1. Exploring Cluster Dynamics Madeline Smith Scottish Enterprise

2. Industry Landscape Textiles Aerospace Defence & Marine Chemicals Construction Forest Industries Other Growth Industries (Industry based Approach) Food & Drink Energy Tourism Financial Services Digital Mkts & Enabling Technologies Life Sciences National Priorities (Cluster based Approach) Industry Development

3. Industry Vision for Scotland Key Operational Goals (Stakeholders) Scottish Enterprise SE Industry Operational Plan Scottish Executive BusinessesUniversitiesITI Other Stakeholder Groups Co-ordinated actions

4. Cluster and Industry Studies Previous studies give a snapshot picture  Show current state  Are relatively static Reality is that:  How organisations work together is important  This is poorly captured (Social Capital?) Systems thinking approach  Shows dynamic nature of clusters  Combine with current clusters thinking  Add to other studies – as well not instead Model Developed by SE  Showed behaviours and company interaction as cluster develops  Developed the question set Process summer 07

5. NETWORK Combinatorial economy COLLECTION Additive economy CLUSTER Synergic economy FACILITATION CULTURE LEVEL OF CULTURELEVEL OF CLUSTERLEVEL OF INTERVENTION Building up the Dynamic System of a Cluster

6. Stimulation and Acquisition of relevant research and development L5 DISTINCTIVENESS GENERATION LOOP Performance of individual firms Overall performance of all firms in the zone Intensity of differentiated competitive threat Motivation for competitive innovation Degree of enhancement of competitive innovation Competitive level of platform for innovation Sharing of critical sectoral knowledge Extent of collaborative initiatives Extent of shared response to common challenges L1 INTER-FIRM RIVALRY LOOP L2 INTER-FIRM CO-OPERATION LOOP Global competition and external market pressure Type of cultural context L3 COLLABORATIVE ADVANTAGE LOOP L4 VENTURE ATTRACTIVENESS LOOP The Principal Dynamic Loops Competitive power of cluster

7. Process used? Working with Cluster teams  Initial presentation to larger team  Workshop to identifying stage of development (through question set) – smaller group, but still wide knowledge  Present back to the larger group  Discussion and feed into strategy

8. Stimulation and Acquisition of relevant research and development L5 DISTINCTIVENESS GENERATION LOOP Performance of individual firms Overall performance of all firms in the zone Intensity of differentiated competitive threat Motivation for competitive innovation Degree of enhancement of competitive innovation Competitive level of platform for innovation Sharing of critical sectoral knowledge Extent of collaborative initiatives Extent of shared response to common challenges L1 INTER-FIRM RIVALRY LOOP L2 INTER-FIRM CO-OPERATION LOOP Global competition and external market pressure Type of cultural context L3 COLLABORATIVE ADVANTAGE LOOP L4 VENTURE ATTRACTIVENESS LOOP The Principal Dynamic Loops Competitive power of cluster Lifescience MD, Bio Stalling at L3 (Although strengths in L5)

9. Stimulation and Acquisition of relevant research and development L5 DISTINCTIVENESS GENERATION LOOP Performance of individual firms Overall performance of all firms in the zone Intensity of differentiated competitive threat Motivation for competitive innovation Degree of enhancement of competitive innovation Competitive level of platform for innovation Sharing of critical sectoral knowledge Extent of collaborative initiatives Extent of shared response to common challenges L1 INTER-FIRM RIVALRY LOOP L2 INTER-FIRM CO-OPERATION LOOP Global competition and external market pressure Type of cultural context L3 COLLABORATIVE ADVANTAGE LOOP L4 VENTURE ATTRACTIVENESS LOOP The Principal Dynamic Loops Competitive power of cluster Renewables stalling at L2 Energy -O&G at L4/5 Powergen stalling at L3

10. Stimulation and Acquisition of relevant research and development L5 DISTINCTIVENESS GENERATION LOOP Performance of individual firms Overall performance of all firms in the zone Intensity of differentiated competitive threat Motivation for competitive innovation Degree of enhancement of competitive innovation Competitive level of platform for innovation Sharing of critical sectoral knowledge Extent of collaborative initiatives Extent of shared response to common challenges L1 INTER-FIRM RIVALRY LOOP L2 INTER-FIRM CO-OPERATION LOOP Global competition and external market pressure Type of cultural context L3 COLLABORATIVE ADVANTAGE LOOP L4 VENTURE ATTRACTIVENESS LOOP The Principal Dynamic Loops Competitive power of cluster Food & Drink Stalling at L3 Bakers at L2Whisky at L4/5

11. International Study Presented at Clusters 2007 International study – 10 studies  Denmark - Mechatronics and ICT  California - Water Flow Technology Cluster  Sweden - Steel, Paper and pulp  Switzerland - ICT Cluster Bern  Finland - ICT sector :Ubiquitous Computing, Open Source, Sustainable Energy and Intelligent Machines Each partner  Recruited suitable cluster(s)  Carried out study with cluster  Feedback (Likert Scale questions) on process and experience Does the group feel this has been a useful process in identifying the stage of development of their cluster/sector? Does the group feel this would be equally applicable to other clusters/sectors in their area?

12. Glasgow Workshop 24 th June Partners shared experience and discussed the model All agreed that the model had the potential for wide application in their regions. All agreed that this is the only model – internationally – that facilitates a quality, strategic analysis and discussion on relationship dynamics and social interactions in clusters. All agreed it helped stimulate fruitful discussions on the stage of cluster development within their cluster groupings All agreed it was a useful tool for cluster practitioners and for those responsible for cluster policy.

13. Profile of Questionnaires

14. Overall Profile Strength in Research raises loop 5 – are the questions right? Context of organisation is important Does the order matter as long as the tool is useful?

15. Feedback Questions Likert Scale - 1 very weak/poor to 5 very strong/good

16. Feedback Reports Overall Positive response Process  Workshop environment  Explaining the model – complicated and language  Too long and labour intensive  Context of study - in addition to performance measures Model  Strength in research – loop 5 questions  Role of large companies  Subsectors  Role of cluster organisation  Showing progress over time

17. Feedback Language and length Workshop environment Research Strength Role of cluster organisation “I would like to congratulate SE – it is very much in demand and is the only international tool that can be used in this area.” “This is the only approach – internationally - that helps us to identify, understand and describe the necessary interpersonal interactions in cluster development”. “That was a surprisingly interesting presentation !“

18. Further Research Impact of international value chains – boundaries of the system Relationships in the cluster  Power, dominance and inter-dependance Influence of large companies Drivers of participation and perceived benefits for companies Case studies and practical examples of interventions at each stage

19. Next Steps Internal SE  Complete analysis of all Priority Industries  Use outputs in strategy development and in identifying suitable interventions for progression.  Use as a discussion tool for Advisory groups and Communities of Practice External SE  Implement improvements to the process recommended by workshop participants  Continue the “loop network” as a forum to share learning, potentially extending the participants  Gather case study learning to help identify successful interventions

20. Questions?