Industry Cluster Engineering

Interesting take today by Sacramento Bee opinion writer Daniel Weintraub about industry clusters leading the charge to bring California back from the brink of total economic meltdown.

As California's economy struggles to rebound from the collapse of the housing bubble, it is difficult to imagine what will lead us out of this hole.  We had the dot-com boom and bust, and then a housing-led recovery that turned out to be a mirage. Is there some industry, some idea that can reignite sustainable growth in this once-golden state?

Maybe not. And maybe that's the wrong way to think about the problem.

It could be that there are six or eight or 10 major industries that together will form the foundation for the new California economy.

He is speaking about regional industry clusters, and he uses the example of Akron, OH, which led an economic revival by rallying around innovation within its faltering rubber industry, and the Central Valley, CA, which is positioning itself to be a leader in clean technologies like solar, wind and water.

Peter Weber, a retired corporate executive and civic activist from Fresno, has studied what makes economies tick and is promoting a regional approach as a long-term strategy for California.  He thinks local governments and the state should make the development of regional economic clusters their top priority.

We completely agree that cluster development within regional economies is at the core of regional economic development. We would add the cautionary note, however, that industry clusters are formed by innovative, entrepreneurial people identifying a competitive advantage and capitalizing on it.

You cannot wish one into place, nor invent one by merely by declaring it as such. Networks of people are the backbone of any industry cluster. If you don’t have the right people with the right knowledge and right access to a strategic business network, you won’t have a cluster form anytime soon. Innovation will sit on the shelf until someone with the knowledge and access identifies the opportunity and brings it forth. Take any notable example, including Silicon Valley, San Diego, Austin, TX, Research Triangle, NC, and you will find that human networks were at the core of the phenomenon.

This precisely why we say that any region wishing to develop any type of industry cluster should focus as much effort on cultivating general networks of innovation and entrepreneurship as deciding which cluster they want to be. Yesterday was biotech. Before that was nanotech. Today it’s clean tech, but yesterday was hydrogen and today is water, wind and solar.

This is an exaggeration, of course. All of these industries are still vibrant and active and provide expansive opportunity for companies and regions to capitalize on. The point is, private industry responds primarily to private market demands and technology flux, and it moves too fast and changes too quickly for government to easily influence it.

Policymakers should be aware of clusters, but understand to build one requires that economic policies help your entrepreneurial people with an affinity for the region find what works best there. Be aggressive to provide them access to things they need most: capital, talent, market intel and strategic relationships. Then let them be entrepreneurial. Let them find the industry that works best for what is available in the region in terms of people, technology, markets, innovation and opportunity.

On Feb. 26 leading technology cluster expert Doug Henton, from Collaborative Economics in Silicon Valley, will present a report on Solano County’s Life Science Cluster, anchored by biomedical giant Genentech. Another story about some smart people with an idea, the right knowledge and the right connections who decided this was a good place to build a company. Is that a cluster? It is now.