TCI 2015 Cluster structure and success from a network perspective

1. Cluster structure and success from a network perspective Jasmijn Rompa Program Manager Cluster Development, Brainport Development Brainport Eindhoven Region, The Netherlands Parallel Session 3.5: Tools and Methodologies for Effective Cluster Management and Cluster Performance Improvement
2. © Brainport Development, 2015Clusters from a network perspective2 © Brainport Development, 2015 Cluster structure and success from a network perspective Jasmijn Rompa Program Manager Cluster Development, Brainport Development Brainport Eindhoven Region, The Netherlands Daegu, November 5th, 2015
3. © Brainport Development, 2015Clusters from a network perspective3 • Clusters in Brainport Eindhoven Region • Network analysis on structure, cooperation and success • Relation cooperation and cluster success • Take aways CONTENT
4. © Brainport Development, 2015Clusters from a network perspective4 BRAINPORT EINDHOVEN REGION (NL)
5. © Brainport Development, 2015Clusters from a network perspective5 ... INTERNATIONAL RECOGNITION “Eindhoven is hands down the most inventive city in the world” “The next Silicon Valley could well be in Eindhoven” “Singularity University pilots Eindhoven, the Netherlands, for global expansion” “The Dutch city of Eindhoven is ranking third as European City of the Future” “Eindhoven University wins Oscar of Technology with solar powered car Stella” “Eindhoven wins Eurocities award for best regional cooperation”
6. © Brainport Development, 2015Clusters from a network perspective6 Characteristics: •Company-cooperation •Related by content •Active contribution •Cooperative goals •Long term scope •Organized CLUSTER APPROACH
7. © Brainport Development, 2015Clusters from a network perspective7
8. © Brainport Development, 2015Clusters from a network perspective8 RESEARCH: NETWORK ANALYSIS
9. © Brainport Development, 2015Clusters from a network perspective9 LEASTINTENSIVE Cooperation Coordination Collaboration Service integration MOSTINTENSIVE
10. © Brainport Development, 2015Clusters from a network perspective10 LOW HIGH LOW HIGH Density: connections between members Centralization:coreplayers Central & Fragmented Decentral & Integrated
11. © Brainport Development, 2015Clusters from a network perspective11 COOPERATION & SUCCESS ARE RELATED LOW HIGH LOW HIGH Success Cooperation
12. © Brainport Development, 2015Clusters from a network perspective12 INSIGHTS • Facilitating cooperation pays off • Different cluster ambitions lead to different degrees of cooperation • Cluster key players can function as ‘energizers’
13. © Brainport Development, 2015Clusters from a network perspective13 TAKE AWAYS • Cooperation will deliver more success if tailored towards specific cluster goals • There is not 1 way for cluster success... • ... this has implications for cluster development, -policy and -governance
14. © Brainport Development, 2015Clusters from a network perspective14 © Brainport Development, 2015 www.tci2016.org
15. © Brainport Development, 2015Clusters from a network perspective15 © Brainport Development, 2015Clusters from a network perspective15 Close co-operation

Hinweis der Redaktion

Welcome to my presentation on cluster evaluation and monitoring

I have visited Japan last week and what I have heard is dat Korean people are even more friendly and kind than Japanese, so I stand before you with great confidence...

I am Jasmijn Rompa, from the Netherlands
working as programma manager on cluster development in the Brainport Eindhoven Region
My goal is to further enhance the existing clusters in our region, and develop new ones where there is a need expressed by regional companies

MAIN MESSAGE OF PRESENTATION
Network analysis helps to better understand how clusters work in practice
In our region we ‘do’ clusters with a practical, hands-on approach
In addition to our practical experience, we performed research..
..as we are looking for insights and approaches to further enhance the very diverse clusters we have in our region
This is what my presentation is about;
I will explain a little bit about the clusters present in our region; and how they have developed over time
I will elaborate on the research that we have done in order to get better insights in the relationships between members in our different clusters; how they are structured and organized, how cluster members are actually cooperating, and how successful they regard their cluster.
Results show that we have found some interesting linkages between these three concepts of cooperation, structure and success.
From these research results I have drawn some interesting take-aways; not only for our regional clusters; but hopefully for clusters all over the world!?
But to start, I would like to tell you where this story and myself come from:
Brainport Eindhoven Region in the Netherlands, North West Europe, a very small region (750.00 inhabitants) in a small country (far away)
In 2011 we won the Intelligent Community Forum award. This gave us direct international and national recognition for being a smart, innovative region. This award/price brings us together with top innovation regions worldwide. I actually found that the award has been won three times before by different cities and regions in South Korea as you can see on the map.
Something else you need to know is that the Netherlands is a stubborn country, Brainport is a stubborn region. We have our very own way of looking at things; which also holds for clusters and the way we think we can develop them optimally.
And we have received even more prizes and international recognition recently from amongst others, Forbes and Fortune!
For being inventive, cooperative, worth investing and being the next silicon valley.

What you should know about the Brainport Eindhoven Region is that it is an innovative, high tech region with many years of history. It is both research intensive and also economically powerful (Amsterdam/ Rotterdam – pillars). And cooperation is in the DNA of the people here; one of the core competencies of the region. Business, knowledge institutes and government works closely together.
Economic development
We put our emphasis in enhancing existing regional strengths in economic development. Thus building upon what there already is.
Crucial aspect is the involvement and ownership (commitment) of regional companies.

Cluster development
Companies must feel the need (urgency!) to cooperate, form long term partnerships and invest their time and effort in cluster cooperation...
With this approach we have seen more and more clusters grow 'organically‘; bottom-up. This route has proven to be successful shown by several mature, self-sustaining clusters in the past ten years or so. This organic growth has resulted in a very diverse set of clusters!
Our goal is to further strengthen the clusters we already have, and efficiently develop clusters when there is a need for cluster cooperation expressed by companies
However, there is no central government cluster policy in the Netherlands, or in our region, so it is mostly learning by doing (with our practical, hands-on approach)

High Tech Software cluster good example
Cluster of >30 software companies, since 2012
Initiated by a few companies that wanted to group together with others
Have common goals and activities (internationalisation, branding, technology development)
From the start (!) members pay a fee for o.a. a cluster managers who organizes events and projects
Next to the common goals, members have already develop new product/markets combinations together that they are entering the market with!
This figure shows the overall Brainport Region cluster landscape based on cluster membership. It is not complete, but covers most of the (big) clusters in the area. These are all the clusters that have developed so differently in the past ten years.

What you can see:
Blue dots are cluster members (business, knowledge en government), red are cluster managers
Diversity in cluster size; Devlab 12 members and Automotive NL 163 members
Diversity in sector/ value chain; from software to energy, from manufacturing to healthtec, from biotech to mobility> all the result (off-spring) of traditional regional expertise in the high tech systems and materials-sector. Common element due to years of history/ heritage
They vary in age (1 HTSc – 10 years old Devlab)
They vary in focus (goals) business (KIEN)- or technology-development (precompetitive research at Devlab)
They vary in type of members; membership (entry) requirements (pure business, multi helix partnership); BSP versus Slimmer Leven/ DITTS
CLEARLY EVERY CLUSTER IS UNIQUE.They have in common (these aspects are strongly related to our Brainport-cluster approach)
Bottom-up emergence
Membership fee/ contribution

There are several membership-connections between clusters (companies being member of more than one cluster), see: for example Brainport Industries & High Tech Software Cluster and Brainport Industries & AutomotiveNL.
Even though we know most of the clusters in our region and we are in close contact with them,
up until this year we had no understanding of the functioning of clusters, the linkages between cluster members. How they are organized, who are the main players, and how (intensively) they cooperate with each other.
Moreover, we were interested in their success; the extend to which members find cluster membership value for money.
We are looking for insights and approaches for further cluster development: Are there lessons to be drawn from successful clusters? Can we say anything useful about cluster development knowing that all of our clusters are so different?

Therefore, we performed research:
Network analysis puts relational data at the centre (communication linkages and -frequency with others)
Investigated 12 cluster-that we are in contact with- and had response from 101 cluster-members with an online questionnaire;
Explored 3 concepts:
COOPERATION - Connections and interaction between members
STRUCTURE - Core players playing a pivotal role in diffusing knowledge
SUCCESS - to what extent cluster members get value for money; how valuable is the cluster for their business?
We found that the COOPERATION among cluster members differs a lot
We put the clusters on a spectrum from least intensive: cooperation, to coordination, to collaboration, to service integration (the last being the most intensive form of cooperation)
On the right end you see Devlab and Solliance, both clusters performing research projects with their members. Clear common goals and directions for all partners involved.
On the left end you see BSP and S&T, both more focus on networking; and – probably not by accident – both clusters were originally subsidised; money was the reason for companies to start cooperating, not intrinsically motivated
In the middle HTSc: young cluster; invested in cooperation among members; get them together with so-called speeddates; have them to know each other (competitors? valuable partners?)
True cooperation > knowing each other; working together and sharing requires trust (not always present!), proximity plays a role

The intensity of cooperation seems to correlate with the cluster goals : knowledge sharing (BSP, lifetechzone) all have a lower extent of cooperation than cooperation in innovation (and) executive projects (Solliance, Devlab)
NB Concept of Cooperation was determined qualitatively based upon interviews with cluster managers.
The second concept we explored was STRUCTURE

Measured with 2 variables:
HORIZONTAL AXIS: Density is illustrative of the degree of interconnectedness; the extent to which members are directly connected to each other. Cluster members were asked with how many other cluster-members they have professional contact. These numbers were supplemented with the number of organized cluster meeting and cluster members presence.
VERTICAL AXIS: Centralization illustrates the extent to which the cluster is (informally) organized around one or several member organizations. Through the questionnaire cluster members are asked for the presence of initiators in their cluster. These play a prominent role within clusters in terms of coordination of (new) cluster activities, influence on decisions, advice and inspiration for other members.

Again you see that clusters in our region are different in their structure; some are decentralized, other strongly centralized, and they have different degrees of integration
At the bottom right you see clusters that are integrated and decentrally structured; this implies many useful connections between members and many committed members; here are devlab and the HTSc I already mentioned
At the top left you see clusters with not much contact between members than at the events organized by the key players (can be business/ government); Remarkable is that the clusters in the top left are mainly concerned with networking and have relatively many members (BSP 81, DITS 48). BSP is actually more of a network with one key player (being a company) taking the initiative to get together the entire group on a regular basis

From our perspective, we would try to get as many clusters as possible in the bottom right corner with a clear focus and the most interaction between members and commitment from all members involved...
BUT: you could wonder if this structure is optimal for every cluster?? Maybe some clusters do not find it necessary to meet at a higher frequency and members do not want to be involved in every decision? This might depend on the goals the clusters have in mind?!?
And the answer to that question is: no, indeed that is not necessary
We have tried to find relationships between concepts COOPERATION, STRUCTURE and SUCCESS

SUCCESS is the extent to which cluster members are satisfied with the cluster; find membership value for money (questionnaire with101 respondents).
In general: Brainport clusters can be regarded as successful (score >3 on a scale 1-5). Cluster members feel committed and connected to relevant other parties

We did not find a relationship between structure and success (so not all bottom right clusters are more successful!!),
but we did find a relationship between cooperation and success (as you can see on the slide by the diagonal trendline), thus the more intense the cooperation among cluster-members, the more successful/ valuable members regard their cluster. Best examples being Solliance and Devlab (both relatively small clusters with a focus on knowledge- and technology development). Devlab is also a very special cluster; it has 12 members (SMEs) that do research together on very specific, previously defined roadmaps. Only companies can be part of the cluster, but of course knowledge institutes are closely related. Some of the 12 companies are competitors, but in this stage of tech-development, they see that their R&D budgets can be multiplied and in the end, every cluster member further develops the technology into products and services in-house, so there is no serious competition danger. This cluster exists for over ten years, is actually not actively looking for new entrants to prevent organizational challenges and clearly satisfies its customers!

Another thing that we found was that the most successful clusters (where members were most satisfied) were those with practical technology projects (FOCUS) and relatively few members (SIZE).
First of all we found that network analysis gave as a better grasp of the true functioning of our clusters

And however you might think that there is nothing new about the result (fact) that more cooperation leads to more cluster success and satisfaction, it is for us an extra reason to invest even more on this aspect. We already a very cooperative region, but this again shows that cooperation is not that easy or straightforward. Intense cooperation requires trust among members; and building trust is not easy! Understanding of other cluster members competences, activities and goals are necessary. Proximity plays a role. Members can f.e. find that they are in competition with other cluster members and still cooperate on very specific niche-markets or product features. Elaborate on the speeddates they software companies did.

Another insight we gained was the importance and effect of cluster goals and ambition; this is determinant for the degree of cooperation. Technology development- clusters (Devlab) have and also need more cooperation among members than clusters with more a networking/business focus (BSP). For proper tech-development companies NEED to work very closely together.
Some clusters we found are decentralized with a few main players. Maybe not our first preference (we want shared responsibilities and ownership by all) but these key players (cluster-managers or key companies) can bring new ideas and create enthusiasm and energy among other members. Use them in your advance; first make sure you get to know them (we do now!)
Our understanding of what happens within clusters has improved;
The lessons we learnt might also be beneficial for the development of clusters in your region:

Cooperation and success are related for our clusters, we have learnt that:
The required degree of cooperation depends on the cluster goals (focus on technology versus business) > For a cluster to be successful its degree of cooperation (amount of interaction among members) should be tailored to cluster goals
Cooperation can be facilitated; the better cluster members know each other, the more trust there is, the more they are able to cooperate
We will invest more on this!
In Brainport Eindhoven Region cluster members are generally satisfied with their cluster membership, we have learnt that:
There is not 1 road for success as Brainport clusters are very diverse in size, age, type of members and cluster goals
but what they DO have in common is the bottom-up development with member-contribution in €s (could you say this makes a cluster succesful..?!)
As for our region and country, where clusters are so different, our way of customized cluster management is confirmed as the right one, The same holds for cluster policy (non-existent now!). In order to stimulate more successful clusters - policy should not (only) consider coordination/setup, but look at unique clusters; their degree of cooperation, their characteristics, goals and needs. Also for policy there is no one size fits all!

Food for thought: influence of cluster size
It seems to be more difficult for larger clusters to have close cooperation among members and be regarded as optimally successful; could it help to organize around sub-clusters with members cooperating on more specific goals in order to be more effective in ther cooperation? Would that be the future?

TCI 2015 Cluster structure and success from a network perspective

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