Are clusters over-rated? Saturday, January 29, 2005 My friend Jay Garner has completed an analysis of the economic development organization in Louisiana. He makes the point that "the cluster concept is overrated". Read more. I have a different take. I think the concept of clusters has been not so much over-rated as misunderstood. Our business is no different than many others: fashions run through it. (The latest example: The Creative Class.) As the corporate community saw with "re-engineering", fads can generate good fees for consultants, but they can also leave clients perplexed and, at worse, frustrated. The cluster concept -- popularized by Michael Porter -- has been misunderstood by some. The basic statistical technique for identifying clusters -- location quotients -- is no different that the approach that consultants have been using for decades in target marketing studies. In this sense, Jay is right. But Porter's idea goes deeper than simply identifying clusters. The real challenge is seeing a cluster as a network for innovation, a productivity engine. Here's where the approach gets a little sticky. Porter -- who comes out of a corporate strategy background -- uses his five forces model and his diamond model to explain clusters...and by implication what you can do to strengthen them. This is a concept of corporate strategy that does not translate well into the civic space of economic development. In sum, Porter has delivered important insights, but we have a lot of work ahead to develop practical policy tools. EDPros need these tools to accelerate innovation and productivity improvement across communities and regions. Macro economic policy focuses on the level of investment within an economy. Economic development focuses on the pattern of investment within an economy. With simpler, more intuitive tools, EDPros can measure the pattern of their investment and make steps to gain more productivity and leverage. Even the most advanced consulting firms using this approach struggle with the translation of ideas into action. It's no surprise. We're in the midst of a paradigm shift. 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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