Media Directory. The focus of the BC Science Clusters Directory is on power technologies ( including fuel cells, hybrids and the hydrogen economy); alternative & sustainable energy (run-of-river, biomass, wind and solar); life sciences ( proteomics, therapeutics, medical devices and biopharmaceuticals); and environmental technologies (LEED building, remediation and monitoring).
There is debate about whether clusters can be forced. At the very least, Porter maintains that they represent a new way for firms and governments to view the economy, allowing for a co-ordinated effort to increase funding and R & D spending, target the commercialization of research, drive the direction and pace of innovation, and increase the productivity of companies. Measureable benchmarks include the number of patents issued, the amount of research grants received, the formation of new businesses, the funding of university chairs, and even the acquisition of local companies by global corporations.
In the high technology world of today, the competitive advantage is increasingly in the realm of knowledge, rather than natural resources. How to compete with global outsourcing hubs such as Bangalore, India and Dalian, China? One of the greatest advantages an MIT or Stanford possesses is the deep pockets of their alumni, and their phenomenal success at fundraising. It's hard to attract the best minds to research without a fully funded R & D program. To this end, the Canadian government has been forging ahead with its Canada Research Chairs initiative and the BC Government has partnered to develop the Leading Edge Endowment Fund.
Porter identifies institutions of higher learning, industry associations, government agencies and other learning organizations that provide research and information as essential components of modern cluster communities. In this regard, Vancouver has a number of insititutional mainstays: UBC, SFU, BCIT, the BC Cancer Agency, Vancouver Hospital and Health Sciences Centre, and numerous other facilities whose links you will find here.
There is another key ingredient to the success of Vancouver's primary clusters, something perhaps less tangible, but that nonetheless draws people, and once here, keeps them in BC. These are the leaders, the serial entrepreneurs, especially in the life sciences and technology companies who have been called a circle of influences, in much the same way that MacDonald Dettwiler has been a company of influence. These are the researchers, scientists and business people who are starting their second and third companies, creating an environment of collaboration and excitement that draws new talent, as surely as the lifestyle and natural surroundings. In the new global competition for talent, it's no longer about moving to a job; it's about creating a cultural and economic ecosystem, which, with a little prodding from government and industry organizations, creates a situation where people want to come to Vancouver for the work, not just the skiing, although at least one company was recently rumoured to have decided to re-locate to the Vancouver area based on a management trip to Whistler-Blackcomb.
Is the focus on clusters working? In 2004, BC was the fastest growing biotechnology centre in Canada. The new media and wireless clusters have both passed the $1 billion mark in revenue. In the shadow of fears about a global pandemic, British powerhouse GlaxoSmithKline PLC has purchased local vaccine-maker ID Biomedical for $1.7 billion. It's a good start.