Amhaus: Clusters work as development idea.
As Wisconsin’s elected leaders consider future economic development priorities, one approach has succeeded across the world — economic clusters. As evidenced by The Water Council, when done well a cluster can create overall business growth, foster entrepreneurship, create jobs and spur academic research and development.
It is now time that policymakers build on this tactic and thoughtfully expand our state’s proven and emerging clusters, as state Sen. Alberta Darling (R-River Hills) and state Rep. Adam Neylon (R-Pewaukee) have proposed to do.
In the last two decades, clusters have gained momentum through the work of Michael Porter at Harvard Business School. However, a couple of months ago, Tom Guevara, deputy assistant secretary for the U.S. Economic Development Administration, told me that this approach is not a new phenomenon. He points to Joseph Schumpeter’s 1911 book, “The Theory of Economic Development,” in which he describes the “appearance of entrepreneurs in clusters.”
Clusters take the current economic strengths of a community and strategically build upon the integrated network of a defined industry. While this economic development approach is growing, there also are a number of misperceptions.
Most important, communities don’t “create” economic clusters; they must organically exist as a proven industry of interconnected companies and institutions. As Badger Meter’s Rich Meeusen has said, if people want Milwaukee to become the country western music publishing cluster of the world, it won’t happen. Head to Nashville if that is your interest.
Clusters also need to be tightknit geographically because it is critical to have consistent and strong interaction between members of the cluster. The potency of a cluster is greatly diminished if individuals must travel hundreds of miles to see each other. It simply won’t work.
According to the U.S. Small Business Administration, a well-managed cluster program can increase opportunities for businesses to participate and promote innovation within the industry and generally enhance economic growth throughout the state.
Cluster initiatives integrate small, medium and large companies; nonprofit organizations; universities, and technical colleges to identify research and new market opportunities that create jobs, attract capital and have long-term, positive economic impact.
A dynamic cluster provides businesses with matchmaking opportunities, business training and access to new talent, innovative research, counseling and mentoring.
Southeast Wisconsin can rightfully claim a global water technology cluster because of its close-knit, extensive and historic industrial and academic base in addressing water quality and quantity issues.
In the past two years, various national and international authorities have recognized The Water Council as a proven cluster initiative.
In 2014 The Water Council was accepted into the SBA’s Regional Innovation Cluster program and last year SSTI, a highly respected national organization focused on technology-based economic development, recognized The Water Council with its award for “Improving the Competitiveness for Existing Industry.”
The numbers and results reinforce this national recognition. Here are a few highlights from our upcoming 2015 Annual Report:
Relocation of the global headquarters for Zurn Industries to Wisconsin, which will result in the hiring of more than 150 people and the construction of a $15 million new headquarters.
$211.6 million in total investment in the Milwaukee Water Technology District since 2010.
Over $2.5 million in funding raised by start-up portfolio companies in the Global Water Center.
Strong demand by water tech businesses from across the world to co-locate in the Global Water Center has created the necessity for the development of a second building.
Representatives from 47 countries visited Milwaukee’s World Water Hub.
Over 2,000 K-12 students in the Milwaukee region were exposed to opportunities in water.
None of these accomplishments just happened. We are fortunate to have a remarkable staff, strong support by the water tech industry and invaluable financial and strategic backing of government at all levels and, of course, it takes time, energy and commitment to stay true to a course of growing a cluster.
Darling has said, “Clusters are excellent examples of publicprivate partnerships that bring our universities and industries together and result in economic development in the form of business growth and job creation.”
It is time to advance Wisconsin’s development of economic clusters. Just as with The Water Council, the private sector needs to take the bull by the horns and lead the development of this public-private partnership in our other key industries, in collaboration with our government and world class research universities.