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Clusters as a tool for improving health companies’ competitiveness

11 March 2015

A cluster is a geographic concentration of interconnected companies that operate in the same economic field, share specialized suppliers and associated services, and have common strategic challenges.

The clusters appear in a territory often due to historical reasons, and develop based on a growth and merger process, in contexts of strong rivalry and cooperation at some stages of the value chain. This favours the rapid transmission of information on markets and suppliers, productive specialization and attraction of talent and capital.

Clusters, therefore, are realities existing in the territory, in some cases for centuries, regardless of how they were denominated: violins in Cremona, wine in Bordeaux or tanners in Igualada.

Policy models of economic development based on clusters assume that the company's competitiveness depends primarily on its individual strategy as well as the quality of the environment in which it competes (existence of infrastructure, sector related industries, sophisticated demand, availability of training and human resources...). In this sense, any company, regardless of the sector industry and technology where it operates, can become internationally competitive if it has components of strategic differentiation.

Michael Porter’s “The Competitive Advantage of the Nations” depicted the model of economic development, which has underpinned today more than 3.000 initiatives worldwide.

 

Custer policies

Governments articulate polyhedral policies to stimulate the complete value proposition of clusters, embodying it with tangible, realistic and exciting actions. These policies are essentially typified by the following traits:

- Focus: Resources by definition are scarce, so trying to generate impact in all areas of the economy is a pipe dream. Because to govern is to prioritize -especially in times of crisis- clusters provide a clever and focused way to concentrate resources and public performances. At the same time, clusters are a perfect intersection for other business policies such as corporate financing, technology transfer, training and attracting foreign investment.

- Transformation: A cluster is an optimum instrument for promoting industrial change, an essential challenge of our economy, based on the adoption of successful business models.

- Traction: Mainstreaming of clusters, with a focus on the value chain and growth projects, pushes support and tangent economic activities. Cluster leaders set the course, while successful practices generate a replica effect on the rest of the community and on the economy.

- Efficiency: With a much lower budget than in other policies, the cluster achieves a higher multiplier effect. This is partly due to the fact that it often relies on intangibles. Moreover, it takes advantage of economies of scale, both in the business analysis phase and in the promotion of changes.

- Adaptability: Cluster companies are the ones that determine the action plan for the cluster revitalization. The plan will be fully adaptable to their needs and expectations. Additionally, the cluster is a living project, that is, some of the essential parameters (perimeter, leaders, project results, new members...) are permanently modified. Each cluster will have a personalized action plan according to its distinctive qualities.

- Reality: Assuming that there are no good sectors or bad sectors, clusters need to be rooted in existing regional or local backgrounds. The main focus should be compatible with innovative initiatives, in line with socio-economic and technological developments that may lead to a cluster initiative ex novo. A cluster must be built on the existing strengths, though leaving room to stimulate new areas with growth potential.

- Responsibility: The role of a cluster manager provides a visible face in the interactions with the public administration. In addition, due to its relations with companies in the sector, this figure gathers expertise and capacity, becoming an authoritative voice that can provide both, a strategic vision and a capacity to appropriately invest and manage public resources.

- Proactivity: A cluster initiative is usually boosted by the public authority and followed by a private leadership. The process starts with a political decision to increase the competitiveness of an economic sector. This initial phase requires a proactive team: to visit the companies, stimulate working groups, lead benchmarking trips, ultimately, to work hand in hand with the private sector, and not passively from their office.

- Positive: Any sector has a rosy future if appropriate strategies are implemented. Clusters detect and implement winning strategies for business.

- Subsidiarity: By promoting cluster structures, administration outsources part of its public policy and transfers it to more flexible and focused ones. By closely coordinating with the cluster, the public powers will avoid duplicating efforts. However, they should not try to lead the organization but to provide for full potential, allow others to do and promote self-organization of the cluster system.

 

Clusters of health technologies

Health technologies are an emerging and strategic sector with high capacity for corporate growth. They are creators of wealth, innovation engines, leaders of world-class research, and able to sustain the development of a local business sector which is not necessarily based on big players.

In Catalonia, for instance, the Health Tech cluster works with an innovative, transversal and patient-focused approach, working on the basis of the flow from prevention, diagnosis, treatment, monitoring and rehabilitation, all interrelated in a dynamic ecosystem.

Increasing business competitiveness within a health tech cluster relies on a number of aspects: improved visibility and international positioning of the cluster, creation and attraction of new businesses, increased average technological level of companies, networking, strategic research and technology transfer, co-operation between universities-hospital-business, and new product development.

 

Salmons: business people implementing key strategies for success

Clusters are led by key entrepreneurs with a willingness to change. We call them salmons because they feel comfortable swimming upstream and breaking pre-set dynamics. These people are moved by their personal commitment to innovation and their roots in the territory, and not by their post or the organization they represent. They are excellent at managing their professional activities, but also have their own view with regards to the sector development and usually show an active commitment with the cluster community. They may be known or may be "hidden".

Every cluster is triggered due to the leadership and commitment of these salmons. They implement innovative projects for the sake of their profit but also aim at a broader positive impact. They not only think of what the cluster can do for them but also what they can do for the cluster.

 

Business Cooperation: teamwork improves individual results

In the current environment defined by the speed of technological change and the globalization of markets, size is a critical aspect, not only in terms of success, but even survival. Business cooperation becomes a good strategy to achieve critical mass and improve the international position.

Business cooperation is not an end in itself but a means to increase the competitiveness of companies. In defining winning strategies there is often a need to travel with a partner that allows us to maximize the window of opportunity and minimize risk. The optimal environment for detecting a potential partner is the cluster, since the competitor next door is usually the best potential ally to share problems and opportunities.

Mass meetings, arranged by the public agencies and sector or regional agents set to discuss cooperation in general asking for the goodwill of the business community, without specifying alternative projects, demotivate and creates antibodies for collaboration with third parties. On the contrary, the psychological process issued from successful cooperation, usually of initially little projects, facilitates generating confidence among entrepreneurs who share the same vision. Then, transformative initiatives to improve strategic positioning will follow. In any case, we will need transparent and pre-established collaboration rules.

Working in clusters is based on the idea that cooperation is a tool aimed at improving competitiveness, which provides a threefold value proposition: market intelligence on the sector, permanent opportunities to generate valuable contacts with companies and agents of the value chain, and a platform to promote projects aligned with future challenges.

 

Future Challenges

Future challenges of clusters involve being able to keep pace with the changes of companies. If they are going to be global, then clusters need to be global too. This will be achieved by networking with other national and international clusters, in an inter-cluster approach that maximizes the advantages of cross-fertilization, with a continuous professionalization and permeability of governance structures.

A cluster of health technologies is no exception and has to deal with, in particular, the following trends and changes in the business:

- The aging population and the impact of chronic diseases: The inverted demographic pyramid of Western countries makes it necessary to understand and take advantage of new business opportunities derived.

- The mHealth provides a feasible way to keep health benefits: Mobile technologies for health are growing exponentially, as elements to better monitor disease, empower patients and reduce healthcare costs.

- Health Technologies. From suppliers to strategic partners: The innovation should not focus solely on the product, but must cover the entire value chain of the health system by identifying opportunities that offer improvements or added value to it.

- Changing the paradigm. The 4 P medicine (personalized, preventive, predictive, participatory): We must strive for a shift from reactive medicine focused on the disease, to a preventive medicine focused on wellness.

- The 5th P. Towards open data in health: Open data is a huge transformation engine that provides transparency, creation of social and commercial value (new business models) and increased participation and commitment.

- Health and wellness tourism as a growth niche: It is a mix of supply of health services and tourism services, which include the usual intermediaries in the tourist sector but also in the health sector.

In short, we need to build on the distinctive capacities that we have, with an international vocation, and a constant generation of activities and projects with high added value. A major challenge.

 

*Joan Martí Estévez is author of "Clusters: winning strategies and teamwork" published in 2013. He is currently Director of Cluster Development at the Catalan Agency for Competitiveness of the Catalan Government. He is also a member of the TCI Network, has worked as a professor of strategy and clusters in various universities and business schools, and is an international speaker.