by Robert Breault

This is the first in a series of articles on the topic of structured clusters, in some regions of the world called economic development regions. I hope to present here insights into the evolution and purpose of clusters and some thought-provoking concepts and challenges to leaders in the global optics community.

The successful cluster concept is based on a community's role in evolving a network of efforts beneficial to the industries in the cluster, and thus to the region's economic growth. Cluster building rests on more than the efforts of an industry association, or a public-sector organization. To a large extent, cluster building owes most to an unpaid, voluntary partnership of a few hundred public- and private-sector organizations that focus on the economic and social health and welfare of a region, its industries, and its people.

What is a cluster? At a conference of the Barcelona-based International Competitive Institute last year, a large subgroup debated the better part of a morning on the definition of a cluster. My well-circulated definition that follows represents the type of cluster that I refer to in this and future articles: " 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."

Clusters may work in conjunction with local, state, and federal offices, and universities and community colleges. The clusters need not be focused only on technical industries: for instance, of the clusters in Arizona, three serve the tourism, food and fiber, and senior living industries.

I want to make it clear that a cluster is more than just an association of similar companies. A cluster and an association are not even close in their functionality. An economic cluster is both a concentration of firms across related industries and a concentration of the public- and private-sector organizations that are stakeholders in local economic development. The successful partnering of these willing groups defines a cluster.

The Arizona Story

Just like natural resources, economic clusters in general have to be found and developed. Though it is possible to build clusters from the ground up, the Arizona Strategic Planning for Economic Development (ASPED) office took on the task of identifying the significant clusters that already existed within the state. Thereafter the Governor's Strategic Partnership for Economic Development (GSPED) was formed to implement the ASPED plan.

Since that time, the concept has been ported in the United States to Florida, Connecticut, Colorado, New Mexico, Massachusetts, Pennsylvania, and New York; in Canada to Quebec, Toronto, Ottawa, and Vancouver; and abroad to Scotland, Singapore, and Japan. In many regions around the world, clusters that were formed ad hoc are renowned for their success -- for example, Silicon Valley, Route 128 in Boston, the fashion industry in Paris, and the retail and leather industries in Italy. Though I will discuss clusters that came about organically, I will place the emphasis on structured clusters, which are created by a known and intentional process.

Arizona's story is about a thousand people who were motivated both by self-interest and the common good. The attitude of many people in Arizona can be summed up as, "If we can run our companies properly and profitably and provide a reasonable return for our shareholders, we can, and must, get involved in the community and have an impact on its direction." This is a challenge to the international optics industry's leaders and regional and national economic developers to step forward and contribute their ideas. This is not a story about old-time associations.

Government and public-sector forces are also changing dramatically. The responsibility for a healthy economy has shifted from the federal government to local regions, paradoxically while markets are more global than ever before. I believe clusters can be created in many regions of the world if they can inspire their community leaders.

Regional efforts are now more important than ever, as the economy and the competition are truly global. One strong business in a region, a Hewlett-Packard, Nortel, or Microsoft, can create a whole economy around it, and account for many spinoffs. In the case of Tucson, the Optical Sciences Center at the University of Arizona has been cited (Arizona's Economy Is Everyone's Business, by Alan Korwin et al., Governor's Strategic Partnership for Economic Development, 1992) as an instance in which the regional economic health flows from the strength of the Center. Fourteen local optics companies have been spun off from research work at the Center. Massachusetts Institute of Technology can claim an even bigger impact in the Boston region.

The cluster process is being replicated at the local level around the world, but Arizona is arguably one of the first to implement a statewide program. Arizona has eleven interactive industry clusters, and a structured set of seven foundations to support the clusters. The state has already received multiple national awards because of its cluster formation and activities. At least one recently published book -- Building Economic Communities: How Civic Entrepreneurs are Transforming America, by Doug Henton, John Melville, and Kim Walesh (San Francisco: Jossey-Bass, 1997) -- cites Arizona, along with six cities and Florida, as exemplary of good cluster development.

Economic development regions have occurred naturally for centuries. Some examples are the first agricultural villages, naval powers, manufacturing industries of all sorts, and now in our time, the telecom regions. In studying the processes that made them successful, it is clear that the social groups that had the better knowledge and organizational skills played a dominant role. Historians have also often attributed the growth of successful societies to geographical location and proximity to transportation; to short-term economic factors such as gold, copper, oil, or other raw and natural materials; or finally to the availability of capital. The cluster concept, however, is provoking new research that challenges these long-held concepts, including the significance of capital formation as being dominant.

Broad Knowledge, Economic Skills

A growing number look on the success of more advanced societies as due to how they developed and incorporated broader knowledge and sounder economic skills than their rivals. Examples would be the Romans' development of wine and weapons, silversmith guilds, dominant shipping centers, and finally Silicon Valley and its associated high-tech industries.

While initially the social entities may have been unstructured, the successful societies evolved more and more structural roles for various sectors of the group. In today's terms we would call the subgroups the public sector (government's civic and economic sectors, and its legislative and judicial branches), the private sector (support industries included), mixtures of both, and educational institutions.

It should be easy to see that this is not a period of economic transition. This is confirmed by the almost simultaneous events such as the demise of the Cold War, downsizing of governments around the world, rapid development of technologies, and the rapid spread of this knowledge. Add to these factors the rapid mobility of capital, global market competition, and access to the information highways.

But this is a period of discontinuity in the evolution of society. No one has yet shown that they know the new rules of the game, but some hold that clusters will be a significant part of the twenty-first century's social and economic structure.

Today's cluster can be viewed as incorporating in a premeditated structure some of the processes of those formed in a more or less ad hoc manner. The principles are a plan, organizational skills, cooperation of the community stakeholders, the educational system, workforce development at all levels, transportation of the products more efficiently than others, competition in the local region, and the integration and modification of multiple foreign technologies.

Robert (Bob) Breault is president of Breault Research Organization of Tucson, Arizona, and co-chairman of the Arizona Optics Industry Association, 6400 East Grant Road, #350, Tucson, AZ 85715; e-mail: bbreault@breault.com.