Creating ICT Clusters of Innovative Small Businesses

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Creating ICT Clusters of Innovative Small
Businesses

• August 30, 2004 Keio UniversityShonan -
  Fujisawa
• Prof.Daniel Rouach
• daniel_at_rouach.net

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Creating ICT Clusters
Success Factors
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Creating Clusters

• Regional Strategies to Create Technology Clusters
• Prof Daniel Rouach,
• ESCP-EAP Paris
• European School of Management

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Strategies to Create Clusters
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Creating Regional Wealth in the Innovation
Economy

• Jeff Saperstein and Daniel Rouach
• sapermktg_at_earthlink.net and drouach_at_escp-eap.net

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Models, Perspectives, and Best Practices

• Building Regional Centers of Entrepreneurship
  and Sustaining them.
• Financial Times Prentice Hall
• Pearson Education - 2002

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Regions Selected  Gold Medalists 
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Strategies to Create Clusters
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Five Forces behind Cluster Formation
1. Universities
5. Competitive Intelligence Networking
2. Leading Companies
Clusters
4. Active Government Support
3. Venture Capital
3. Entrepreneurs Spirit
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Cluster Formation Definition Michael Porter

• Clusters are Concentrations of Highly
  Specialized Skills and Knowledge, Institutions,
  Rivals, Related Businesses, and Sophisticated
  Customers in a Particular Nation or Region.

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Proximity,Special relationships Michael Porter

• Proximity in Geographic, Cultural and
  Institutional Terms allows Special Access,
  Special Relationships, Better Information,
  Powerful Incentives, and other Advantages in
  Productivity and Productivity Growth that are
  difficult to tap from a distance.
• As a result in a Cluster, the Whole
• is Greater than the Sum of the Parts

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Elements of Clusters Why do clusters work?

• Better access to employees.
• Better access to suppliers.
• Better access to specialized information.
• Access to public goods (universities).
• Location is self-reinforcing increasing
  returns.

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Elements of Clusters Distance matters!

• Collaboration over distance is hard particularly
  for innovative activities
• Distance slows work
• Distance leads to breakdowns
• Distance keeps you far from the customer
  
  
  

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Elements of ClustersWhy do clusters work?

• Workers cultivate social professional
  affiliations within the cluster friends and
  acquaintances human linkages.
• Clusters have most sophisticated buyers, so firms
  have best view on the market.
• Site location outside firms set up next to like
  firms. The buzz.
• Peer pressure

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Elements of Cluster

• Geographical Proximity
• Critical Mass of firms
• Complementary firms
• Replacement of Vertical Integration by
  Specialized Suppliers

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Clusters are Magnets
Clusters are a Driving Force in increasing
exports and are Magnets for attracting Foreign
Investment Michael Porter . Feb 2000 Economic
development Quartely Vol 14 p.15
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.
Where is the RIGHT place to BE ? Intellectual
Capital of Regions
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Strategies to Create Clusters
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Wireds 1st Tier Clusters
Stockholm
Helsinki, Finland
Boston, MA
Cambridge, England
Montreal
Dublin, Ireland
Seattle
San Francisco
Israel
London
New York City
Silicon Valley
Taipei, Taiwan
Albuquerque
Bangalore, India
AustinTX
Source Venture Capitals Wired Magazine July
2000
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Wireds 2nd Tier Clusters
Malmo, Sweden
Virginia
Oulu, Finland
Chicago
Flanders, Belgium
Raleigh-Durham, NC
Bavaria, Germany
Kyoto, Japan
Tokyo
Thames Valley, England
Paris
Los Angeles
Hsinchu, Taiwan
Baden-Württemberg, Germany
Hong Kong
Queensland
Sao Paulo
Melbourne
Source Venture Capitals Wired Magazine July
2000
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Wireds 3rd Tier Clusters
Glasgow-Edinburgh, Scotland
Trondheim, Norway
Saxony, Germany
Salt Lake City, UT
Sophia Antipolis, France
Santa Fe, NM
Inchon, South Korea
El Gazala, Tunisia
Kuala Lumpur, Malaysia
Singapore
Campinas, Brazil
Gauteng, South Africa
Source Venture Capitals Wired Magazine July
2000
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Wireds Clusters
Red First Tier Orange Second Tier White
Third Tier
Montreal
Glasgow-Edinburgh, Scotland
Stockholm
Boston, MA
Trondheim, Norway
Virginia
Saxony, Germany
Cambridge, England
Chicago
Oulu, Finland
Helsinki, Finland
Flanders, Belgium
Raleigh-Durham, NC
Kyoto, Japan
Malmo, Sweden
Dublin, Ireland
Seattle
Tokyo
Bavaria, Germany
Thames Valley, England
Israel
San Francisco
London
New York City
Sophia Antipolis, France
Taipei, Taiwan
Hsinchu, Taiwan
Silicon Valley
Paris
Salt Lake City, UT
Bangalore, India
Hong Kong
Baden-Württemberg, Germany
Los Angeles
Santa Fe, NM
Kuala Lumpur, Malaysia
Albuquerque
El Gazala, Tunisia
Queensland
AustinTX
Singapore
Gauteng, South Africa
Melbourne
Sao Paulo
Campinas, Brazil
Source Venture Capitals Wired Magazine July
2000
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Type of Clusters Silicon Valley or Death Valley

• Baby Cluster Atlas valley
• Babel Cluster Sophia Antipolis
• Island Cluster Wadi Valley (Israël)
• Magnet Cluster Silicon Valley
• Network Cluster Bangalore

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Success Factors Creating or Destroying Value ?
Ingredients For Success

• 1 Cross Fertilisation
• 2 Cooperation /Competition
• 3 A Leader
• 4 Leading Firm Start-ups
• 5 Incubation Spirit

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Success factors Ingredients for Success

• 6 . Networking Culture
• 7 . Magic Atmosphere
• 8 . No Not Invented Here Syndrome
• 9 . Knowledge Transfer
• 10. Diasporas Culture

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Success factors Ingredients for Success

• 11 . Education Investment
• 12. Risk Chutzpah !
• 13. Branding
• 14. Competitive Intelligence
• 15. Venture Capital

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The Magnet Cluster Silicon Valley Ethos

• "Can do" Attitude with Contagious Enthusiasm for
  Collaborative Projects
• Emphasis on Teamwork, Openness and Egalitarianism
• Encouragement for Risk-Taking, Innovation, and
  Tolerance for Failure that is based on Learning
  so Best Practices can be Discovered and Applied
  in Future Projects
• A focus on Productivity and Practical Goal
  Setting
• The ability to be Intellectually Agile, while
  working on projects that have tight, ambitious
  timetables for completion

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The Magnet Cluster Silicon Valley Ecocluster

• Regional Network-Based Industrial System
  Proximity of All Professions and Skills needed
  for technology based businesses.
• Social Networks and Open Labor Markets that
  encourage Experimentation and Entrepreneurs
• Informal Communication and Collaborative
  Practices
• Abundant Venture Capital

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The Magnet ClusterSilicon Valley Ecocluster

• Educational Institutions and Technology Parks as
  Incubator Hubs and a Skilled Workforce Generator
• Government at Federal, State and Local Level
  facilitating the Speed for Investment and Quick
  Problem-Solving

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The Magnet Cluster Silicon Valley Ethos

• Individual Freedom and Self-Discipline are
  Integrated
• People are Respected for their Knowledge and
  Contribution to the Team, not their Job Title
• Knowledge must be translated into Action with a
  potentially positive outcome

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Strategies to Create Clusters
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• Example Grenoble - France
• A high-tech hub Digital, IT, micro
  nanotechnologies
• Mission No 1 in Europe for micro
  nanotechnologies
• Influence by local environment and tradition
• Entrepreneurial spirit spin-offs,
  self-sufficiency

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Grenoble
History of hydroelectric power atomic energy
Isolated environment but market exists A
pioneering and self-sufficient spirit.
Local Culture
4 renowned universities including the
INPG Communication exchange between
Universities, Research Laboratories Industry
Informal network
20 years history of spin-offs, entrepreneurship Ce
ntre d Energie Atomique (CEA) key player Local
hero Louis NEEL
Spin-off creation
Technology Transfer between research and
industry Micro Nano-Technology House Aim
no. 1 in Europe for Micro Nano Technology
Future Strategy
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Challenges and problems for Grenobleto stay
competitive and to attract multinationals

• Regional
• Infrastructure factors no TGV from Lyon,
  isolation.
• Competition Lyon Sophia-Antipolis are in the
  same region.
• National
• Brittany, Lorraine, Paris and Sophia-Antipolis
  are national competitors for high-tech
  development.
• International
• Grenoble is not a major European city. In
  competition with Munich, Dublin, Barcelona and
  Stockholm.

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Role of Government in Grenoble
Regional and local governments
Intellectual capital
National Government
1970s
2000
1900
1950s
Research and atomic energy
Microelectronics and high-tech
Micro Nano technology
Hydro-electric power
Spin-offs
Incubators
Science parks
CEA
Decentral-ization 1982
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Government
Local Hero Louis NEEL
Isolation pioneering spirit self-sufficiency
Leti
INRIA
INPG 9 engineering schools
CEA
State-funded research labs
 Informal Network 
4 Universities 2 business schools
ZIRST Spin-offs 20 yrs
Traditional Industry 1950s Hydro atomic energy
Industry dynamic companies
Physical Environment Alps, Italy, Germany,
Switzerland
Regional organisations AEPI, CCIG
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Grenoble  spin-off slopes 
Pioneering spirit
Inspiration
Intellectual capital
creativity
ideas
entrepreurship
Technological know-how
Informal business network
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c
petition
oo
ooperation
pportunity
COOPETITION
echnology Transfer
nnovation
ntelligence
etworking
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Competitive Intelligence

• Competitive intelligence is the art of locating,
  collecting, processing and storing information to
  be made available to people at all levels of the
  firm with a view to shaping its future, but also
  protecting its present against competitive
  threat.
• It is legal and it respects a code of ethics.
• In other words, business intelligence is the
  transfer of knowledge from the environment to the
  organisation with respect to established rules.

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CEA DTA Competitive
Intelligence
Competitive Intelligence -
Skills and knowledge have become the only source
of sustainable long-term competitive advantage
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Competitive
Intelligence
The intelligence pyramid
STEP 3 Drive Decisions
The Intelligence System Security
Analysis the Art and the Discipline
STEP 2 Analyze the Data
Sources Laying the Foundations... Guidelines
and Checklists
STEP 1 Build the Foundation
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The key information sources of Competitive
Intelligence
The value chain of information
Technical intelligence
Marketing intelligence
Financial intelligence
Production intelligence
Sales intelligence
Active
Technical watch
Marketing watch
Financial watch
Production watch
Sales watch
Passive
RD
Marketing
Finance
Production
Sales
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The key information sources of Competitive
Intelligence
Classifying according to information types
80
80
20
20
HOT
SECRET
COLD INFORMATION
White
Grey
Black
Information
Information
Information
Industrial
espionage
Grey Information
Competitive
Competitive
Black Information
Intelligence
Intelligence
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The key information sources of Competitive
Intelligence

• Partner groups
• Subconctractors
• Suppliers
• Clients
• Competitors
• Professional Groups
• Financial partners

• Fortuitous sources
• Train, plane,  the street 
• Stagiaires...

• Institutions
• Administrations
• International organisations
• Associations
• Research Centers
• Institutes and foundations
• Universities

• New Networks
• Internet
• Compuserve

Sources

• Personal Networks
• Clubs
• Colleagues
• Confrères

• Consultants and experts
• Ingineering Schools
• Universities
• Experts
• Technical Centers
• Consultants

• Information providers
• Press
• Booksellers
• Libraries
• Internet servers, brokers
• Data bases
• Information Centers

• Events
• Colloquium
• Fairs
• Business trips

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Conclusion Why do clusters work?

• Network effects!
• Direct effects firm-to-firm learning
• Indirect effects When key inputs are in abundant
  supply

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Conclusion Cluster results

• Each firm is more productive
• Each firm is more innovative
• Formation of new businesses is higher