Earlier this year I wrote about a British study that explored the attitudes of start-ups to life inside a cluster.  It revealed that whilst early on, many had succumbed to the hype around the benefits of surrounding yourself with like-minded peers, the flip side of higher rents often outweighed those supposed benefits, especially as cash flow became an issue.

The virtues of serendipity

Central to the myth surrounding clusters is that by rubbing shoulders with those seeking to do similar things to yourself, you open yourself up to a world of collaborative opportunity.  It’s a similar myth to that surrounding the appeal of co-working spaces.

A recent study set out to explore whether this is in fact the case.  The hypothesis was that if knowledge did indeed move between firms in a cluster, it would be reflected in the movement of people between companies, and by therefore monitoring the job market within a cluster, it would prove a good proxy for knowledge flows.

Knowledge flows inside a cluster

By analyzing talent movement using LinkedIn’s Recruiter Lite tool, the authors were capable of building up a good picture of the flow of talent within two Danish clusters, one in life sciences and one in wireless telecommunications.

In the life sciences cluster, it emerged that it was common for people to move (with their knowledge) to companies that were not direct competitors.  This free movement was reflected in the behavior of the companies as they engaged in pre-competitive collaborations with peers from different sectors.

This ready movement of people within the cluster helped the companies within it to meet the various challenges posed by radical shifts in technology.  The cross-fertilization of expertise allows companies to adapt more readily.

The other side of the coin

Things weren’t quite so positive in the second cluster however.  The telecom cluster was once a pioneer but fell on difficult times as the companies struggled to keep pace with the technical requirements of the industry.  Expertise was required that simply didn’t exist in the cluster, which led to large multinationals choosing to invest outside of the area.  In contrast to the life sciences cluster, most employees left the cluster rather than move within it.

Takeaway lesson 1 – compliment, don’t compete

So what can be learned from the two contrasting tales?  The authors believe that the best and strongest clusters are those that span noncompeting sectors.  For instance, in the life science cluster, skills in fermentation were valuable to a wide range of industry sectors.

When companies within the cluster compete directly against one another however, these benefits wither away.

Takeaway lesson 2 – knowledge becomes hard to control

The flipside to this is that the very thing that makes clusters strong, also makes it very hard for proprietary knowledge to be controlled.  So if you have some IP that you wish to protect, a cluster may not be the best place for you.

In other words, what is good for the strength of the cluster as a whole, can sometimes be bad for the individual companies within it.

Takeaway lesson 3 – choose your partners wisely

I’ve written a few times on the importance of choosing collaboration partners well, and how you can make the most of these for steady and radical innovation.  The authors contend that building this network well is key to success within a cluster, and advocate a partnership network with little competitive overlap.

As with many heavily hyped notions, it’s very dangerous to assume success simply because something has worked well elsewhere.  The paper provides a telling reminder that whilst clusters can be valuable, success shouldn’t be taken for granted, but rather something that needs to be worked at.