Superclusters in Canada: What’s next?

Superclusters in Canada: What’s next?

While the world focuses on ‘whither Amazon HQ2,’ the federal government is about to make a far more important and long-lasting decision about the future of clusters in Canada. In an attempt to address a long-standing weakness of the Canadian economy, the federal government will be announcing up to five new “superclusters” (or a series of related clusters that form a larger one). This is part of the five-year, $950 million Innovation Superclusters Initiative (ISI) that could materially impact the future of various sectors, players, and the overall competitiveness of the country. As the final list of superclusters is announced, the Institute offers recommendations to ensure that these superclusters will produce the economic growth and inclusive prosperity we hope for. The Institute is also hosting the 21st TCI Network Global Conference 2018 (also known as “TCI 2018”) from October 16-18, 2018 in Toronto and we hope to showcase the many clusters in Canada – super or not – at the conference.

Recommendation #1: Keep coordination at the centre

Some of the shortlisted superclusters, such as Canada’s Digital Technology Supercluster, have more than 200 organizations and post-secondary institutional members committing over $500 million in funding for 100 projects or cluster initiatives. This is an ambitious undertaking and will require significant coordination. Within a cluster ecosystem, initiatives are often coordinated by cluster managers within cluster organizations. As of 2012, half of global cluster organizations had 3 employees or fewer. For a supercluster, a large cluster organization or multiple across the various clusters would be needed to execute and manage these cluster initiatives or projects.

In some ways, the role of a cluster manager is similar to that of a project manager, coordinating across organizations in the same way a project manager coordinates between departments to drive projects to completion. But to succeed within a highly complex cluster ecosystem, cluster managers need to be experienced. Most cluster managers globally have 3-5 years’ of experience and 25 percent had 6 years or more. A major challenge that the supercluster finalists will need to overcome is hiring experienced cluster managers to coordinate the array of cluster initiatives.

Recommendation #2: Focus on international trade and exports

Traded clusters, or clusters that export across jurisdictional boundaries (including across provinces/territories) are typically more productive and prosperous, able to offer higher wages and innovation results, than local or non-traded clusters. Former Institute Fellow Paul Boothe’s interviews with large exporting Canadian firms offer evidence countering the assumption that companies that export are more successful. Instead, companies that are already successful locally are more likely to export. The ISI is therefore an opportunity for large anchor firms to continue exploring new markets, but also to scale up and prepare smaller companies to export their products and services.

Some of the shortlisted superclusters were explicit in their international trade aspirations while others were not so. Ideally, each supercluster will focus on scaling up and collaborating to eventually become export-oriented global leaders.

Recommendation #3: Tell your story

Canada lacks a clear, concise, and consistent story.[1] The same can be said of superclusters. While many of the major news outlets produced articles following the announcement of the shortlisted supercluster applicants, there was surprisingly little media attention on the superclusters themselves. What brought these companies together, across industries, to collaborate? What are the lessons the Innovation, Science and Economic Development Canada (ISED) team learned in evaluating the applications and working with the applicants? The Institute, in planning TCI 2018, has heard amazing stories of collaboration and innovation that come from these superclusters that we believe the public should hear.

This is why TCI 2018 is focused on storytelling. Stories are easier to remember than just facts but they also have more impact.[2] More importantly, stories are critical to branding, which clusters and cluster organizations work together to craft. As the finalists of the ISI begin their five-to-ten-year journey executing these projects, the Institute looks forward to the strong branding and storytelling that will help Canadians and those abroad be drawn to these superclusters.

Recommendation #4: Learn global best practices

Executing hundreds of projects over the next decade as some superclusters will, does not only requires coordination, but also continual education for all organizations involved. Corporations and specific sectors have jargon that may not be easily understood across a cluster, much less a supercluster. Developing and learning a common syntax, tools, and frameworks will be helpful in enabling seamless collaboration. A basic example: in North America, “cluster” is used less often than “sector development” or “business growth.”

In addition, cluster development is more advanced in other countries, such as those in Europe where the interconnectedness of the continent requires more collaboration. Therefore, it makes sense to draw on the experience of those outside of Canada so that those within superclusters can learn global best practices. TCI 2018 offers such a platform to “get your feet wet” on the practical aspects of cluster development as well as the high-level cluster conversations.

Recommendation #5: Evaluate long-term outcomes

Nearly $1 billion of Canadian taxpayer dollars will be spent on the ISI. The Institute applauds this investment as there are many positive stories that have come from this process. In some cases, former competitors now work together (in cluster development this is called ‘coopetition’). Yet accountability in the form of continuous data gathering and evaluation to ensure this investment by the federal government, along with other provincial and municipal governments, are necessary to drive towards the ISI objectives.

In Superclusters! Lessons + Opportunities for Canada, the Institute proposed some evaluation metrics and the ISI has also provided a list of key performance indicators (KPIs) that act as proxies for the expected outcomes. While these KPI data are useful, they are measures for outputs, not outcomes. For innovation to thrive, the focus should be less on outputs and more on long-term outcomes. ISED must balance the cost of capturing this data with the utility it will provide and the decisions it will impact. In many cases, these output data can be accompanied by qualitative data to give context on how well the superclusters are achieving the desired outcomes.

In addition to these recommendations, the Institute will be watching to see how the decision on the five superclusters was made and commenting on the process and the results. What will happen to those who are not successful? Will efforts be made to keep up the momentum behind those submissions? Will there be an obvious attempt at geographic equity instead of economic impact? What metrics will be used to measure success going forward? Regardless of the answers to these questions, cluster policy will be a central part of the national economic conversation in the year ahead.  The Institute is excited to be a part of that discussion.

Looking for next steps? Want to get involved?

There are a few ways to get involved in TCI 2018:

  1. Share your story – We issued a call for proposals for those who have a story to tell, a case study to present, or lessons learned to share from cluster development. Whether you are a policymaker or business leader who has worked in sector or cluster development, we want to hear from you!
  2. Attend TCI 2018 – Registration is coming soon. Join our mailing list to stay up-to-date to know when registration opens.

Written by: Dorinda So with Chris Mack and Jamison Steeve

Photo credit: StudioM1, iStockphoto

Disclaimer: The views expressed in this blog are that of the Institute’s and may not necessarily reflect the views of the 21st TCI Network Global Conference Local Steering Committee members, partners, or organizing teams.

 

[1] In fact, the release of Ingenious by former Governor General David Johnston and Tom Jenkins shed light to the little-known stories of the many inventions with Canadian origins.

[2] See the Psychology Today blog post on this, the Atlantic article, or Harvard Business Review article for more information. See StoryBrand for how stories can drive branding.

Category: Clusters, Economic Progress, Innovation