“Why is there a need to transform?” was one of the questions that has been coming up quite frequently after we published the report Building the Transformational Company. While this wasn’t part of the original report, we went back to our work, our notes and our case studies, and looked into why there was a need to transform.

What we found was that there were six fundamental reasons why companies need to transform. You may have other perspectives and have probably seen other reasons why, and we would really encourage you to share your thoughts and opinions with us, and have a discussion around how that fits in.

Six Fundamental Reasons Why Companies Need to Transform

1. Declining Profits

With profits steadily on the decline, and limited opportunities to turn that around, being locked in a declining core business model is a recipe for disaster. You may be locked in the newspaper business, or oil and gas, or maybe an outdated software business. If your declining profits can’t be solved, the need for transformation is imminent. If it’s not already too late, and you end up in a “shock” type of scenario.

2. Structural Industry Change

Deep, structural changes to how an industry operates and how value is created and captured. These structural changes may take decades to play out, but you can’t fight against them. It is like the surf and the tide, you can try to compete it, swim against it, but deep structural changes will play out, no matter how you position your business. An example of this would be the gradual shift from oil & gas to renewables. Most executives today would say that, “over a timeline long enough, we will transition. It is just a question of when,”.

3. Rapid Technology Shifts

Swift and rapid technology shifts are similar to structural industry change, but happens at a much faster pace. They’re much more dynamic and much quicker. Expect to see a significant number of startups, scale ups and investors operate in this space.

You can already see examples of this playing out in the mobility space with ride-sharing, micro-mobility, scooters, and in tourism with the sharing economy like Airbnb.

4. Financially Under performing

Companies financially under performing on the stock market will often be pushed to transform – even against their own will. Activist investors, PE fund and other investors may acquire enough leverage to force through a radically new direction. 

Example of this abound, but are often less known from the outside. Starboard’s transformation of Darden Restaurants is a great example how an active investor came in, sacked the board, changed management and led a transformation. While Blockbuster is another example where an activist investor actually blocked a transformation into streaming (you can learn more about this in the online program).

5. Strategic Preemptive

Often led by an internal strategy review or a new CEO, the strategic preemptive route is often driven by foresight, some level of anxiety about a shifting landscape and a desire to transform before it is required.

Often, a new CEO will have the momentum and opportunity to lead this reinvention easier than an established, internal CEO will. 

6. Markets Fallen Off a Cliff

In times of economic shocks and crisis, markets may vanish virtually overnight. The oil and gas crisis back in 2014, the financial crisis back in 2008, 2009, and today in 2020, the economy fallout thanks to COVID-19. These economic shocks happen, and when they do, companies go through three phases – they start with “shock”, they cut, and for those that make it, they transform. From hospitality to oil & gas crisis, these moments will push many firms into bankruptcy, while others are able to use the crisis to generate a compelling case for swift transformation. Very challenging. 

So those are the top six reasons that we find. Again, these are just based on our own findings. I would love your insights and would be very happy to discuss this further with you.

One of the many conversations we had in our early findings was this question:

“is it only just the one reason, or can it be multiple?”

So we did a little bit of research, and what we found was that very often, there are several reasons that come together at the same time. For example, a company could be seeing declining profits over time, experiencing structural industry change, and also on top of that, going through some more rapid technology shifts. Of course, if you are going through all of these, it is a very challenging environment to manage a transformation in.

Another example, one that is more crisis-driven, would be a company (like many today in the wake of COVID-19) facing markets that have fallen off a cliff, and rapidly declining profits.

Finally you could have a company which is transforming due to a strategic preemptive, maybe through a new CEO or a strategy review, rapid technology shifts, and also a deeper underlying structural industry change.

So what are the implications for you? You may be a consultant, an executive, a strategy leader or a HR, L&D executive?

We have developed a tool that can guide you on this journey – and here we are sharing a beta version of it.

The Why Transform Canvas is specifically designed to assess whether you are in need of transformation.

Assess Your Organization’s Need to Transform

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It’s a simple and straightforward tool – which you can use to assess your company on a scale of 6 – 30. The higher your total, the lower your need is to transform. Check your score here.

You can access the PDF and high quality JPEG format of the Why Transform Canvas – as well as the entire toolkit and know-how you will need to guide your company’s transformation within the online certification program – Building the Transformational Company.

Innovation Superclusters and innovative ecosystems are both crucial engines of growth. In our research, we have looked into future trends and how governments can actively build Innovation Superclusters around the industries of the future. 

SUPERCLUSTERS VS. ECOSYSTEMS

Globally, there are around 7000 formal Innovation Superclusters. Of these, around 15 – 25 may be recognized as genuine Innovation Superclusters. On the other hand, most startup ecosystem ranking will often rank the top 150 – 200, with Silicon Valley, Beijing, Boston, Shanghai, New York, and Tel Aviv topping the list. One ecosystem, let’s say Beijing, may count 30 – 100 clusters. While one cluster, possibly the Norwegian seafood cluster in Finmark, could be a single cluster, it does not have much of an ecosystem to lean on.  While both these systems of innovation are important, they are also fundamentally different.


SUPERCLUSTERS ARE ACTIVELY BUILT

Innovation Superclusters are the result of both active government programs, long-term industry leadership, and hands-on organizational development.  

A cluster will always have an operating organization, a (small) management team, a board or steering commit, an operating budget, members and reporting. No matter what size, from early “baby clusters”, to Growth Clusters and Superclusters, these traits are always in place.  

Two examples are the two ocean-centric clusters, NCE Seafood Innovation Cluster, located in Bergen, Norway and Canada’s Ocean Supercluster, based in St. John, Newfoundland. Both are led by a CEO, co-funded by Government and industry alike and working to solve industry-level challenges to unlock sustainable economic growth in the ocean space.  

ECOSYSTEMS ARE PASSIVELY NURTURED

Ecosystems, on the other hand, are far more passively nurtured. Granted, governments will invest heavily in various elements of ecosystem development, including Singapore’s recent announcement of a $500M investment into building Singapore into one of the world’s leading AI ecosystems.  

This will likely propel Singapore forward and put it even more firmly on the world map of most innovative tech hubs. 
But you are unlikely to find a CEO, a single member-based operating unit, a cluster-based strategy document and the close collaboration found in the best clusters around the world.  

CB Insights, an analysis firm, recently published an overview of the world’s leading tech hubs, or ecosystems. Much along the methodology lines of Startup Genome, CB Insights maps out the best tech hubs, based on a number of key variables.  

LOOKING AHEAD

Looking ahead, our research shows Innovation Superclusters are on the rise. At the same time, regions and nations are competing more than ever to attract, build and scale the best tech firms. Whether in life sciences, AI, smart mobility, clean energy or platform-based business models; expect to see both Superclusters and ecosystems become an even higher focus for governments, policymakers and nation builders in decades to come.  

Around the world, Innovation Superclusters are on the rise. But what, exactly, are Innovation Superclusters and why do they matter?  

INNOVATION SUPERCLUSTERS IN SIX POINTS

While often misunderstood due to various policies, structures, funding models, strategies and capabilities, we find that Clusters and increasingly Innovation Superclusters can be identified and understood through six key points.  A Cluster initiative on Taiwan, in Korea or the Thai Supercluster program, will be different in context, industry need, and government program, but the six principles are equally valid across geographies and culture.  

1. Engines of Growth

Successful Innovation Supercluster is first and foremost Engines of economic growth, by connecting 100’s of members and partners. From a policy- and GDP-development point of view, Clusters are expected to produce value that far exceeds the national averages across all industries.  

2. Collaboration Networks

Second, Superclusters are immense collaboration networks built around the industries of the future. These clusters exist to build out larger, more connected networks around future key industries. By pulling together industry executives, academics, investors, startups and government leaders, the Superclusters aims to build close and personal ties across domains, roles, hierarchies, and traditional silos.  

3. Private-Public Partnerships

Third, Superclusters ae large-scale private-public partnerships, developed by design. While they do require certain foundational capabilities in terms of local industry, local talent and local investors, it is really the co-development of private and public partners that make the cluster initiative a success.  

4. Trust-based

Forth, Superclusters are trust-based collaboration platforms. While the level of trust and preferred route to develop trust may vary, the essence is that industry leaders, researchers, startups and other members in the cluster should work to create trust across the entire cluster base. This translates into collaborating on projects, sharing research data, pool company data into cluster collaboration projects (Seafood industry sharing fish health data for machine learning development).  

5. Solution Creators

Fifth, great clusters are solving industry-level challenges & opportunities. Think, open innovation across a close community of stakeholders. Using our open innovation software platform, clusters can identify industry-wide challenges, challenges that then can be addressed by the cluster through joint innovation projects or innovation working groups. Over time, Superclusters should be able to take on and solve “challenges that are too big for anyone of us”, in the words of an industry CEO.  

6. Magnets

Finally, strong Superclusters become magnets. Think of magnets that attract talent, capital, researchers, and companies into the region and cluster membership base. In Canada, the Digital Supercluster is already seeing a growing number of corporates and startups relocating into the greater Vancouver region to be a part of the rapidly developing Digital Supercluster. 

PULLING IT ALL TOGETHER

We are seeing a rising interest in and understanding of building a new breed of Innovation Clusters. Governments from Canada to Thailand already have Supercluster programs in place. The EU, the Nordics, South-East Asia, Latin America, and the Middle East are all in various stages of exploring their own Supercluster Initiatives.  

Whatever model and policy they may choose, they will all need to follow the six principles listed here to Build Successful Innovation Superclusters.  

Five years ago we attended our first Drucker Forum, aptly titled The Great Transformation. Little did we know at the time that the experiences from the Forum would result in the creation of Transform! a powerful experiential learning simulation, potentially changing how we teach, train and build deep transformational capacities.  

OSLO, NOVEMBER 13, 2019

“No, that could never happen”, shouted one of the participants.
“Well, actually it could”, sighted her CFO teammate.  

The pair, acting as management of case company Rail1 – a European railway operator, was just getting acquired.  

“We have partnered with Juppz, secured a 500M funding structure, and can now execute a hostile take-over”, said the deal manager, CFO of Flight – the electric scooter company, as he officially announced the deal to the table. Working closely with the ride-sharing company Juppz, Flight was now implementing its innovation strategy; having recently shifted from a collaborative partner-approach to the more aggressively buy-strategy.  

Having previously acquired CarWagon; Rail1 had built a broad business model portfolio beyond its legacy core business of operating trains in Europe, secured financing for new ventures and hit a 23,3BN market cap, all on its way to transform into a mobility winner of the future.  

Collectively, the four companies were battling it out in a highly competitive mobility arena. Their mission: transform a legacy company stuck with two low-margin business models into a thriving company with a healthy mix of business models across the Core-Growth-Explore framework. At the same time, build an innovation strategy, secure financing, lay a transformation roadmap, deal with Booms and Busts, all while making 100’s of micro-decisions effectively replacing any well-planned strategy with split-second decisions. What could possibly go wrong?  

TEACHING SMART PEOPLE HOW TO LEARN

The group, a part of Open Innovation Lab Norway, was running Transform! a highly engaging learning simulation, designed to help people learn how to build transformational companies and execute successful transformation strategies. Transform! is built on the research and development work by Christian Rangen and the team at Engage // Innovate and Strategy Tools.  

Built on top of eight visual strategy tools, Transform! is designed to be a learning and development simulation to teach people and companies how to build transformational capacities. In essence, it aims to solve the problem of teaching smart people how to learn and develop a stronger absorptive capacity in light of ever-faster industry shifts.  

LEARNING THROUGH SIMULATION

Inspired by the work of Swedish Professors Johan Roos (Lego Serious Play) and Karl Erik Sveiby, coupled with the latest thinking in strategy from Rita McGrath, Scott D. Anthony, Roger L. Martin, Henry Chesbrough, Alex Osterwalder, Yves Pigneur, Gary Hamel and Clay Christensen, the Transform! simulation is designed to be a highly engaging and powerful learning experience.  

By combining new strategy thinking, new visual strategy tools, and a table-based, role-based simulation, the participants combine a number of different learning elements into a single multi-faceted learning experience. 

Having run close to 85 sessions across three different simulators over the past eleven months, it has become clear to us exactly how powerful the power of simulation-based learning can be. From Board members, CEOs, Policymakers, Professors, innovation agencies; every single participant quickly get absorbed into the competitive dynamics of strategy simulation. Designed to transfer new learning, new tools, and a new strategy mindset, the simulation teaches strategy, innovation, transformation, finance, corporate venturing, decision-making and mental models in one single session. The Transform simulation helped us explore and uncover some big strategic mental models to our company, said one Danish CFO we worked with on a large scale transformation strategy.   

THE TRANSFORMATION GAP

“On average, 2,3, maybe” summarized one of the participants in Oslo. 
The group of eight has just answered the two key questions. 
“Over the next ten years, how significant a transformation will we require?” 
As a group, they averaged 7,9 out of 10, with executives from larger firms tending towards 9 and 10.  

The follow-up question, however, got a different response. 
On how ready are we for this transformation?” the group barely scored 2,3 out of 10. A number that drew a loud sigh from the participants.  

“What does this mean”, I asked.
“It’s the transformation gap”, came the instant reply from the corporate innovation manager. 
“It is the massive gap between our aspirations, our intellectual need for transformation in light of external industry shifts, and our internal ability, our capability to actually do it”, she continued, to the active nodding of several of her group members, and a not too concealed tone of frustration in her voice.   

The Transformation Gap. The gap between our fully understood need for large-scale transformation vs. our ability, our organizational capacity for transformation. We find the Transformation Gap virtually everywhere we go. In fact, it has been a passion, a driver and a source of deep motivation for us over the past seven years, trying to better understand this gap. Is has fueled questions, conversations, and research across countries, industries and organizational hierarchies.  

Today, with the first year of Transform! experiences behind us, we believe hands-on experiential learning can significantly close this Transformation Gap. The a-ha moments, the deep individual reflections, the new tools, the group-wide insights, and new collective thinking absorbed through the gamification mode and the many new conversations that start during a simulation, only to carry over into real-life company context all combine into building company-wide transformational capacities. 

BACK TO VIENNA

Professor Rita McGrath once said, “We are working with outdated tools & assumptions”. Referring to how most companies work on strategy, McGrath asks if companies are set up to work, successfully on strategy in the light of a new strategy paradigm.  

We share McGrath’s concern. From energy, mobility, technology, finance, healthcare, we see industries shift into arenas and companies facing a brand new strategy landscape. Traditional strategic thinking is no longer sufficient. Competing on transformation will be the new rally cry.  

The conversations that started at the Drucker Forum in 2014 still resonates, perhaps as important and relevant as ever. The insights and inspiration we gained in 2014 have fueled new strategy tools, insights and transformation programs. Now, as we prepare to depart for Vienna yet again, we look forward to a new set of conversations, this time on how companies can master new ecosystems and continue to accelerate their transformation.

Surely, we will need it. 

Av Christian Rangen
Founder, CEO at Engage // Innovate & Strategy Tools – the Modern Strategist’s Toolkit

Investorkapital, business angels & corporate venture avdelinger; stadig flere klynger begynner arbeidet med kapital. Men hvordan skal egentlig en klynge gå frem for å utvikle sin kapitalstrategi?

De siste fire årene har vi jobbet tett med klynger, klyngeledere og nasjonale klyngeprogram. De fleste av disse er solid forankret i Triple Helix logikken; bedrifter i nettverk må kobles mot forskningsdreven innovasjon, støttet av offentlige myndigheter. Dette var den opprinnelige ideen bak Triple Helix på tidlig 1990-tallet.

Men, verden forandres.

Stadig raskere global innovasjon, flere digitale forretningsmodeller og et stort antall velfinansierte vekstbedrifter gjør nå at både bedrifter og klynger beveger seg bort fra Triple Helix til fem-punkt, eller Pentagon modellen. Plutselig sitter klynger med entreprenørskap, akseleratorer, børs-noteringer og privat kapital på kartet. Hos stadig flere klynger dukker nå spørsmålet opp, hva gjør vi med kapital?

Det siste året har vi jobbet tett med flere klynger for å besvare nettopp dette spørsmålet. Hva bør være klyngens kapitalstrategi?

Fra Solklyngen i øst til havklyngene i vest, fra reiseliv til internasjonale drone, mobilitet og fintech klynger har vi nå gjort erfaringer, observasjoner og sett klyngenes kapitalstrategi utvikle seg i praksis.

Vi har nå samlet disse erfaringene i ti punkter for klyngens kapitalstrategi. Vi tror disse er like anvendbare i Bilbao og Bergen, eller Zagreb og Sandefjord. Hver innovasjonsklynge, stor eller liten, må finne sin kapitalstrategi, men her er våre ti punkter.

1.     Styret

Velg en ansvarlig for kapitalområdet i styret. Dette kan gjerne være en kapitalaktør (investor, fond) som velges inn med det mandatet.

Uten forankring og kompetanse på plass i styret kan man nesten bare la være å starte arbeidet i organisasjonen.

Vår observasjon er veldig få klynger har definert kapital som et eget område for styret og få av styrets medlemmer er kjent med at dette er viktig for klyngens utvikling.

2.   Ledelsen

Daglig Leder har et overordnet ansvar for utvikling og implementeringav kapitalstrategi, men er ikke pålagt å ha inngående teknisk kunnskap.

Daglig leder må derimot ha god kjennskap til medlemmenes behov og ønsker knyttet til kapital.

I flere av klyngene vi har jobbet med, har Daglig leder ikke vært i forklare relevans, behov eller betydning for klyngens medlemmer (Se også punkt 5)

3.    Investor Relations Manager

Utvikle rollen «Investor Relations Manager» (IRM). Dette kan være en deltid (%) eller fulltidsstilling. IRM må ha hands-on erfaring med tidlig-fase investeringer, venture fond og vekstkapital. Dette betyr blant annet at en tradisjonell bankleder neppe er riktig profil.

Ideelt er dette en person med flere års erfaringer med tidlig-fase investeringer, bredt kjennskap til investorlandskapet i sin del av verden (Europa, Sør-Øst Asia, Latin-Amerika) og selv deltatt i etablering og drift av venture fond.

Litt for ofte ser vi rollen som IRM fylles av personer med ingen faglige kvalifikasjoner eller relevant erfaring. Da blir også resultatet deretter.

4.   Innovasjonsgruppe

Utvikle en dedikert Innovasjonsgruppe på kapital-området. Denne ledes av IRM, men består av gründere, investorer, venture fond, business angels og etablerte bedrifter.

Innovasjonsgruppen kan være aktiv i de neste punktene.

5.    Kartlegg

Kartlegg dagens kapitaløkosystem for klyngen, enten det gjelder digital helse, Havbruk eller Fintech. Det vil være ulike investorer som dukker opp med ulike mandat og investeringsområder. Sørg for å forstå ikke bare hvem de er, men også deres investeringsmandat, historiske track record og aktive portefølje.

Start med lokale investorer, men kartlegg ut av egen region og eget land. Det er åpenbare investorer som kan kobles på fra land som Tyskland, Japan og USA.

Kartlegg disse inn i et strukturert format og verktøy. Benytt gjerne Kapitalstrategikartet (finnes også i skybasert digital løsning).

 

6. Kartlegg kapitalbehov i klyngen

Kartlegg medlemmene i klyngen, i forhold til deres modenhet og kapitalbehov.

Kartlegging bør avdekke hvor stort kapitalbehovet hos medlemmene er, samlet sett, over en periode på 18 – 24 måneder.

Bruk gjerne Klyngens Medlemmer til å bistå denne kartleggingen.

Erfaringer fra slike kartlegginger er meget positive.

I de tre siste gjennomføringene vi har deltatt i, har det blitt avdekket et kapitalbehov blant klyngens medlemmer på mange hundre millioner kroner; et behov som var nærmest ukjent for klyngeledelsen.

 

7.   Utvikle en Kapitalstrategi

Når informasjonsgrunnlaget er på plass (punkt 5 og 6), jobb med flere stakeholdere (Styret, Innovasjonsgruppen) for å utvikle en konkret og målbar Kapitalstrategi.

Denne bør inneholde et langsiktig målbilde og konkrete steg på veien med KPI’er på år 1, år 3, år 5 og år 10.

Bruk gjerne Klyngens Kapitalstrategi som et utgangspunkt.

8.   Kompetanseløft (felles)

Lanser kompetanseprogram for alle medlemmene i klyngen, samt viktige samarbeidspartnere.

Et slikt kompetanseprogram kan gjerne strekke seg over ulike nivå og mot ulike målgrupper. Et forslag kan være:

  • Grunnleggende Kompetanse for kapital i klynger (1/2 dag)
  • Investorkapital i klynger (2 dager)
  • Engelinvestor i klyngen (1 + 1 + 1 dager)
  • Startups: Investor Readiness Level? (1+1+1+1 dager)
  • Corporate Venture Capital (2 dager)

Disse kan kjøres lokalt, med få eller mange deltakere.

For «Advanced users», vil vi kanskje anbefale

  • VC unlocked (fem dagers kurs, USA, Asia)
  • Executive Venture Capital (fem dagers kurs, USA)

 

9.   Start med de store bedriftenes behov

Dette er ikke et åpenbart punkt for mange klynger, men vi tror det kan være et helt sentralt suksesskriterie.

Ved å kartlegge de store bedriftene, klyngens medlemmers, behov, kan klyngen identifisere strategiske investeringsområder (investments areas) og deretter utvikle særskilte investeringsprogram rundt disse.

Strategiverktøyet, Klyngens Startup Porteføjle kan være et bra utgangspunkt (finnes også i skybasert digital løsning).

Dette arbeidet, med å utvikle klyngens portefølje av oppstartsbedrifter, er forbeholdt veletablerte klynger, da det krever både innsikt, kompetanse og ressurser. For de klyngene som har kommet skikkelig i gang, ser vi allerede et veldig godt resultat av arbeidet.

10. Aktivitetsplan (felles)

Etabler en 18 måneders handling- og aktivitetsplan.

Velg ut noen få områder. Prioriter bort de andre.

Tenk partnerskap, samarbeid og utvikling sammen med andre.

Inngå partnerskap med internasjonale akseleratorer, utvikle program sammen med andre klynger og ikke minst, lytt til hva investorene i klyngen din ønsker seg.

Evaluer og juster underveis.

Først og fremst; Quick Wins

For klynger og kapital er det mye som skal løftes. For de fleste er dette et helt nytt område. Begynn med små seire. Sikt inn på noen raske suksesshistorier. Det er bedre å bidra til 1 million til ett selskap nå, fremfor 100 million om 15 måneder. Jobb frem et lite antall startups og scale-ups som er investment ready. Hjelp dem bygge investor syndikat (grupper), og dra emisjonen i havn.

For både fremvoksende, vekst- og superklynger vil kapital være en viktig del av strategiarbeidet fremover. Spørsmålet er bare hvor og hvordan man ønsker å starte.

___________________

Strategiverktøyene i denne artikkelen kan lastes ned på norsk – gratis – på www.strategytools.io.

Leading up to the 2019 Drucker Forum we will be exploring leadership, strategy and policy in and around Innovation Superclusters. This is the first publication. Next, Building Innovation Superclusters (the report) is out mid-June.

The world is learning to innovate faster. Companies are increasingly looking to collaborate across ecosystems, networks and innovation clusters. Visionary governments are trying to build future growth industries and national innovation superclusters. But what do these shifts mean to leaders in these innovation superclusters? How do cluster leaders lead in the age of Innovation Superclusters?

By: Christian Rangen, Founder, CEO Engage // Innovate, & Strategy Tools, business school faculty @chrisrangen    
Design by: Jolene Foo-Hodne, CMO, Engage // Innovate, VP Design, Co-Founder, Strategy Tools

 

Over the past four years we have had a chance to work closely with policymakers, visionary governments, national transformation leaders and innovation cluster leaders in Asia, Europe and the Nordics. Our work has taken us to Prime Ministers, remote cluster outposts and inside more than 40 innovation clusters, all intent on building new industries for the future. While the underlying principle of an innovation cluster largely remains the same, there is a small, but growing category of larger, stronger, globally-oriented clusters. We call them Innovation Superclusters.

In this article we explore the leadership traits and behaviors we have identified in interviews, observations and in-depth conversations with formal and informal cluster leaders across countries and industries.

This article is taken from the upcoming book, Innovation Superclusters – a New Playbook for Economic Growth – due late 2020.

“The leader is a networker”

Merete Daniel Nielsen was firm in her statement. “the leader is a networker”. We were halfway into our conversation with Merete, as she repeated the statement. Merete, President of the global cluster network, TCI, and co-founder of Danish Cluster Excellence Denmark, has observed cluster leadership for over a decade.  Working across the Danish and global cluster landscape, Merete has had a front row seat to the development over the past decade.

The leader, in any cluster, today, is first and foremost a networker, a facilitator and an influencer. Merete’s statement completely echoes our findings in interviews and observations.

As we shift from a company-based leadership perspective to a cluster-based leadership perspective, a fundamental shift occurs. The leader no longer holds the formal role of leadership, with its traits, perks and formal decision-making authority. Instead, networked, influencing and shaping becomes key traits. These findings also go far beyond the notion of servant leadership and challenge us to rethink how we describe leadership at the ecosystem and cluster level.

 

“Cluster leadership is nothing like ordinary leadership”

Arild sighed, with a big smile. As a long-time IBM sales manager, he had grown his leadership skills within IBM’s Big Data Analytics unit. With a deep passion for the intersection of technology, society and healthcare, Arild had found a unique opportunity to build and lead the emerging cluster, Norwegian Smart Care Cluster. Under Arild’ s leadership, the cluster had grown from a handful of companies and academically minded research projects, to an internationally-oriented growth cluster with over 120 members and active business development projects in Europe and North America.

A thriving startup community, a growing investor network, successful market entry collaborations and the Norwegian Smart Care Lab were some of the early wins for the cluster.

But one thing was clear in observing the rise of the smart care innovation cluster; leading and building an innovation cluster across sectors, domains and stakeholder groups was nothing like traditional leadership in action.

Network, influence and a razor-sharp member-focus were suddenly key drivers and key leadership traits for Arild and his team. (Initially, most members don’t know what an innovation cluster is, or how they can benefit from it, so building a new innovation cluster from the ground up is a little bit like Henry Ford’s statement about customers and horses….)

 

 

From Five to Eight Leadership Levels

Long-time faculty and leadership expert Morten Emil Berg at BI Norwegian Business School is a national brand in the field of leadership. His books, easily accessible and focused on the reader (i.e. the leader), not fellow researchers, have underpinned the leadership development and training of thousands and thousands of Nordic leaders over the past twenty years.

Central in Berg’s writing is the five levels of leadership. Berg defines this as:

Visionary
– the leader as shaper of the long-term vision, mission and key cultural pillars of the company and its narrative internally and externally.

Strategic – the leader as a strategist, thinking ahead, seeing strategic moves, disruptive industry changes and building new transformational business models for the future.

Administrative – the leader’s role in building processes, workflows, administrative systems and internal policies.

Operational – the leader as a coach, people developer and manager

Self-Leadership – the leader’s ability to lead herself, manage time, handle pressure, use positive language and deal with self-weaknesses.

Building on Berg’s framework, we find leaders in Innovation Clusters work across not five, but eight levels of leadership.

The Eight Levels of Supercluster Leadership

 

 

VISIONARY

The leader must build a large coalition of industry leaders, government leaders, politicians, ecosystem builders and unite them around a strong vision for the cluster. With the distributed decision making across cluster landscapes, the leader has to build a massively compelling vision to a large number of different stakeholders, all with different needs, wants and agenda.

The visionary cluster leader will be able to unite these behind shared ambitions and shared problems they are trying to solve, problems that can only be solved by working together.

NETWORKED

In our research, we find all successful cluster leaders to emphasize the importance of the network and having access to the right networks. Either directly, or through their key stakeholders (often, the Board of Directors at the cluster level), the leader fully recognized the critical importance of working in and across personal networks to build and scale the cluster.

A great cluster leader will focus on building and expanding her personal network to cover both cluster members, policy makers, international partners, investment community, accelerators, national innovation agencies and a number of organizational entities far outside the bounds of the cluster’s operational membership.

The Chairman of an emerging global energy Supercluster spent the first six months of his role working in and across his personal network, rekindling relationships, connecting with fellow industry chairmen and CEOs to build interest and support for the emerging Innovation Supercluster.

STRATEGIC

“A good cluster leader has to be strategic – always”. The statement came from the CEO of one of Norway’s largest innovation clusters. The cluster had a roadmap to 2050, with a target to 5X the industry’s value impact. To achieve this mission, the CEO knew that strategic thinking, sensing the landscape across the entire industry, from CEOs, policymakers, educators, researchers, startups, investors, corporate innovators and regulators was of the outmost importance.

But with limited organizational resources, staff and funding, a cluster CEO will always struggle with the balance between short-term and long-term focus. In our research, we generally find that most cluster CEOs easily get sucked into a busy, operational role, neglecting or at least struggling with the strategic leadership role. This is a fundamental challenge that must be addressed by boards and national cluster programs.

A great cluster will develop a bottom-up long-term strategy, define strategic areas and targets, future business models (critical), KPIs, roadmaps and a culture of execution at all levels.

 

INFLUENTIAL

How strong influence does the cluster leader have in her network? With hundreds of members, many of them industry CEOs, Professor and policymakers, the leadership role changes fundamentally from “boss” to “influencer”. Soft power, diplomacy, nudging and invisible influence can be far more important than any formal decision making.

In our research, we found that few cluster leaders were fully aware of this area, acting rather like they were operating within formal, hierarchical leadership structures. Our findings are very clear; they don’t.

ADMINISTRATIVE

Fully in line with Berg’s writings, we find that the administrative leadership tasks simply “must get done” within the innovation clusters. Most leaders struggle through this, experiencing an overload of reporting, systems and reviews, often caused by the financing and requirements by the national cluster programs. Surprisingly, a number of cluster leaders do not use the administrative supporting tools and reporting platforms, designed to ease their job.

MEMBER-FOCUSED

“We work to serve our members”, is a common statement found in our interviews. While this is obviously true, it is also a dangerous trap to fall into. If the cluster leader overly spends his time and resources on serving the existing cluster members, he is unlikely to achieve the larger, strategic goals of the cluster.

 

A successful innovation supercluster will have hundreds of members, spread across capital, entrepreneurship, academia, industry and government. Any leader, too member focused, will easily be running himself to the ground trying to please everyone.

 

The right Supercluster leader will focus on the architecture and structure, building an organization that can serve the members, not trying to do everything himself. This proves to be a challenge, as few clusters have a professional organizational model in place and understood across its key stakeholders.

Working closely with the Norwegian Innovation Cluster Program, we have developed Supercluster Structure 2.0, as a visual strategy tool to help innovation clusters design better cluster organizations.

Supercluster Structure 2.0 – get it at www.strategytools.io

 

OPERATIONAL

In traditional companies, business units, departments and teams, people are organized in a hierarchical and largely formal manner. We expect to find mostly full-time employees and clear manager-employee relationships.

This is not the case in most innovation clusters.

On average, an innovation cluster will often have a CEO and 3-4 employees.
In our data set, the range is from 0 FTE to 45, with a single outlier with 85 employees.
With our definition of EC (Emerging Clusters), GC (Growth Clusters) and SC (Superclusters) we generally find 10 – 45 people in the Supercluster segments.

But, we find that most cluster leaders lead, organize and mange a large number of employees, interim staff, interns, part-time project managers, working groups, special projects, research initiatives and business development groups.

While the number of formal employees tend to be small, the number of people and staff that fall under the operational management is large, and in some cases very large. This creates highly complex leadership structures and challenges.

In our interviews, we find a clear and repeatable pattern that management has clearly shifted from hierarchies to managing ecosystems. Our observation is clearly, for clusters, the age of traditional hierarchical leadership is over.

Yet, few cluster leaders have the tools, training or deep understanding of how to navigate and succeed in this new world.

SELF-LEADERSHIP

The importance of self-leadership has been on the rise since the 1980’s. The ability to set goals, focus on personal performance, strengths-based development, self-imposed positive psychology in practice and a positive developmental belief system are all key pillars of self-leadership.

They also echo many of the criteria cluster leaders mention in their own talks about leadership and leadership challenges in clusters.

Many cluster leaders describe a situation where they mostly work alone, have to set their own goals and targets. They describe a situation of both being busy, but at the same time experiencing a sensation of everything taking much longer than expected. Despite having a large number of members, stakeholders and board members, most describe a sensation of “working alone”.

These findings fall in the category of self-leadership, or rather leaders applying self-leadership to navigate their new leadership paradigms.

 

Assessing Your Leadership in Innovation Superclusters

Based on our early findings and the shift from five to eight leadership levels, we have developed the Cluster Leadership Map (1.0). It is now being applied to leadership development, coaching and training of leaders in clusters and ecosystems.

The Cluster Leadership Map – get it at www.strategytools.io

The tool allows cluster leaders, clusters or even national cluster programs to assess, measure and develop stronger cluster leadership.

Recently introduced to a cohort of new cluster managers, the tool is showing strong signs of being both relevant and powerful to help innovation clusters and ecosystems evolving better leaders.

 

Moving Towards an Emerging Understanding of Cluster Leadership

In our work we have been privileged to gain access to board rooms, national transformation leaders, cluster leaders, academics and well-respected industry CEO’s. Through observations, surveys, interviews, conversations and reflections, we continuously attempt to make sense of new social structures. We believe a growing number of countries will move towards building innovation superclusters and national cluster programs. But we are also aware that the overall understanding of key leadership traits in these cluster structures is generally low to non-existing. Rather, a traditional, top-down, hierarchical mindset is applied to what fundamentally requires a new perspective on leadership.

In our work, and in collaboration with leading academics and experts in the field, from California to Copenhagen, from Singapore to Vienna, we hope to contribute to an emerging understanding how we develop a generation of new leaders, leaders that naturally thrive and succeed in the age of ecosystems, networks and Innovation Superclusters.

As we move closer to the 11th Global Peter Drucker Forum we invite you to join the conversation and explore the rapidly evolving leadership challenges across ecosystems, networks and Innovation Superclusters. These topics will be covered in depth at the Forum this coming November.

Building Innovation Superclusters – the report (Mid-June 2019)

This article draws inspiration from the upcoming report, Building Innovation Superclusters.
Sign up at www.engage-innovate.com/reports for special preview to the upcoming report on how to build Innovation Superclusters.

The Book – Innovation Superclusters – a New Playbook for Economic Growth (late 2020)

This article is taken from the upcoming book, Innovation Superclusters – a New Playbook for Economic Growth – due late 2020
Register your interest and sign up for special early access at www.engage-innovate.com/books/innovation-superclusters