Aug 9, 2021 at 12: 39 am

What is Business Model in a Cluster?

The business model of a cluster is how it creates value. Yet, many clusters never get there and get pulled in all kinds of different directions.

Christian Rangen & Victor Haze

3 MIN READ

At its core, strategy is simple. It should cover where we are going (vision, mission, ambition, desired position) and how we are going to get there (the focus areas, strategic pillars and roadmap).

For a cluster, a clear cluster strategy should cover the following areas:

  • Ambition: What is our mission and ambition?
  • Focus Area: What are our strategic pillars? We often recommend five.
  • Value Impact: What is the value we aim to create or the impact we aim to have?
  • Roadmap: What does our strategy roadmap and timeline look like?

Three Levels of Cluster Business Model

Level 1: how a cluster is financed

The first level of cluster business model is the financing side. We have identified three common financing mechanisms, Public-Private-Project. For many clusters, the quest for financing can take a significant part of their focus and energy, preventing them from focusing on the value creation or output of the cluster. Initially, most clusters struggle, getting by on ‘scrappy financing’ solutions.

Level 2: the cost structure of a cluster

The second level is the cost structure of the cluster. What do we need and how should we best structure it. For many, it is often beneficial to start with the cost side, and really dig into how to best structure the cost of the initiative.

Often, we find there are creative ways to manage costs, through talent sharing, internships, co-locating with founding partners and generally keeping costs lean, low and flexible.

Level 3: how a cluster creates value impact

The third level is how a cluster is able to organize and align itself around the shared value creation or, what we call, value impact. This goes beyond the funding/cost discussion and requires the cluster to focus and measure outcomes and value creation. For many, this is a difficult exercise. Many clusters, we find, tend to measure the easy things (number of members, number of events, how many people have joined a webinar). Few are truly adept at measuring the outcome of the cluster. Granted, this can be exceedingly hard, but it is possible.

Why cluster business models matter?

Globally, there are some 7,000 innovation clusters. In the EU alone, there are 3,000.

The large majority of these clusters are small, understaffed and underfunded. They are resource-challenged, and consequently, their value impact is limited.

We believe that innovation clusters and Superclusters worldwide would greatly benefit from learning about, understanding and shaping better business models.

At its core, the business model of a cluster is how it creates value. Yet, many clusters never get there. Instead, they get pulled in all kinds of different directions, trying to serve and please members and being busy rather than strategic.

In our work with clusters and business models over the past five years, we have rarely met a cluster that has had a clear business model. Instead, some have financing (mostly public), some have financing (mostly private), some have budgets, some have project financing, some have KPIs and metrics; but few could really pass the test of a highly developed, fully validated, sustainable cluster business model.

We believe this needs to change. We believe the next decade will need to shine a light on, build capabilities and mastery around winning on cluster business models. The question is ‘how?’

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Download the full report here if you want get unique cluster business model tools, expert views on the cluster business model revolution and emerging thinking on cluster business models. Pre-register for the Spanish version coming soon.

You can also register for the Global Cluster Leadership Program here – an online certification program designed to build capacity for cluster management and develop strategic cluster leadership skills – to dive deeper into an exciting combination of cluster case studies, cluster strategy and leadership exercises and interviews.

You can also get a taste of the digital strategy simulation Supercluster! by RSVPing here to join the 2-hour Supercluster! Digital Discovery Session on 2nd September (11:00 – 13:30 CEST).

 

Christian Rangen & Victor Haze
Christian Rangen & Victor Haze

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