TCI 2014 Differences between cluster initiatives in America and the rest of the world. 4 basics & 4...

Differences between cluster initiatives in America and the rest of the world. 4 basics & 4 lessons learnedMarc Papell

Parallel 2.2 Cluster implementation in different parts of the world

11 November 2014

DIFFERENCES BETWEEN CLUSTER INITIATIVES IN AMERICA AND THE REST OF THE WORLD

4 BASICS & 4 LESSONS LEARNED

MARC PAPELL

[email protected]

CAROLINA GUERRERO

[email protected]

mailto:[email protected]

mailto:[email protected]

www.cluster-development.com

“CREATE EXTRAORDINARY VALUE”

COCOA PRODUCERSEXPORT OF CLINICAL

SERVICESNO MATTER THE BUSINESS! (IF IT IS A BUSINESS)

YOU CAN ALWAYS DEVELOP STRATEGIES TO HELP BUSINESS GROW, TO INCREASE THEIR

PROFIT & GUARANTEE LONG TERM SUISTAINABILITY

THE OBJECTIVE OF A CLUSTER INIATIVE (C.I.) IS ALWAYS THE SAME

COMPETITIVENESS

1


USD 109.3 billion

¿WHAT DOES “CREATE EXTRAORDINARY VALUE” MEANS?

¿HOW DO WE GRAB A BIGGER PART OF THIS CHOCOLATE CAKE?

EXAMPLE : COCOA PRODUCERS NORTH ANTIOQUIA (COLOMBIA)POST CONFLICT TERRITORY

USD 86.6 billion

USD 109.3 billion

USD 5.9 billion

www.cluster-development.comC.I.’s FOCUSES ON BUILDING STRATEGIES TO ACCESS HIGHER VALUE MARKETS AS THE FIRST STEP TO GENERATE CHANGES IN ECONOMIC REALITIES

WITHOUT BULDING STRATEGIES TO ACESS HIGHER VALUE MARKETS WE’RE RETURNING TO THE STARTING POINT

CHOCOLATE MASTERS INDUSTTRY

Grano

TRANSFORMACIÓN

Productos Intermedios

COMMODITY

TRADITIONAL LOCAL MARKET

NICHE MARKETS WITH VOLUME & VALUE

“QUALITY” DIFFERENTIATED INDUSTRY (ORGANIC, FAIR TRADE, …)

$24.000/KG MAX. PRICETONS: 10.000

$4.600 LOCAL COMMODITY PRICE

ESPECIALIZED INDUSTRIAL MARKET (VOLUME)

PLUS ON PRICE: $250/kiloPLUS ORGANIC: $250 - $750/kiloTONS: 80.000

BEAN TO BAR INTEGRATORSVALUE = x6SAME VOLUME

2


EXTRAORDINARY VALUE = SUM OF THE GENERATED VALUE IN EACH PART OF THE VALUE CHAIN AND HOW THIS VALUE IS “CONNECTED” AND

“TRANSMITTED” TO ALL THE ACTORS IN THE BUSINESS

HOW THE INSTITUTIONS UNDERSTAND THE MARKET

CHALLENGES AND PLUG&PLAY THEIR POLICIES/PROGRAMS

HOW FIRMS UNDERSTAND THE BUSINESS CHALLENGES AND IMPLEMENT THE STRATEGIES

HOW ALL PARTS OF ECOSYSTEM UNDERSTAND THEIR ROLES &

RESPONSABILITIES

C.I.’s FOCUSES ON CREATING VALUE IN THE ENTIRE VALUE CHAIN AND CONNECTING THIS VALUE FROM THE BEGGINING TILL THE END (MULTIPLIER EFFECT)3

COMPETITIVENESS


1. STRATEGIC AGENDA FOR THE FUTURE PROJECTS Concrete actions and projects that will impact in firms P&L

Definition of roles and responsibilities for the implementation of the projects

2. FIRMS LEADERSHIP + INSTITUTIONS LEADERSHIP Active participation, not only in the cluster initiative but also on projects and actions

implementation

Development of roles and responsibilities

3. GOVERNANCE OF THE CLUSTER INITIATIVE FOR THE IMPLEMENTATION Long term horizons (10 years) to change realities

Modelling long term governance with clear “playing rules” with firms & institutions

C.I.s WITHOUT BUSINESS LEADERSHIP AND GOVERNANCE TO IMPLEMENT “PROJECTS” LINKED WITH INSTITUTIONALITY WILL NEVER CHANGE REALITY4


VALUE CREATION, FUTURE STRATEGIES, AGENDA OF PROJECTS & FIRMS & INSTITUTIONALITY LEADERSHIP ARE

THE BASICS…

¿BUT CAN WE HAVE THE SAME IMPLEMENTATION FOR ALL CLUSTER

INITIATIVES?

…IN AMERICA AS IN OTHER PARTS OF THE WORLD YOU CAN FIND DIFFERENT REALITIES THAT IMPLIES DIFFERENT APPROACHES OF IMPLEMENTATION…


SUISTANABLE & COMPETITIVE TERRITORIES

• BUSINESS ENVIRONMENT• MATURE INSTITUTIONS WITH

DEVELOPED CAPABILITIES

UNDEVELOPED TERRITORIES OR POSTCONFLICT TERRITORIES

• POOR BUSINESS STRUCTURE BASED ON FAMILY PRODUCTION UNITS

• POOR OR LACK OF INSTITUTIONS

CAPACITY OF THE TERRITORIES TO CAPITALIZE THE VALUE OPPORTUNITY- +

OP

PO

RTU

NIT

Y TO

CR

EATE

EX

TRA

OR

DIN

AR

Y V

ALU

E FR

OM

HIG

HER

VA

LUE

MA

RK

ETS

-

+

Examples: SUCRE, GUAJIRA, ITUANGO, MAGDALENA MEDIO, URABÁ…

Examples: VALLE DE ABURRA -MEDELLIN

EXAMPLES IN COLOMBIA

COCOA, COFFE, TOURISM, EXOTIC FRUITS, SHEEP/GOAT, …

ENERGY, CLINICAL SERVICES, INFRAESTRUCTURE SOLUTIONS

TWO REALITIES WITH BIG DIFFERENCES IN CAPABILITIES TO DEVELOP

“THE VALUE OPPORTUNITY”

TO CHANGE REALITIES, C.I.’s MUST IMPLEMENT DIFFERENT APROACHESDEPENDING ON MATURITY OF INSTITUTIONS AND BUSINESS STRUCTURES5


SUISTANABLE & COMPETITIVE TERRITORIES


CAPACITY IN TERRITORIES TO CAPITALIZE THE VALUE OPPORTUNITY- +

TERRITORIES TO DIVERSIFY

EXAMPLES IN COLOMBIA

•BUILD CAPABILITIES IN LOCAL INSTITUTIONS (MARKET VISION & PROJECT DEVELOPMENT)

•INCREASE THE LEVELS OF BUSINESS INTEGRATION TO ACCESS MARKETS (ASOC., COOP’S,..)

•WORK ON CULTURAL CHANGE (FROM FARMERS TO BUSINESSES)

•ENCOURAGE HIGH PERFORMANCE INSTITUTIONS CONNECTED WITH MARKET CHALLENGES(PLUG&PLAY)

•DEFINE HIGH VALUE LONG TERM STRATEGIES

•WORK ON CHANGE MANAGEMENT FOR HIGHER PERFORMANCE BUSINESSES

FOCUS ON

OP

PO

RTU

NIT

Y TO

CR

EATE

EX

TRA

OR

DIN

AR

Y V

ALU

E FR

OM

HIG

HER

VA

LUE

MA

RK

ETS

-

+

TO CHANGE REALITIES, C.I.’s MUST IMPLEMENT DIFFERENT APROACHESDEPENDING ON MATURITY OF INSTITUTIONS AND BUSINESS STRUCTURES5


DOESN’T VALUED BY LOCAL MARKETS

SUBSISTENCE

Associations

HIGHER VALUE MARKETS

¿HOW WE CONNECT THE BASE OF THE PYRAMID WITH THE VALUE MARKETS?

C.I.’s MUST FOCUS ON “MARKET CONNECTIONS” DEVELOPING HIGHER LEVELS OF BUSINESS INTEGRATION TO ACCESS HIGHER VALUE MARKETS6



HYPERSUBSIDIZED DEVELOPMENT

12

2004

2010

20112012

SOCIAL FOCUSSED PROJECTS

(FUPAD, US AID, UN, ACNUR..)

PRODUCTION REACTIVATION

COCOA ASOCIATIONS’ ACTIVITY LEVEL IN “ANTIOQUIA” FOR THE LAST 10 YEARS

FOCUSSED ON SOCIAL ISSUES AND INCREASING PRODUCTION

FOCUSSED ON LOCAL PRODUCTION SUSTAINABILITY

FOCUSSED ON DEVELOPING HIGHER VALUE MARKETS

COCOA’S CLUSTER INITIATIVE FOCUSED ON:

• MARKET PERSPECTIVE AND KEY SUCCESS FACTORS ON HIGHER VALUE MARKETS

• INCREASE THE LEVEL OF BUSINESS INTEGRATION WITH A VALUE PROPOSITION FOR FARMERS

• COCOA’S CLASSIFICATION NOT BY QUANTITY BUT QUALITY

• DEMAND DRIVEN ACTIONS AND PROJECTS WITH INSTITUTIONS (EXPORT DEVELOPMENT)

CORPORATE SOCIAL RESPONS.& LOCAL MARKET VISION

DEMAND DRIVEN PROJECTS TO ACCESS INTERNATIONAL MARKETS

C.I.’s DON’T RESPOND TO HYPERSUBSIDIZE OR S.C.R. PROJECTS BUT TO DEMAND DRIVEN PROJECTS TO CAPITALIZE A LONG TERM SUSTAINABLE VALUE CHAIN 7

2007

2024

2014

2013

40% PROD. DECREASE


SO, ¿WHICH ARE THE KEYS OF SUCCES IN IMPLEMENTATION?


THE “4 BASICS” THAT DOESN’T CHANGE

(1) VALUE CREATION

(2) FUTURE STRATEGIES

(3) AGENDA OF CONCRETE PROJECTS

(4) FIRMS & INSTITUTIONALITY LEADERSHIP


DIFFERENCES IN IMPLEMENTATIONDEPEND ON THE

DEVELOPED CAPABILITIES IN

EACH “TERRITORY”

C.I.s MUST IMPLEMENT DIFFERENT APROACHES DEPENDING ON MATURITY OF INSTITUTIONS AND BUSINESS STRUCTURES IN “TERRITORIES” TO CHANGE REALITIES

MUST FOCUS ON “MARKET CONNECTIONS” DEVELOPING HIGHER LEVELS OF BUSINESS INTEGRATION TO ACCESSHIGHER VALUE MARKETS

MUST GENERATE DEMAND DRIVEN PROJECTS FOCUSSED ON HIGHER VALUE MARKETS AND THE BUILD OF LOCAL CAPABILITIES TO DECREASE HYPERSUBSIDIZE REALITIES

MUST FOCUS ON DEVELOP CAPABILITIES IN EXISTING LOCAL INSTITUTIONS & ATTRACT NEW INSTITUTIONS TO THE REGION TO COMPLEMENT THEM

CLUSTER INITIATIVES IN TERRITORIES WITH LOW CAPABILITIES

THE 4 LESSONS LEARNED IN AMERICA

Date post:	02-Jul-2015
Category:	Economy & Finance
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TCI 2014 Differences between cluster initiatives in America and the rest of the world. 4 basics & 4...

Economy & Finance