The role of Clusters in Innovation and Collaboration

1. The role of Clusters in Innovation and Collaboration Reunion Ultra-peripheral Regions Conference 14 – 17 September 2011 Dep. of Economic Development: Western Cape Government

2. Cluster-based Economic DevelopmentA mainstream strategy in 75+ countries Positive link between cluster development &: • Productivity • Competitiveness • Job creation • SME growth • Innovation • Export development

3. Pole de Competitivite

4. Clustering - The pay-offs • Creating trust, linkages between firms/ academia • Facilitates specialisation • Builds critical mass • Creating a commercial magnet: • Attracts customers, new investment, new skills, specialised infrastructure… • Alignment of public & private investments • Key university role • Building an ‘innovation environment’

5. Some background to the Western Cape cluster programme:

6. The Western Cape Population 5 million Cape Town – 4 million GGP – Euro 30 billion 4 Universities/ Strong research culture A diverse economy, backed by a strong agricultural base, with a deep manufacturing base, and strong financial and tourism sector. French Huguenot culture still prevalent

7. History of Cluster Programme in the Western Cape • DTI’s cluster roadshows in 1996 • First cluster launched in 1998 • 2004 – Recognition & Budget to the Special Purpose Vehicle - SPV Program • 2011 – 17 Initiatives, Euro 8m annual budget

8. Western Cape - Industry Cluster Portfolio Cape IT Initiative Prof. Bus. Services WC Tooling Initiative WC Furniture Initiative Auto- componants CCDI (Craft) Cape Film Commission CIMM (New materials) Established Clusters Emerging Clusters SA Wine and Brandy Trust Cape Bio-tech Trust Electronics Clotex (CMT’s) SAOGA (Oil and Gas supply) Clusters with potential Calling the Cape Environmental Goods & Services Cape Ship Repair CTBi (Boatbuilding) CT Fashion Council Cape Clothing Cluster Financial Services GreenCape Initiative WC Aqua Culture Initiat WC Fine Food Initiative Cape Music Initiative

9. Nature of Cape Clusters • Average 5 staff per SPV • Not-for profit companies • Public/ private sector funded • Open membership • Representative boards (majority industry + reps from academic & research institutions / government) • CEO’s – industry specialists

10. Achievements: 17 SPV’s Euro 8million funding 50% from government/ 50% outside 3000 companies participate All 4 universities involved

11. Role of Clusters10 key functions Understanding industry Collaboration Business Development Institution Building Innovation Support The Cluster Initiative Building Institutions Productivity Interventions Debottlenecking Problems FDI/Trade Promotion Skills & Training

12. The challenges of Innovation Science driven – may not be what the market wants Path lock-in/ dependency Scientists can be poor entrepreneurs Protective/ defensive/ untrusting Length of time to commercialise (particularly Bio-tech) Funding can be uncertain/ erratic (FFF)

13. Role of Clusters in supporting Innovation – A neutral player! • Breaking down the barriers of mistrust • Linking new ideas / sources of innovation to industry/academia – tech transfer • Facilitating access to R&D grants/ Framework funding • Facilitating IP protection • Assisting in commercialisation of IP and new start-ups • NB of success stories – Changing mindset

14. Innovation Systems thinking Address question of how to improve the functioning of the system as a whole. Look at sectoral innovation systems and how to improve them Innovation systems at the edge/ Open innovation How to get scientists to interact with industry and visa-versa. The Cluster IS the innovation system?

15. Role of Clusters in Collaboration Ubiquity of knowledge – tacit knowledge increasingly important • Encouraging co-operation between firms • Building of social capital – bringing firms, government, academia/ research together. • Hub for distribution of information/ providing connections Eg – Boom room; Listening Lunches; Bio-Buzz Events, Food-Tec conference

16. International Collaboration Increasingly globalised, specialised world South Africa like Reunion – somewhat isolated from major trade routes To survive, need to identify competitiven advantages, specialise and innovate Deepen collaboration in key technologies to achieve critical mass

17. WC/ Reunion Co-operation Framed within EU/SA trade agreement Co-operation around bio-tech, food and aquaculture Joint research projects between Qualitropic, CPUT, ARC and PGWC Student exchanges Attendance at conferences Tech-transfer and sharing

18. Additional areas of potential co-operation Renewable energy – looking at appropriate techs for Africa Medical bio-technology – Knowledge sharing between CYROI and SA’s Accelerator centre Plant bio-technology – medicinal plants

19. Finally Some lessons:

20. Don’t allow paralysis by analysis • Businesses, especially SMEs, seek • early pay-offs • Move quickly into action, identify the ‘low hanging fruit’; prioritise by passion • Then engage in the more substantive issues • Establish a portfolio of projects • Move at the speed of business • Analysis simply provides the platform for action

21. The clustering process:But what can gowrong? • Capture by narrow interest groups; • Entry of new actors blocked • Removed from private sector culture: • Unable to attract business leaders • Chasing white elephants • Focus on analysis, not action • Ignoring emerging clusters • Cluster definition too broad, or too narrow • Confinement within political borders • Inconsistent support from government agencies

22. To conclude: In our experience enhancing innovation and strengthening the innovation system in the long term can be strongly enhanced by cluster-type bodies, that act as a neutral player to bridge the gap between scientists and industry, and to assist in internationalising innovation and research.

23. Thank you! Nigel Gwynne-Evans Ngwynne@pgwc.gov.za