Figuring out the costs of administering a cluster Saturday, March 01, 2003 Here's one aspect of cluster-based development that rarely gets discussed: the expense of managing the cluster. Four years ago, Ottawa identified seven clusters that powered their metro economy. Industry groups formed and identified initiatives to pursue within each cluster. But without a full time cluster coordinator, progress has been slow. Now, the City is stepping forward to fund positions for three of the clusters. At $60,000 a piece, the expense is not small. (If you figure in other soft costs, like office rent and web site management, the total is more like $85,000 to $90,000 per year for each cluster.) Ideally, this administrative cost should be shared between the public and private sectors to start. In the beginning, the public sector can take on the majority of the costs. But this should shift as the cluster matures and gains credibility. Eventually, the private sector should take over most of the costs of managing the cluster. (From 80/20 public/private to something like 40/60 public/private.) That's the only way to tie the cluster to the market and make sure that the coordinator is creating value for the cluster. From an organizational standpoint, the cluster can start out being incubated inside the public sector, but there should be a plan to spin-out a non-profit corporation. In Youngstown, we are experimenting with a different model. Incubate the cluster management at an Institute at Youngstown State, then solicit industry sponsors to support the activity. Learn more about what's going on in Ottawa. posted by Ed Morrison |		This work is licensed under a Creative Commons License. links Some Background on EDPro Weblog The purpose of this weblog is to help economic development professionals -- EDPros -- keep up with the changes sweeping our profession. Strap on your goggles. It's a whole new game. There are no experts any more. The only place to learn about economic development is from other EDPros who are doing it. One other point: the prevaling approach (paradigm, if you like) in economic development is shifting from competition to collaboration. There are a lot of reaasons underlying this shift, but here's the important insight: You, your community, and your region will do better by collaborating and sharing information. So, spread the word...Share the knowledge. Tell a friend about EDPro Weblog. If you are using a news reader, here is the link to syndicate this site: Here's the link if you are a bloglines subscriber: Speaking and workshops on Open Source Economic Development As the idea of Open Source Economic Development starts spreading, more people are asking about it. Visit the I-Open web site to learn more. My colleagues and I are happy to explain the basic concepts in a talk or a workshop. E-mail Susan Alshuler if you'd like to learn more about workshops and speaking. Background on Ed Morrison Download some background information on me here.

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