Clusters: A framework for understanding the inter-linked challenges facing businesses and territories

I have been at the University of British Columbia’s Okanagan campus in Kelowna, Canada, for the last couple of weeks. It has been a great experience, teaching on UBC’s new Masters in Management programme, which is led by Mike Chiasson. This blended learning programme kicked off with a two-week intensive in-residence module that brought together a group of students from a diverse range of professional backgrounds across the public and private sectors. Rather than taking classes around typical management disciplines, they were challenged throughout the two weeks to think about those disciplines in the context of real-world issues, stimulated by a series of study visits in the Okanagan region.

The programme is built around an innovative methodology that encourages students to: (i) identify areas of interest (an organisational management issue, or a territorial development issue); and then (ii) to seek out different frameworks that might help them understand that area of interest; and (iii) specific methodologies that enable those frameworks to be usefully applied. My contribution was to lead sessions on globalisation, regional competitiveness and clusters. Clusters, for example, can be seen as one framework through which both business challenges and regional development challenges can be understood. There are then a series of methodologies – different approaches to cluster mapping, cluster policies, cluster organisations, etc. – that can be explored to put this into practice.

The use of clusters as a framework in this way was really brought to life by the field visits punctuating the in-residence module. In a form of ‘action learning’ we visited a range of firms and institutions related to the emergent Okanagan wine cluster, and had the chance to quiz them on their challenges and what they are doing to address them.

This case makes for a great example for learning about the link between business development and territorial development. On the one hand wine is an emerging industry in the Okanagan region, facing some specific challenges associated with being able to compete in a highly competitive global wine market. On the other hand there are strong links between those challenges and a range of wider regional economic development concerns such as sustainable use of land and water, and the rights of different groups of people (in particular the indigenous First Nations people).

It is also a case where the cluster approach really fits well. The wineries face a number of shared challenges where collaboration, alongside competition, is likely to be very important for finding the right solutions. These challenges include a limited and fragmented land base, the need for sustainable management of new diseases and of water usage, the development of a recognised identity (or identities), and the need to be continually improving quality. The latter appears to be perhaps the dominant concern because the Okanagan region is at the climatic limit of where it is commercially viable to grow grapes for wine production. This means that their strategy needs to be based on quality, as low yields make it impossible to compete on price.

On our field visits we saw an industry that is starting to work together around these sorts of challenges, for example through the establishment of a British Columbia Wine Leaders Forum, facilitated by UBC’s Okanagan campus and KEDGE Business School (Bordeaux) We visited the Pacific Agri-Food Research Centre (PARC), where the Director of their Wine Programme explained that they were trying to do the type of research that the industry wants/needs, rather than that which the PARC scientists might want to do per se. It is not always easy to achieve this change in research perspective, but in this case science appears to be a great example of where more effective collaboration could bear fruit, given shared challenges around issues such as grape quality, vine hardiness, and sustainability.

Taking a cluster approach also implies widening the lens to look beyond the immediate wine industry. In this sense the field visits sparked a series of discussions around how the grape-growers and wine-makers might collaborate with local barrel producers, steel container producers, marketing experts, tourism providers, etc. in seeking to build synergies and improve their collective capacity to compete.

The cluster lens can also be widened to take on a broader regional development frame, asking how the evolving activities of the cluster fit with the objectives and interests of the communities that make up the Okanagan territory, and seeking to build on the synergies and effectively address any tensions. That way it is possible to imagine a ‘golden scenario’ in which the economic development of individual businesses and the socioeconomic development of the territory are truly in tune with one another. It is going to be really interesting to see how these sorts of issues, that the student groups have started to explore in the last couple of weeks, develop into concrete projects and ideas over the coming months.

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