‘‘INDUSTRY CLUSTERSINDUSTRY CLUSTERS - - A NEW A NEW MODEL FOR INDUSTRY MODEL FOR INDUSTRY

INNOVATION AND INNOVATION AND COMMERCIALISATION’COMMERCIALISATION’

Current Reflections Current Reflections

Angus M RobinsonAngus M RobinsonChairman, Embedded Systems AustraliaChairman, Embedded Systems Australia

September 2011September 2011

Vertical clusters – firms linked through buyer-seller Vertical clusters – firms linked through buyer-seller relations relations

Horizontal clusters – firms that:Horizontal clusters – firms that: share a common end product market share a common end product market use common technology or science baseuse common technology or science base use common skillsuse common skills require similar resources and conditionsrequire similar resources and conditionse.g. Embedded Systems Australia Clustere.g. Embedded Systems Australia Cluster

Presence of a central ‘actor’ (e.g. multinational Presence of a central ‘actor’ (e.g. multinational company such as an Auto manufacturer)company such as an Auto manufacturer)

The Cluster SpeciesThe Cluster Species

Types of ClustersTypes of Clusters

Technology basedTechnology based – – Grouping around a product Grouping around a product oror processprocess technology technology i.e. i.e. manufacturingmanufacturing

Customer based – Leading edge users, major markets, Customer based – Leading edge users, major markets, industries supplied, etc. (often OEM / FDI based)industries supplied, etc. (often OEM / FDI based)

Product based – Grouping to produce an end-product, Product based – Grouping to produce an end-product, service or solutionservice or solution

Needs based – Grouping of SMEs working cooperatively Needs based – Grouping of SMEs working cooperatively to overcome problemsto overcome problems

Resource based – Grouping around supply of skills, Resource based – Grouping around supply of skills, materials, funding, etc.materials, funding, etc.

Centre for Strategic Economics Studies

The Porter Cluster Model The Porter Cluster Model

Porter – The ‘gestation’ period for ClustersPorter – The ‘gestation’ period for Clusters

10 years for clusters to be successful10 years for clusters to be successful Suggest that this is too long in AustraliaSuggest that this is too long in Australia Need success in 3-4 years to maintain Need success in 3-4 years to maintain

commercial interest commercial interest

Clusters - What is Really Important?Clusters - What is Really Important?

Whilst a cluster may be focused locally on a major domestic industry e.g. defence or being linked to a locally based MNC, it is essential that the cluster has it is essential that the cluster has an an external focus on generating exports external focus on generating exports for world marketsfor world markets e.g. Australian Wine ‘cluster’ e.g. Australian Wine ‘cluster’

The global opportunity will be realised when the cluster has identified/established a credible unique a credible unique marketing proposition that is based on a clear, marketing proposition that is based on a clear, indisputable competitive advantageindisputable competitive advantage

Australian Cluster SpeciesAustralian Cluster Species

Market FacingMarket Facing –– Leading edge users, major Leading edge users, major markets, industries supplied, etc. (often OEM / markets, industries supplied, etc. (often OEM / FDI based)FDI based) e.g. automotive, medical e.g. automotive, medical devices/ehealth, defencedevices/ehealth, defence

Technology Push – Technology Push – Grouping around a product Grouping around a product oror process technology process technology e.g. photonics, e.g. photonics, microelectronics/embedded systems, microelectronics/embedded systems, wireless, nanotechnology, RFIDswireless, nanotechnology, RFIDs

LO

W V

OLU

ME

MED

IUM

VO

LUM

E

HIG

H V

OLU

ME

LOW VALUE

MEDIUM VALUE

HIGH VALUE

Electronics Standards (EMC, CE), Product Stewardship, Environmental,Quality and Technical Standards, OH&S, Geography Specific Business regulation, etc.

SUPPLY NETWORK

CLIENTS & CUSTOMERS

World Markets North America,

Europe, Greater China,North Asia

Australian Markets

REGULATORS & REGULATIONS

COLLECTIVE SUPPORT INFRASTRUCTURE Facilities & Support: Technology precincts (ATP), Technology Networks and

Clusters (ESA), Telcos, Testing Facilities.

R&D and Education: NICTA, CSIRO, Universities/TAFE. Government Users: Government agencies: e.g. RTA, Vic

Road, toll way operators.

OEMFINAL CUSTOMER

OEMFINAL CUSTOMER

TECHNOLOGY INTEGRATION

EMBEDDED SYSTEMS

ECOSYSTEM(Defined by Technology/Solution)

Systems DesignElectronics DesignIndustrial ControlUser InterfacesCustomised DevicesWireless Vehicle CommunicationsSmart Video CamerasMeasurement Systems

-- VALUE --

-- VOLUM

E --

OEM

FIN

AL C

US`

TOM

ER

OEM

FIN

AL C

UST

OM

ER

COMMERCIALISATION MARKETING

ICT MNCse.g. Google, Microsoft,

IBM

Intelligent Transport SMEs

e.g. Cohda, Braetec, Restech

Sapphire Chipse.g. Silanna

Medical Device SMEse.g. Cochlear,

Resmed.

Other SMEs in…Systems Design

Electronics DesignIndustrial ControlUser Interfaces

Smart Video Cameras

Clusters – The Value Proposition Clusters – The Value Proposition

Prime importance ofPrime importance of trusttrust in clusters in clusters Core/non-core participantsCore/non-core participants Free from prescriptive legal agreementsFree from prescriptive legal agreements Link industry development/export Link industry development/export

opportunitiesopportunities Introduce ‘cluster life-cycle’ model, industry-Introduce ‘cluster life-cycle’ model, industry-

driven, project focus – with driven, project focus – with funding points for funding points for government investmentgovernment investment

Clusters – A New Approach RequiredClusters – A New Approach Required

Need early success – “low growing fruit”Need early success – “low growing fruit” Commercial self interest predominatesCommercial self interest predominates Benefits of collaboration need to be realisedBenefits of collaboration need to be realised ‘‘super-clusters’ - a new dynamic model – super-clusters’ - a new dynamic model –

abolish “silo thinking”, andabolish “silo thinking”, and Link the many small, disconnected clusters Link the many small, disconnected clusters

and networksand networks

FURTHER INFORMATIONFURTHER INFORMATION

Embedded Systems AustraliaEmbedded Systems Australiawww.embeddedsystemsaustralia.com.auwww.embeddedsystemsaustralia.com.au

angus@leisuresolutions.com.auangus@leisuresolutions.com.au+ 61 418 488 340+ 61 418 488 340