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Why clusters are beneficial for your business
The development of clusters is an important issue for governments, companies and other institutions. Commercial director Andrew Barlow draws on his experience at Milton Park, to explain the concept of clustering and the associated benefits
Defined by the Harvard Business Review as “geographic concentrations of interconnected companies, specialised suppliers, service providers, and associated institutions in a particular field that are present in a region”, clusters are proven to increase productivity.
So the concept of clusters excites policymakers because they help rapid growth as well as economic success and for these reasons alone, it is worth any business looking at how clusters can positively impact on corporate performance.
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There are some businesses which embrace the concept of clustering as a strategy for extending the capabilities, resources and responses to levels that would not be achievable as an individual firm. These businesses do not necessarily use the term cluster, but see significant advantages in working with other businesses on joint activities and projects for mutual gain. For example, think of the recent publicity surrounding Tech City in London or the global reputation of Silicon Valley in California.
The benefits of clusters can be summarised as
• Reputation of an area • Innovation through having information on new markets and technological advances
• Pool of experienced labour, attract and retain experienced staff
• Access to specialised information through personal relationships
• Joint marketing • Better access to suppliers • Local rivalry and peer pressure • Access to institutions and public goods
Highly successful clusters also attract other facilitating organisations and here at Milton Park we are fortunate to have the Oxfordshire Bioscience Network (OBN) which acts both a catalyst and an amplifier for many of the activities listed above. OBN is the focal point for the bioscience cluster and organises events which concentrate the attention of the cluster such as the world renowned BioTrinity conference. It also acts as a point of access for third parties interested in the cluster such as venture capitalists.
It is important to note that whilst the academic analysis and government support of clusters is undeniably essential, clusters do, first and foremost, deliver tangible advantages for individual companies. Clusters are good for your bottom line.
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are present in clusters of different structures, sizes and sectors.
1 Commonality; ie the businesses are operating in common fields or related industries with a shared market focus or sphere of activity.
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2 Concentration; ie there is a grouping of businesses that can and do interact.
Milton Park is home to 6,500 people and over 250 organisations. When you decide to join us, you are not just choosing one of the largest business communities in the UK, you are embracing a lifestyle that can truly enhance your work life balance. We work better when we’re happy and we’re happiest when we feel we belong.
3 Connectivity; ie interconnected/linked/ interdependent organisations, with a range of different types of relationships.
• Environment which is more conducive to new businesses.
The management team at Milton Park is fully engaged with attracting the region’s leading business sectors. One example is the world- renowned bioscience cluster on the Park, which has grown significantly over the past two decades and continues to flourish with collaboration and innovation amongst the on-site community being an important feature. The success of this strategy has in part been demonstrated by the establishment of Enterprise Zones, as part of Science Vale UK, in a location here which is facilitating economic growth and jobs.
101_102_A4_Ad_4.indd 1 Getting finance Getting and keeping business Providing products and services
The UK Government published its own definition of clustering as long ago as 1999; “Concentrations of competing, collaborating and interdependent companies and institutions which are connected by a system of market and non-market links”. This broad definition has since been used to identify three underpinning principles of clustering which
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2013
Training Lobbying
General networking
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Activity/outcome New product development
As any business knows, there can be a significant gap between recognising the benefits of a location and being able to act in a way which maximises those benefits. The Foundation for SME Development at the University of Durham conducted a study into the activities which commonly occur within successful clusters. These are summarised in the table below:
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Grow. Succeed. Belong. How undertaken in a group
Joint R & D, sharing information and ideas, peer review of R & D, influencing the research agenda of universities
Closer access to finance bodies (especially venture capital), supplier credit
Referrals, joint marketing, gathering market information, improving the image of an area
‘Just in time’ delivery, help supplier improve quality and reduce costs, joint purchasing and transport, share equipment, technical assistance, benchmarking
Joint courses, setting curriculum with training providers To influence the business and regulatory environment
Get contacts to help with other activities, put something back into the community
www.businessmag.co.uk 27/09/2013 09
So if you would like to benefit from an ecosystem of enlightened self-interest, a cluster might be where you belong.
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