Tag Archives: clusters

Tourism and niche food – a powerful intersection to build on

After a full day travelling I arrived on the island of Bornholm and cranked into another packed day of meetings all over the island and yet again more productive discussions and outstanding people.  Bornholm and Taupo share a lot of similarities, including population sizes and dominant industries.  Bornholm is the same size as Lake Taupo.

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Destination Bornholm and the Business Center Bornholm

First cab off the rank was tourism with Peter and economic development with Jørn.  Bornholm has encouraged people to purchase vacation homes out of the main centres, perhaps a solution for the Auckland housing “crisis”.  Bornholm is trying to extend stay to shoulder season and leverage off the growing outdoor tourism market.  There’s one main visitor centre open all year round with others only seasonally.  Economically there is a big focus on proactively working with existing businesses and providing a one stop shop.

There were both differences and similarities to NZ and the topic of collaboration surfaced consistently.  How easy is collaboration in tourism compared to other industries?   Do more accommodation or activities grow or hinder industry?  Does necessity drive people together or apart?

Bornholms Middelaldercenter

Next stop was Niller from the medieval centre and a great example of what happens when you mix passion with authenticity.  The centre blends historical and cultural tourism delivered in way where all ages can actively engage.

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Gaarden

Then onto meet Mikkel at a food and culture house.  The food industry here is a outstanding showcase of adding value to primary product having developed from almost nothing 15 years ago to the place to be in Denmark for niche food.  Gaarden is a great intersection of regional food and historical heritage and an example of very collaborative industry in action where activities are as close to producers as possible…aka localism.  Like Oregon, there’s a lot of potential for transfer to NZ, and one that the Food Innovation Network is tapping into but I believe has considerably more scope in rural locations, especially to get away from price-taking commodity trading.  Here’s one bit of the Gaarden store selling local products, not bad for an island 588km²!

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Go Bornholm and East Winds

Finally I spent time with Jonas, a local entrepreneur who simply gets on and does stuff.  In addition to the East Wind activity business he has recently launched Go Bornholm, and online booking plaftorm, I lost count of how many bookings flowed through during our discussion…the digital age is now the norm.  If destinations don’t offer bookings direct from their website, where is the call to action?  It’s like not being able to book a room on a hotels website.

So what?

Whilst tourism is “lower value” as pointed out by Sir Paul Callaghan, it’s still the starting point for many communities rather than simply trying to parachute into something new.  Combining tourism with adding value to primary produce, locations can move up the value chain, and then overlay technology to step up again – it just takes market focus, capital, time, persistence…

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The Paper Province and the future of primary industries

Another full day of immersion in Karlstad, this time on economic development at a very local level focused on wood processing.  Here’s a view from on top of the water tower by Karlstad University looking out over the University, town, Lake Vanern and toward one of the paper manufacturing plants in the Varmland region.

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Clusters

First up it was an overview of clusters in action which was great to follow on from Harvard/MIT meeting last week.  There are hundreds of industry/regional clusters in the EU, with a Cluster Observatory and there’s also research focused internationally.

The Paper Province

Mats built up The Paper Province for 10 years and now works all over EU.  Initially the data didn’t identify wood processing as a cluster in this region, so early on they spent time proving it was.  Tetra Pak is one company you may know.  As mentioned yesterday there was significant consolidation in the industry.   It’s quite a story, the cluster started with 7 companies who had a burning platform around getting people to work in an industry which wasn’t seen by future employees as desirable.  This was at a time near the late 1990’s tech peak where the talk was about moving to “new economy” and how the ‘old economy” would disappear.

What I really enjoyed about today was seeing the results of pragmatism and determination of people working together over 15 years.

Applicable learnings for industry development were a lot around the people:

  • Industry involvement is the bottom line, so long as there’s not too much “our industry is different”
  • Being collaborator is like the metaphor – “bridging the gaps and then managing traffic on the bridges”.
  • Trust is key

Cluster actions are grouped into 3 activities:

  1. Cluster identity and attractiveness.  Doing this for an “old industry” like paper manufacturing involved opened changing perceptions through marketing, educating and empowering teachers, integrating University and research and developing their own school.
  2. Innovation and R&D.
  3. Business development, e.g. Companies leveraging off each others export contacts, sharing space at tradeshows.

The results?

Over 100 companies are now in the cluster and as a group they have outperformed other benchmark clusters in most other performance measures (like financial results).  It only takes a decade or so…

The future of primary industries?

Building on yesterday’s post about increased competitiveness – what is the future of industries, particularly primary manufacturing?

As an example, Sweden takes a different to wood processing.  The ownership mixture of forests is half small lots (200,000 owners!), and the other half split between large companies and government, which means very little vertical integration (ownership of forest and processing/manufacturing).  Despite this, almost all the wood is processed in Sweden into a range of products and then exported meaning very few raw log exports (they can import some wood).  Depending on the tree it takes 75-100 years for a tree to mature in Sweden compared to NZ’s 25-35 years…check out a comparison.  You’ll know of Ikea, which started in Sweden and look what it is today…nearly EU $30b in revenue per annum.

What would happen if companies and regions did nothing more than try and increase the value of their current products/services?  Especially when they are primary based (aka provincial NZ).   This might employ less people, but they will be higher skilled and higher paid.  What could then be leveraged off?

Harvard clusters and MIT entrepreneurship

Today was northward through the maze of highways from New York up to Boston. I’m writing this with a sense of relief having made it through a month in US with only a few less possessions than I started.  Tonight is an overnight flight to Sweden via Iceland.  I’ve been blown away by the friendliness and hospitality of the people here – from the people I’ve met (I haven’t had one cancelled meeting) through to all the people I’ve bumped into as a tourist along the way.

Dezan Shira & Associates

Richard, the Director of North America Operations for Dezan Shira gave me a great summary of his experience of living and working in China for 10 years.  I’ll cover this off in my China section in a couple of weeks, but it was a brilliant overview that will significantly aid my time there.

Harvard and MIT

From there it was on to meet with Sarah Jane who is with both Harvard Business School as part of The Institute for Strategy and Competitiveness running the Cluster Mapping project and MIT Regional Entrepreneurship Acceleration Program.  Here’s Harvard Business School.

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The Institute of Strategy and Competitiveness was founded by Michael Porter of Five Forces fame.

The visit wrapped a lot of structure around all the ideas I’ve come across so far, including putting into context a lot of traditional activities around industry attraction and trying to pick future industry winners.  In summary:

  • Cluster mapping methodology involves an upfront focus on data, with industries classified as either local or traded depending on where they sell to (locally or outside the region).  The key here is that while both industries provide jobs, the traded industries create higher wage growth, more productivity, and the list goes on.
    • A very smart algorithm is then applied to identify industry clusters.  There is a lot of data, which is split into three categories: Performance, Business Environment and Performance & Geography.  Tech geeks, they are using APIs.
  • Sarah Jane talked about stakeholder ecosystems to develop industries, including representatives from each sector – Entrepreneur, Risk Capital, Corporate, Government and University.  This is a great systems approach and what is very relevant for smaller locations is that Universities will often be absent and getting the mix of the other four can also be problematic.

The relationship between rural locations and cities is an interesting one…rural communities often benefit from cities growing, but if your location is declining – then what?  There’s some good rural research here too.

I’m doing cluster mapping a great disservice with this very brief summary of my take-outs, so check out the website for more info.

OK, flight is about to board so one last technology plug…here’s an almost hologram at Boston Logan airport giving people information before they pass through security.

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Reinvention – the new normal

The weekend was full of lots more driving and some sightseeing, but most importantly time to recharge the batteries after an incredibly demanding week.  There was probably no better place to do it than in Oregon (photo of Smith Rock).

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Many of the people I’ve spoken to in Idaho and Oregon talk about the Oregon Trail, which previously I knew nothing about.  Can you imagine emigrating over 2,000 miles in a horse for 4-6 months?  Then get to the mighty Columbia River and being faced with a decision of whether to the run one of two gauntlets – down the river or over the mountains!  Learning more about the pioneers in the US puts into perspective the country it is today and it helps place life into perspective.

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Staying in Bend, Oregon showed what is possible when towns are faced with changes in industry.  Bend was founded as a logging town and now has a massive tourism industry, a growing technology sector and is a popular place to retire.  My meeting destination for today, The Dalles, Oregon is similar.  It’s been a trading town for 10,000 years but what trades hands is changing, from wool to aluminium and now technology.  Insitu started here and now has 800 employees whilst Google also located their first data centre here (one factor that helped was access to energy).  In the face of adversity communities are playing to their strengths and being creative to enable industry to develop.  The only constant is that change will keep happening.  How do recognize when that change is coming and what do you do?

Mid-Columbia Economic Development District (MCEDD) and Columbia River Gorge Technology Alliance (GTA)

The MCEED has been going since 1969, which shows how young economic development is in NZ.  They serve five Counties in two different states so collaboration is their strong point.  Amanda and the team focus on:

  • business financing, which has great payback and is changing with the likes of crowdfunding.  They explained the concept of Enterprise zones and how it can be used when a community is economically distressed through either high unemployment or low wages.
  • Industry development.  Jessica talked about the GTA as an example of industry collaborating in a cluster.  I suspect we will hear a lot more about STEM youth robotics, it is definitely preparing kids to work in the workforce of the future (or is that today?).
  • Regional coordination including strategy and ensuring enabling infrastructure is provided like transport, broadband, and financing.

From the outside looking in the team were deliberate about where future lies and I can see a lot of potential for this region as different industries continue to intersect.

The Dalles Port

Started in 1933, The Dalles Port has seen a lot of change.  They focus on bringing jobs to region through land sales and it’s fair to say they’ve succeeded.  Google is the high profile one but many of the other businesses are “small business” .  As an aside, it makes you wonder about classification of small business – how useful is it knowing that 97% of businesses are small, perhaps we can make it more commonly known the difference between no employees, micro (1-5 people) and small (6-19 people)?

Andrea and Kathy had some great insights:

  • Places need to find their niche – sounds easy!
  • Time and perseverance
  • Importance of community support, which I get the sense there is a lot of in The Dalles
  • Collaboration with local agencies, putting together a team to work through problems while cutting through bureaucracy

The Dalles is just over an hour outside of Portland, and we discussed how urban people can perceive places outside cities as “rural”…how do you overcome that perception, whether you’ve reinvented yourself or not?