Supporting entrepreneurship, innovation and company formation is critical for improving cluster performance. Establishing entrepreneurship centers (ECs) with a specific cluster focus can consistently help to encourage entrepreneurship, launch new businesses and move innovations to market in the targeted cluster. Let’s explore how cluster-focused ECs work and the steps necessary to create one.
The U.S. Cluster Mapping Project at Harvard University defines a cluster as “a geographic concentration of companies, organizations, and institutions in a particular field that can be present in a region, nation, or state. Clusters arise because they raise a company’s productivity, which is influenced by local assets and the presence of like firms, institutions, and infrastructure that surround it.” Clusters also tend to produce innovation and higher than average wages, according to ICMA. Economic developers create cluster initiatives in order to support the growth of a particular cluster, or clusters. Among those initiatives are activities that support entrepreneurship and startup companies.
At BCD, we define cluster-focused ECs as ones that deliberately recruit entrepreneurs and provide service offerings specifically tailored for businesses in the designated cluster. Cluster-focused ECs are results-driven, aiming to consistently start and grow businesses, commercialize technologies and products, and foster innovation in a targeted cluster. Cluster-focused ECs often take the form of accelerators or incubators. For example, a clean tech-focused accelerator would only accept entrepreneurs and teams developing clean tech innovations into the cohort, and then incorporate industry expertise into the curriculum, in addition to pairing teams with mentors who have experience in the clean tech industry. A life science-focused incubator would be housed in a facility that included wet and dry lab space in smaller spaces for early stage life science companies, as well as access to expertise on the regulatory process required for getting a product to market and other areas that are specific to companies in a life science cluster.
Creating a cluster-focused EC starts with selecting a cluster, or clusters, to target. Many regions and communities already have cluster studies in-hand that have identified one or several clusters present in the region or community. An EC cannot target all of the clusters so the right cluster must be identified. Also, not all clusters are well-suited to an EC model. Pick one that will fit, and the one in which the EC is most likely to have the most impact on the cluster and generate measurable results.
Once you have chosen the targeted cluster, you must develop a clear understanding of the market. What are the needs of entrepreneurs and early-stage companies in the cluster in your region, and how are they currently met or not? What types of organizations, programs and events are serving those needs and how? What is your current and future capacity to serve those needs? The gap between the business needs and the resources available should be the focus of your EC.
With this market assessment in-hand, the next step is identifying the EC model that best addresses the gap. The options include accelerators, incubators, coworking, makerspaces, and an array of events, plus hybrids of these models.
Then, it’s time to get down to the business of planning the different aspects of the EC. Planning includes defining and developing the mission and goals, selection criteria, marketing and recruitment strategy, specialized facility (if needed), tailored service offering, network of expertise, staffing, funding, and budget. Planning helps to garner community support and avoids costly mistakes in the development process.
Before the final step of launching the cluster-focused EC, funding must be obtained. BCD’s experience with more than 75 cluster-focused programs demonstrates that cluster-focused ESPs have greater funding opportunities than non-focused ECs. Federal government agencies, foundations and private donors seeking to boost and support innovation and new business development in the cluster can be supportive of cluster-focused ECs.
To learn more about how to strategically develop and deploy a cluster-focused EC in your community, join me at the InBIA e.Builders Forum on October 3 & 4 in Niagara Falls, NY. I’ll be teaching an interactive, half-day workshop on “Driving the Startup and Growth of Businesses in Targeted Clusters.” https://inbia.org/ebuilders-2019-home/
Carol Lauffer, Principal, Business Cluster Development
As Principal and owner of Business Cluster Development (BCD), Carol has helped more than 80 communities, universities and corporations across the U.S. to plan and deploy successful strategies and programs that support entrepreneurship, create new businesses, move innovative products to market, and build strong ecosystems and clusters, resulting in economic diversification, job creation, technology commercialization, and economic growth.
As a dedicated member of the industry, Carol served on the board of the International Business Innovation Association (InBIA), holding the post of Chair of the Board of Directors of InBIA in 2010-11. Currently, she serves on the board of the International Economic Development Council (IEDC). Carol is a course instructor for both organizations’ professional development programs, and a frequent speaker on best practices for entrepreneurial support organizations, ecosystem assessment and development, and targeting technology clusters and other verticals for economic development.