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Spotlight on clusters

What are they? And why prioritise building one?

Welcome to BioVale’s blog which we’ve launched alongside our new website. To kick off, we thought we’d reflect on a question we’re asked frequently: what is a cluster? And why target building an innovation-driven circular bioeconomy cluster right here in Yorkshire and the Humber?

Clusters exist throughout the world – Stoke’s potteries, Silicon Valley’s tech, Hollywood’s cinema and York’s food & drink. Their basic principle is that a geographic proximate region has the core complementarities and commonalities needed to competitively excel in a particular sector, i.e. a critical mass and concentration of business, institutions, skills, infrastructure, R&D, resources/feedstocks, enterprise, funding and ambition.

A cluster is grown through economic strategy or emerges naturally as both industry and labour are inherently drawn to its advantages. These advantages are known as the ‘cluster effect’ and they’ve been extensively studied ever since Michael Porter drew the world’s attention to them in the 1990s. Scholars tend to put forward definitions such as: a mature, strong cluster harnesses existing strengths to optimise efficiencies by reducing transaction costs and attracting new enterprise and talent. In doing so a cluster increases productivity, competitiveness and – above all – drives invention and innovation. All of which, in turn, expands and strengthens the cluster itself in an economic virtuous circle.

Clusters put the role of location front and centre in driving innovation and use social glue to bind its members together. Beyond fostering productivity, competitiveness, enterprise and innovation, benefits come from cluster members sharing specialist equipment, resources, training/skills, knowledge/insight, branding, marketing and skilled labour as well as nurturing entrepreneurial possibility, curiosity and creativity. The active participation of world-class academia and its research is vital when a cluster develops new supply-chains, technologies and its industries, such as the commercialisation of a disruptive bioeconomy at scale. Notably, a strong cluster will underpin a region’s strategic planning and investment while creating a single, highly-visible voice from which to talk to or lobby customers, suppliers, government – and be listened to. Success begets success and the whole cluster is strengthened in an open, collaborative manner which grows opportunity and enables capability upgrades.

Hence, a cluster benefits each member by allowing it to behave as if it has a greater scale, influence and assets than it actually does via a web of informal linkages. Small (or large) business cluster members can retain their independence, flexibility and individual strategy while leveraging links, associations and collaborations forged in a crucible of community and trust. It’s a different way of developing complexity rather than, for example, formalised vertically integrated joint-ventures. In the pandemic’s wake, increasingly local business models such as clusters are being discussed as solutions to global challenges as nations and societies rethink the long-term relationship between government, industry and the people.

The question then becomes: “Great! But, how can a local cluster be better for an individual business than leveraging the global economy for its cheap labour, low energy costs and access to markets?” The answer lies in what strategy a business is pursuing. If it includes embracing new ideas, new collaboration, new research and new customer future trends, then cluster networks, open knowledge exchange, collaboration, trusted relationships and access to world-class, academic research will prove far more valuable in the long-term. Whilst cluster benefits are broad, arguably it is the magnification of innovation which drives their fundamental success.

It is by cultivating this exchange and collaboration between large enterprise, small enterprise, start-ups, government, academia and education that regions can control their own future economies – develop complimentary innovation, build on existing strengths, foster growth and invest in the skills of local workforce while attracting innovators to relocate locally. An economy where people start their own ventures because the barriers to entry are lower and so magnify enterprise, growth and innovation.

So how to go about building a strong, dynamic cluster? Fundamentally, it must have a genuine solid foundation. Unanchored ‘cluster-dreams’ will flourish if fed a generous diet of money, but when the money ends the cluster will dissipate. Rather tomorrow’s strong clusters will leverage today’s sector strengths while embracing a bold vision shared across stakeholders.

How does a cluster-strategy fit with Yorkshire & the Humber?

Bold ambition and vision unpin the world’s best clusters – they target a ‘moonshot’ if you will. So we ask, if Yorkshire & the Humber (Y&H) were to build a cluster, what would its moonshot be? The ideal answer will encompass existing goals (Circular Yorkshire, Grow Yorkshire, numerous 2030 net-zero targets and an economic need for long-term productivity growth providing skilled jobs as well as embracing the UK’s Green New Deal) and then interweave and expand on these goals to generate an overarching vision.

The answer is: a circular bioeconomy. The creation of a future-proofed economy that uses renewable resources/processes; sees waste as a feedstock; and tackles the UN Sustainable Development Goals, biodiversity and net-zero while creating rural and urban economic opportunity for all. It’s a bold moonshot requiring substantial efforts, but please know this: Yorkshire & the Humber is the natural home for the UK bioeconomy.

Locally, numerous organisations have been advancing, advocating, dreaming of such a civic-minded moonshot for over a decade so we’ve a valuable running start given clusters are built on people. In embracing a cluster strategy, we will achieve this ambition by cooperatively linking our regions strongest industrial sectors – food & drink processing, agriculture and bio-based R&D – with our world-class educational institutions, skilled workforce, excellent logistics, enviable quality of life and adjacent chemical clusters. Combine these assets with the fact that the cost of doing business here is highly competitive and our moonshot no longer seems such an unreachable dream. Sure we’ve weak points – notably our entrepreneurial infrastructure and culture – but nothing strategic investment cannot overcome (and then reap its return). Ours will be a cluster built on unshakeable foundations.

Where does BioVale fit with this ambition?

BioVale is Yorkshire and the Humber’s Innovation Bioeconomy Cluster Organisation. As they say, behind every strong cluster is a strong cluster organisation who is there to not only support but to accelerate the cluster’s success. How cluster organisations achieve this varies – and will be the topic of upcoming blog posts.

Right now we know recovering from Covid while adapting to Brexit will be challenging, but we’re ahead of the curve. In collaboration with a number of key stakeholders, we’re already pooling resources, amplifying ambition and, above all, agreeing that we’re going to build an economy fit for the future we all face – greener, stronger and fairer.

But let’s finish our first blog post by highlighting BioVale’s most important asset – our members. With almost 600 members from over 350 organisations, BioVale belongs to you and, as with all cluster organisations, our members get out of BioVale what they put in. Cluster relationships take time and effort, but will deliver more than you realised was possible. So please explore our new website, contact us with insight/queries and take the opportunity to expand on your member profile while surfing other member profiles. Or if you’re not yet a member – join us.

Sarah Hickingbottom

CEO, BioVale

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