by Robert Breault

In the first installment of this series (The Evolution of Structured Clusters, Photonics Tech Briefs, May 2000, page 10a), I offered a definition, as follows: "A cluster is a concentration of firms across several industries that creates quality jobs, exports goods and services, shares common economic foundational needs, and unites the public sectors of economic development, legislatures at all levels, universities, community colleges, the K-12 educational community, workforce development, support foundations, and all community economic stakeholders."

As an example I cited the State of Arizona's efforts to create a structured cluster -- that is, one that did not grow in organic fashion but was created by a known and intentional process. Arizona has eleven interactive industry clusters, and a structured set of seven foundations to support the clusters.

The Arizona economic development plan addressed three basic questions:

1. What should be the goal of economic development? (My expansion of the original response is in italics.) The goal of economic development is to increase the standard of living and enhance opportunities for advancement by increasing per capita real wages, creating quality jobs, fostering enterprise, and improving the quality of life. The goal of economic development at the national level for regional industry clusters is: to increase, in a catalytic way, their members' access to capital; develop and share market information; and enhance opportunities for the expansion of their regional cluster of industries. The latter could be done by fostering enterprise growth, improving regional infrastructure, enabling public and private meaningful dialogue, removing national legislative barriers, and improving the overall economic health of the region.

2. What are appropriate strategies for economic development? Economic development strategies create quality jobs by attracting, retaining, and nourishing value-added clusters through initiatives that strengthen economic foundations.

3. How should regions and nations organize for economic development? Public-private partnerships are required to both strengthen foundations and promote cluster-based economic development. The planners proposed a three-phase approach. (My suggestions for the optics industry are again in italics.)

Phase 1: Strategic Assessment. An economic framework based upon "best practices" from across the nation was used to prepare an in-depth strategic assessment of the needs of the region. A national strategic assessment would undoubtedly reveal that the aerospace, biomedical, telecom, environmental, optics, and software industries, for instance, are some of our nation's strongest economic assets of the future. You may ask, why perform an assessment if we know the answers? Because we do not know all the vital cycle industries, nor do we appreciate their magnitude and impact. I cite today's optics industry as the foremost underrated key industry in the United States. In other countries, it may be the same or different industries: forestry, oil, hydroelectric power generation, etc.

Phase 2: Strategic Planning Process. In a statewide planning process involving a broad spectrum of Arizonans, the strategic assessment was used to develop initiatives. This process will be a major challenge at the national or global level. At the state level, frequent meetings required individual participation. Individual participation was the soul of the plan because the planners got first-hand input from the consumers of the output -- private companies. The initiatives were not the ideas of the planners but came from the people in the marketplace. Nationwide individual input from companies, involving frequent attendance at meetings, is unlikely. The clusters may be the solution for getting "direct" input from CEOs and other company executives at the local level, an opportunity that is presented by national gatherings of clusters. Arizona initiated the first of such meetings in June 1995 at the North American Cluster Conference. The interest in clustering was so high that it even surprised the planners. Before any invitations were sent out for the 75 seats available, there were more than 200 requests for them. The Competitiveness Institute now sponsors an international cluster conference annually. The Coalition for Photonics and Optics (CPO) is another example of a national response effort.

Phase 3: Implementation. Specific strategies developed in the planning process are being implemented through specific public- and private-sector actions. The implementation phase is most often the hardest. It requires buy-in and participation by industry leaders. This is taking Total Quality Management to a global scale. It leaves the drivers for growth in the local region, but takes the development of the infrastructure to a national or global level of partnership.

The optics community has to acknowledge that it has no plan for the economic development, growth, and support of its industry. We have no national SIC or SOC codes, and little or no market analysis, metrics, or demographics for our industry. Supportive legislators and interested investors find it hard to measure the size, value, and potential growth of the optics industry. Fragments of such information would indicate that investors and public-sector figures should be paying much more attention to our high-growth industry.

The Arizona Strategic Planning for Economic Development (ASPED) study reflected contributions by every segment of Arizona's diverse population and every region in the state. The top ten economic development concerns of ASPED participants were:

After reading studies from other optics clusters, I conclude that it is reasonable to expect that these concerns permeate all clusters at the national level.

The Arizona cluster-building process, while not totally unique, has created one of the first successful state cluster programs in the nation. It took the effort of more than a thousand creators, and has evolved into an undertaking embracing more people and regions. Arizona makes no claim that its way is the right way for other regions. In fact, other clusters have borrowed from Arizona's concept and created their own version of what a cluster is and how best to implement it. A cluster is a process rather than a step-by-step plan that can be followed anywhere. But there is little doubt that the model is a good one. Arizona is confident that its plan has the right ingredients to significantly better the state's economy in the twenty-first century.

Robert (Bob) Breault is president of Breault Research Organization of Tucson, AZ, and co-chairman of the Arizona Optics Industry Association, 6400 East Grant Road, #350, Tucson, AZ 85715; e-mail: bbreault@breault.com. The author acknowledges that he has drawn upon several internal Governor's Strategic Partnership for Economic Development (GSPED) documents whose authors are unknown and therefore cannot be cited individually. Among the documents that had authorial attribution were the following: