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ConnectedClusters Landscaping Study 50 Agglomeration and Identity Agglomeration and identity are key issues that clusters must overcome in order to become stable and recognisable. These are the two sides to the coin that is cluster growth. Through forging a strong regional identity for certain sectors – in the case of ConnectedClusters, cleantech and climate-friendly products – others of like mind may be attracted to develop their innovations in the region. Incumbent firms may also feel inspired to green their offering if a region establishes a clear cleantech trajectory. Clusters generate greater returns for their members through agglomeration benefit. However the ways in which clusters generate such critical mass differ. Those identified within this project are creation, collection and transformation. Creation refers to those clusters, such as AVAESEN, which have had incubators at the heart of their models for a number of years. Such clusters tend to have a smaller number of actors at the top level, but through supporting SMEs and start-ups focused on climate innovation they build a cluster almost as a by-product of helping these nascent entities to grow. Through encouraging these small firms with fledgling innovations to reach the market, the cluster develops and grows as these companies scale. This ties in closely to the notion of a cluster developing markets for climate solutions. Whilst business creation is inherently based upon providing a demand with a supply, a cluster’s ability to broker entry into previously untapped or inaccessible markets is an important emergent feature. The notion of collection is primarily based on Energy Capital. The cluster has a broad top tier of actors covering academia, local government and industry. The cluster gathered critical mass by ‘collecting’ all the relevant actors and, through discussion and by convening meetings, aligning a pre-existing group of actors to focus on a common mission. This was achieved by the initial group seeking to draw in others with relevant interests and expertise in the energy sphere. Here, some fresh developments helped to create the initial conditions for being able to construct a convincing narrative about the critical mass of energy activities in the West Midlands – the location of the Energy Systems Catapult in the City of Birmingham, the award of the Energy Research Accelerator programme to a group of Midlands universities and the formation of the Birmingham Energy Institute being key points. The potential for transformation is seen in the nascent Frankfurt cluster. There already exists a huge footprint of interconnected industrial activity at the Höchst site. However, at present much of this work can be characterised as ‘conventional’ chemical engineering approaches. In seeking to transform this cluster into a ‘climate innovation cluster’, the challenge is manifold – encouraging the ‘new shoots’ of clean growth, by nurturing new ideas and developing new ventures that can be grown into SMEs, whilst simultaneously making an appeal to the existing incumbents to join the journey and transform their goods and services into cleantech alternatives. AVAESEN presents an interesting representation of agglomeration. Its original form was a ‘collected’ group of energy sector businesses in the region, however the decimation of its membership meant that it had to change how it grew from then onwards. Currently, AVAESEN utilises both ‘collection’ and ‘creation’ simultaneously to grow and fund its cluster. The cluster ‘collects’ members by having external and previously established businesses pay a fee to become a cluster member, and it ‘creates’ members through its accelerator programmes, and by encouraging those who reach market to become cluster members. This synergistic approach could be an effective model for clusters at all stages of their development. Cleantech London is still in its birth phase. At present, it appears to possess traits of both the above definitions – a smaller group of ‘collected’ actors, though it seeks to ‘create’ businesses and support them within the cluster too. Moreover, Cleantech London is reliant on physical development, with limited dedicated space at present. This is, however, changing in line with growing business demand. The branded organisation at the heart of each cluster is not the entirety of the ecosystem – but a catalyst, hub or organiser. Around the world, there are many pockets of concentrated activity in a specific domain or sector that do not have an overarching brand or identity. However, the creation of brands and identities to describe agglomerations of activity is powerful – both to stakeholders inside and outside the cluster.
University of Birmingham | Climate-KIC 51 Identity plays a double role in cluster development. On the one hand, it can be used as a visioning tool to help galvanise those within the cluster towards a common mission. The creation of a brand under which regional activity can be united is a useful device to allow regions to construct their identities and stories of industrial transformation. These stories can be used to capture buy-in from actors inside the region and focus them on climate-friendly goals. Identity is also key to the way that clusters present themselves to the outside world and to cluster growth. Once critical mass has been attained, cluster growth is sustained by its ability to draw in new members. The cluster’s identity affects how it markets itself, either to potential start-ups and SMEs or to political actors and industry. This affects the quantity, calibre and scale of actors attracted. Managing Incumbents and Insurgents Clusters face a significant challenge around managing co-existing firms on different scales. They will often be home to large anchor firms as well as smaller start-ups and new SMEs. There is a challenge in managing the sometimes-conflicting priorities of firms at different scales. For climate innovation clusters, successfully disrupting the status quo to encourage the transition to cleaner alternatives is also key. There is an enduring tension in the innovation space between large firms and smaller newcomers. Whilst new firms may have new ideas and novel thinking, they may not have the resources to bring an idea to market. However, they are smaller, more agile and may be able to develop solutions more quickly than established players. With fewer resources, smaller entrants must find innovative ways to develop ‘lean’ solutions that do not impose a high overhead on scarce resources. By contrast, larger firms may be more set in their ways. They have brands to defend, and large amounts of sunk assets invested in certain products, processes and services – so may be slower to change. That said, by virtue of their size and scale, they have the potential to have substantial impact if they change direction. Whilst they have the resource to develop solutions, their capacity to change is often limited by hierarchy, structure and organisational inertia. The Frankfurt cluster is an interesting example of these tensions in the positioning of the cluster as an innovator in circular economy solutions, within a cluster of industrial partners with a long tradition of the production of chemicals whose processes might not be readily adapted. Trends and technologies change quickly. Globally, there are clusters that are littered with the remains of firms that did not manage to innovate quickly enough. Kodak missed the digital camera revolution, and Nokia didn’t manage to capture the smartphone market quickly enough. However, for every failed leviathan, there are thousands more small ventures that did not make it to market.
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