Interaction is the Key to Economic Cluster Success

Clusters are an interconnected network of businesses that share ideas, work on collaborative projects and compete against the market. They are clusters of innovation that require constant engagement to achieve their mutual goals. According to a study in the International Review of Management and Marketing, a cluster is effectively formed when there is coordination of interaction with the environment, coordination of financial-economic policy, coordination of production-economic activity of members (Basyuk, et. al. 2016).

Coordination with the Environment: Companies within a cluster don't act on their own and are part of a larger network of co-creators. While they may engage in some competitive activities they ultimately work together to create synergy that benefits all members that are actively engaged. Helping them to actively engage in cluster management is helpful. 

Coordination of Financial-Economic Policies: The cluster survives because city, state, and national policies are designed to help it survive by creating a pro-business environment. When policies are reviewed and form an advantageous environment, businesses are more likely to flourish and grow in a way that contributes to national development. 

Coordination of Production-Economic Activity:  It is not enough to invent products but also to create them in physical form and to do so in a cost effective manner. Connecting inventors with builders is important for realizing something in tangible form so that it can be sold on the global market. The clusters advantages reside in the creation-production process. 


Economic clusters need to work together or otherwise they would be disjointed businesses in the same locality that don't have much tangible benefit. When ideas are shared, government policies in pro-business form, and inventors are connected with manufacturers businesses have the ability to achieve more than they can on their own. Successful customer management encourage interaction of all the cluster elements to create a collaborative environment.

Basyuk, A. et. al. (2016). Administration management in the innovation cluster. International Review of Management and Marketing, 6 (6s).

Higher Education is too Important to Not Protect

Nations succeed on the abilities of their workers and providing a lifestyle that maintains a growing development of skills and important. Higher education is something we can't afford to give up and not encourage. Yet how we do this can take many forms as we ponder how we are going to make it affordable and beneficial for the nation. We may want to go back to the drawing board and start with fresh ideas and methods that are focused on higher education's essential purpose.

Much of the problem we face is the entrenchment of what higher education. We think it is expensive structures, traditional mindset and the protection of privilege that makes higher education valuable. The problem is that these things are costly to maintain and take a lot of money out of the hands of our national coffers. But perhaps there is a different way?

When we think of higher education we should think about its essential purposes of raising our skill levels, expanding our mental capacity and transferring knowledge from one generation to the next. The forms and methods we use to maintain our higher education status is open for debate. Few politicians seem to have any solid answers.

While we discuss higher education in terms of loans and Pell Grants we should keep in mind that higher education is a process that has an end result in expanding our economy and making us a competitive nation. It isn't that we shouldn't be protecting and supporting higher education but that we should seek better and more cost effective methods of educating.

Online education has grown in recent decades and is used by both traditional and non-traditional schools. We also have certificates, continuing education and trades schools. Each focuses on a specific need within the market to fulfill the knowledge gap. We need them all in one form or another.

If we as a nation want higher education to continue forward we will need to rethink its expensive form and try and develop better methods that allow greater access. That doesn't mean we shouldn't be supporting research and the gaining of new knowledge, but it does mean that we should focus on the essential purposes of advanced education in our rethinking process. Many of the structures, regulations, and restrictions are designed more to protect the "status quo" then it is to educate people. Wouldn't it be great if our educational process focused on educating people than protecting artificial structures?

Pulling Your Team Together

Pulling together team takes a little skill as people from varying walks of life and skill sets come together to achieve an objective. Whether this is for business or this for something else like a non-profit the process is the same. Successful teams are built and created from a particular mindset. The following tips will help you create a high functioning team.

1. Different Strengths: Pull together a team with the strengths you need to accomplish your goals. Recruit people with the skills you need and try and ensure that they support the goals of the team.

2. Find Commonality: Find something all the members believe in. It could be the development of innovative products or it could be getting the books in the hands of kids. The values can be used to create a way of focusing on the end result.

3. Set Your Goals: Develop specific goals for the team to achieve. They will be your highest priority. All actions will be measure against goal attainment. When you achieve one goal work toward another.

4. Create Motivation: Find ways of motivating your team through recognition, rewards, compensation, and experience.

Working from your Strengths

Working from your strengths can lead to greater productivity and overall development of one's skills by focusing on what you do well. Putting your best foot forward can reap rewards for your career as you align your strengths to the needs of your employer in a way that leads to mutual benefit. We can't be good at everything so be really good at what you know your good at!

When we are young we are taught to be good at everything. At a young age we need to learn how to develop our skills and explore our abilities. Yet, as we get older we will need to take those skills we are good at and apply them to earn a living.

Each person is born with certain skills and abilities that once discovered need to be practiced to achieve mastery. We start out slowly and clumsy until we slowly gain confidence with each new experience. Over time we know what our strengths and weaknesses are and can use them for our benefit.

Tips for working from your strengths:

1.) When engaging in work projects and activities seek to use your skills you are good at to have the best outcomes.
2.) Develop working relationships and hedge your weaknesses with those who hold strengths in those areas.
3.) Continue to develop your weaknesses but focus on your strengths.
4.) Volunteer and seek out jobs that maximize your strengths and lead to the highest levels of success.

Human Resource Practices in Innovative Clusters

It has been said that people are the center of success for any organization. They build things, invent things, and sell things. Leaders rely on their highly skilled workers to keep their business growing in the right direction. Clusters are sources of innovation and it is necessary to recruit and attract the right kind of people for success. According to an article in the International Review of Management and Marketing Journal, Human resource practices can have a big impact on corporate success within a cluster setting (Doronina, et. al., 2016).

Human resource practices are important for innovative clusters as the essential soul of such systems is their high quality talent and technical "know how". Management of people within a cluster have two important aspects such as...

1. Defining and enacting business objectives.
2. Managing people within the cluster.

The first aspect applies to all types of businesses regardless of where they are located. The second aspect takes on considerable importance as we consider the nature of creativity and innovation needed to lead the market.

Human resource management entails hiring the right people and preparing them for the highest performance possible. Cluster oriented employees are high performers and typically have attained a significant amount of skill and knowledge. According to the study 85% of people have gained higher education degrees and 10% specialized skills.

Because skills are advanced, managers will often spend a considerable amount of time training and retraining employees to ensure they are up-to-date on job requirements. Advanced clusters that offer leading edge products, need specialized skills that can make those products. Higher education and training are a part of that process of product development and manufacturing.

Companies will also need to develop creative environments that offer opportunities to maximize idea generation and exploration. They may consider the use of new management techniques, environmental design, and corporate culture to encourage employee's creative juices to start flowing. High technology and innovative companies often seek to create stimulation rich environments that foster the mind as the greatest asset.

While many of the principles of strong human resource tactics make their way into clusters there is an increased need to attract and foster highly educated and innovative employees. High innovation employers will emphasize the recruitment of highly educated/skilled employees, continuously train them to work on leading edge products, and develop environments that enhance their thinking abilities. Creative and innovative environments use human resource practices designed to feed and enhance these environments that leads to greater intellectual capital within the company.

Doronina, I, etc.. (2016) Human Resource Management Features of an Innovative Cluster. International Review of Management and Marketing, 6 (6s).

Military Spending vs. Higher Education

Should we spend on Education or the Military? As a nation we must debate the use of our money in order to ensure we are using national resources in a way that further the interest of the country. Budget battles and rising costs are hitting the necessary functions of higher education and the military hard in a way that makes us believe the battle is between the two. The guns vs. butter debate has been a staple for intellectual debate since the beginning of modern society.

It isn't easy to choose one over the other and few can claim they have the right answers. We need a strong military that can handle the growing threats around the world but at the same time we need an educated workforce that keeps our economy growing. The argument has been pitted education vs. military when this is not really the case.

The question really isn't whether we should or should not be spending on either of these institutions, but whether we need to rethink them. When our hands are tied with limited budgets and we don't have new sources of revenue coming anytime soon, we need to find new ways of solving the problem. It requires a paradigm shift in our thinking.

People relate to institutions through a cultural lens based on past experiences which make it difficult for them to view them differently.  As time changes, we must continually update our thinking or otherwise we get stuck in process that doesn't allow for necessary adjustments and changes.

We have a number of options when it comes to the military and higher education budget:

1. Cut military funding and spend more on higher education.
2. Cut higher education funding and spend more on the military.
3. Do nothing.
4. Cut other programs and put the saved money into the military, higher education, or both.
5. Rethink one or both institutions and force reforms that make them more cost effective while not reducing performance.

Option 1,2, &3 seem to be the mindset we are in as a nation. We are thinking this is an either/or debate where one leads to the other because we framed it that way. The news media reports it this way, our political leaders are trying to sell it this way, and we have come to understand it this way. However, we might consider a combination of 4 and 5 as our best approach.

If the military and higher education are important to us, we can consider reviewing all government spending and closing programs that are of less importance and allocating that money to higher education and the military. It is even possible to use the argument that since higher education has a big influence on quality of life, health, productivity, and the economy we may want to cut other social programs and focus on quality education and the military capacity to protect our lifestyle.

We may also want to rethink both institutions and review what is working, what isn't, and the best uses of money. Could we reform higher education to make it more relevant as well as cost effective whereby it educates more people at a higher level? Certainly, we can consider the growing push to reform and looming budgeting problems as a signal that option 5 may be a serious one to consider. Likewise, pushing our military to do more with less while reforming to increase capacity can't hurt if it is done in a logical and sound manner.

A Systemic Approach to Corporate Performance and Cross-Corporate Innovation

Companies have input and output departments and these are often seen as cost centers. They don't make money and are instead allocated a budget based on the total sales of the company. However, at their core, businesses are seen as bundles of efficient transactions that allow them to create value by being more than the sum of their parts. According to an article published in the Business Management Dynamics Journal thinking systemically it is possible to turn cost centers into efficient profit centers in that it allows them to learn from their environment (Roth, 2014). In turn, they would also be able to create additional cross corporate collaboration by selling their services.

Consider the nature of an organization that is based on a number of departments such as design departments, production departments, advertising departments, etc... Each has a value to the organization but often become non-competitive due to the captive nature of their internal customers. Such departments can lose their efficiency, and when this occurs across an entire organization, it could mean bankruptcy.

According to the article, if we were to allow them to bill internal customers for their budgets and take on additional work outside of the firm it is possible to raise their performance level by keeping them connected to the needs of the market. If internal departments become non-competitive they should be adjusted and changed or closed down so the function can be outsourced.

While the article doesn't address this question, the selling of services to the outside market creates greater cross-corporate collaboration by encouraging transferring of new ideas through corporate collaboration. The greater connection among businesses within a cluster, the more likely they will transfer new knowledge, reduce costs, and innovate. Selling services allows companies to borrow competencies for projects.

One one hand, we have the benefit of improved internal performance, efficiency, and costs while on the other hand we have greater collaboration with other companies that can lead to cluster collaboration and innovation.

Internal Benefits:

1. Improved performance
2. Improved Efficiency
3. Reduction of Internal Costs
4. Increased revenue sources.

External Benefits:

1. Improved collaboration.
2. Stronger transference of knowledge.
3. Development of more efficient clusters.
4. Creation of new industries.

The systemic approach to billable services and outside customers can work for some departments. For example, product design, labor competencies, marketing, product knowledge, and many others have formulated specific competencies based on their unique approaches to the market. Cluster members may want to contract those abilities to help them launch or service a new product. As these companies buy and sell their unique abilities they increase the performance of the entire cluster and create new cluster efficiencies that may be difficult to match in other areas.

Rother, W. (2014). A systemic approach to improving corporate performance. Business Management Dynamics, 4 (4).