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Clusters are more than just for cereal

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Karola Tarkos
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via Flickr
What's the deal with clusters? No, that's not a Jerry Seinfeld quote; it's the basis of a new Brooking's Institution study.

Finding universal truths is not easy. Not in life, (especially) not in journalism. But according to a new paper by the Brookings Institution, industry clusters bring about certain economic truths.

As described in “The New ‘Cluster Moment’: How Regional Innovation Clusters Can Foster the Next Economy,” industry clusters are geographic concentrations of interconnected firms. That's a fancy way of saying similar businesses are physically close to each other. Think Silicon Valley.

This is relevant to the Innovation Trail because business and government officials in upstate New York are trying to create a cluster for knowledge-based industries.

For instance, most new jobs in Buffalo have been created on the Buffalo Niagara Medical Campus, which is a cluster of bioscience, life science and research organizations (both university-backed and private). There’s also a life sciences cluster on Grand Island (the chunk of land you pass through on the way to Niagara Falls).

A biomedical innovation corridor in Cleveland (which Buffalo officials partly use as a model) has been the rage the last 15 years or so. The report says:

“The ‘innovation economy’ is well under in Northeast Ohio, where more than 600 firms now comprise a biomedical cluster which grew at an annualized rate of 7.4 percent from 2003 to 2008 and in 2008 alone attracted $395 in venture capital and National Institutes of Health (NIH) funding. The implication: One way to accelerate the emergence of the next economy in America may well be to strengthen the nation’s varied regional innovation cluster.”

Obviously success stories like Cleveland and Silicon Valley shows what’s possible when the cluster idea lands a triple axel. 

You may ask yourself (like in that Talking Heads song): in a global economy with modern technology, of what use is being physically close?

“Thanks to clusters, firms, regions and the nation are more productive than they otherwise would be,” the report states.

When like-minded businesses work in the same area, there’s an infrastructure that naturally emerges. Organizations tend to want to pool resources for investments and grants. An I’ll-scratch-your-back-if-you-scratch-mine mentality emerges. Clusters are recruitment magnets like an ice cream truck’s tractor beam effect on kid’s in my neighborhood. The word “synergy” gets used a lot, for better or worse.

Many folks I’ve interviewed at the University of Buffalo, the medical campus and in economic development circles hold many different titles for many different organizations. Like having a conversation with someone sporting a face tattoo, one can’t avoid walking away with one thing on their minds and in this case, it's this: folks with knowledge in more than one area are valuable; together they’re greater than the sum of their parts. Clusters attract these kinds of cross-trained minds, according to the report. Multiple companies benefit from this unique expertise. 

Also, restaurants, bars, and shops like to open next to clusters. There is also a noticeable (and appreciated!) effort put into landscaping.

After reading much of this 100-plus page report, I’m left with a few questions, though.

What is a region? How big can a “cluster” be? My impression upon reading the report: a cluster can be whatever people say it is. Upstate New York, apparently, is trying to become its own regional economic cluster. Officials, elected and in the private world, speak about it. It sounds nice at a podium, but is it real? Clusters, according to this report, are more practical contained in the same city or county, not half of a state.

The most collaborative act I’ve seen between two upstate entities not located in the same county is the potential research collaboration between Roswell Park in Buffalo and the James Wilmot Cancer Center in Rochester. Officials are still mulling that over, last I heard.  

Other highlights:

  1. “Cluster initiatives, to begin with, should only be attempted where clusters already exist. Clusters cannot be created out of nothing.” There is no evidence, the report states, that governmental policy can successfully create clusters where none previously existed.
  2. Clusters are a “different kind of growth model that relies less on bubbles and consumption” to provide steady economic activity.
  3. “More a paradigm than a program, clusters are neither a shiny new fad, a silver bullet…but instead represent a grounded source of practical value to businesses, workers, and policymakers.”
  4. The federal government has remained largely hands-off on the concept. And the report says there’s a “patchwork” of state provisions.

The Vermont Artisanal Cheese Industry is also a cluster. As a cheese fan, this is great news for me. Plus, when the saturated fat in cheese clogs my veins, I can find my way to a medical cluster and get treatment for it.