Collaboration is the new competitive advantage. So says the Harvard Business Review. With this in mind, Ireland's national enterprise policy, Enterprise 2025, aims to promote inter-organisational collaboration in the form of clusters in key sectors of the economy such as agri-food, engineering, ICT, life sciences and the audio-visual film and animation sector.
It seems like a welcome development, given that similar cluster policies have proved successful across the world. In the US, Harvard Business School’s impressive Cluster Mapping project, indicates that 51 traded clusters form the engine of its economy.
Closer to home the majority of EU member states have cluster policies in place to strengthen collaboration and co-operation between industry and research, support the SME eco-system and internationalisation. These cluster initiatives have been fuelled in part by EU policy and targeted funding programmes to promote economic development through clusters of regional specialisation.
One example is in Denmark, where the Danish Food Cluster, initiated by the food industry in Denmark in 2014, has practically the whole country in its cluster covering approximately 75 per cent of the total turnover in the food industry, with the aim to become the world leader in food innovation by 2018.
While co-location of enterprises on a sectoral basis is a feature of the Irish enterprise landscape, actual clustering dynamics are relatively limited in practice, according to Government’s Action Plan for Jobs. Yet without this willingness to embrace new ways of working together it is very hard to see how any type of world class cluster can get off the ground. EU data indeed confirms this to be the case.
Key examples
To explore this, let’s look at two areas of the Irish economy that have being going from strength to strength over the last five years: the audio-visual industry – with a focus on animation; and the agri-food sector.
The animation industry has experienced substantial growth since 2010 and has emerged as a central component of Ireland’s digital and creative economy. Animation studios Brown Bag Films and Cartoon Saloon have been nominated twice for Oscars with a raft of BAFTA, Golden Globe and Emmy awards and nominations between them.
Animation Ireland, the industry body who works collectively to promote Ireland's world class sector internationally, cites Ireland's favourable tax credits as one of the most attractive in Europe. There are also internationally recognised animation degree and further education courses based at IADT and Ballyfermot to develop the talent and specialised skillset now demanded by new technology.
In terms of Ireland’s agri-food sector, the government’s FoodWise 2025 strategy foresees an agri-food sector that acts more strategically and achieves a competitive critical mass in the international marketplace. Initiatives such as Bord Bia’s Origin Green has over 80 per cent of Ireland’s food and drink industry signed up to the world’s only national sustainability programme for food and drink.
Food Works, a collaboration between Bord Bia, Enterprise Ireland and Teagasc, helps launch and scale new food business for global success.
Enterprise Ireland’s Food for Health Ireland combines world-class science and industry expertise to improve health through innovation in food. Add to that the string of Local Enterprise Office-supported training programmes, networks, incubators and hubs from Dublin to Drumbshanbo and one could argue that Ireland is already a world leading food cluster.
Not so according to UCD’s report on Innovation in the Agrifood Sector in 2013 which concludes that world class performance is not seen as the norm for the Irish agri-food sector which currently lies fifth behind Denmark, Finland and the Netherlands. One of the key reasons given for this is the lack of collaboration among all stakeholders.
Competitive edge
This is where the Danes have an edge. On the back of an already world leading food and agriculture sector, the Danish Food Cluster was established in 2014 to take advantage of the opportunity to embrace the global food challenge brought about by increasing populations worldwide and the rapid growth in the number of middle-class consumers. Through a managed programme of clustering activities, it is creating a pipeline for new products, technology, business models and talent and finding new solutions to provide value to industry to achieve its ambition of being the number one country for food innovation by 2018.
Despite all the positivity, clusters have been known to fail. One of the key reasons is the inability to manage the conflict and mistrust that can exist among all the players and stakeholders in the cluster. This can prevent the clustering dynamics of co-operation and collaboration that fuels innovation and growth.
For Ireland’s agri-food sector and other sectors of the Irish economy to become world-class clusters it is not just a matter of building critical mass. It is a question of developing the leadership and skills required to facilitate large-scale collaboration across the whole value chain from government, education, research, industry and the networks of smaller regional-based initiatives which leverage local strengths.
Collaboration truly is the new competitive advantage and Ireland must ensure that it develops the cluster management capability required to deliver on a world class ambition.
Gráinne Millar is director of GM Innovations, a management consultancy specialising in cluster development strategy
