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Christian Rangen: Why Superclusters are Engines of Future Growth

 

The world is learning to innovate faster – and innovation superclusters are playing an increasingly important part.

Sillicon Valley (tech), Boston (healthcare), London (fintech), Tel Aviv (tech) are famous clusters in today’s global economy. They attract talent, capital, R&D investments, corporates and create a strong collaboration model across a large ecosystem.

Countries and regions are now learning to actively build and grow future-oriented clusters on a massive scale. They are designed to accelerate regions and countries into the future. We call them Innovation Superclusters.

Not many across the globe have an in-depth understanding of what it is and what exactly it entails. We sat down with Christian Rangen, who is doing an increasing amount of work within Innovation Superclusters, to get a better overview of what Superclusters are and how they are shaping the future.

 

Listen to the podcast here:

 

What are innovation superclusters?

Innovations superclusters are large system-level government-led initiatives to drive and accelerate national innovation programs.

While a lot of governments do have quite active innovation policies, very few governments have put together the building blocks and all of the pieces for what we call Innovation Superclusters.

Innovations Superclusters can best be understood by looking at bringing together the five pillars of the innovation ecosystem. So, you have the academics, you have the governments, and you have the corporates. That’s traditionally the triple helix.

Recent research from MIT also adds the entrepreneur and the capital. Now we see that this is really the five pillars of the innovation ecosystem . What is new is that governments can really build and actively design these.

 

So are there different types of clusters?

You know that’s a good question. It’s actually a great question.

We’ve identified and mapped out what we call three types of clusters, where you have EC (Emerging Cluster), GC (Growth Cluster), and SC (Supercluser). We rank them on some of their size and scale versus the impact.

Now the first level of clusters is the Emerging Clusters. They can be found all over the country or all over the region. They’re probably quite incomplete in terms of being an ecosystem and they’re quite local by design. Typically they’ll have between 20 to 25 and have 100 members.

Next you have the more powerful, the more impactful Growth Cluster. Growth Cluster is really a high potential area that the government should look closely at and definitely keep developing.

As a cluster it already has strong value creation and it might actually cover a region, looking beyond just national borders. And so you can have a Growth Cluster at the border around Hong Kong and mainland China, you can have them growth cluster between Singapore and Malaysia.

Now what’s really interesting is the third level – the third type of cluster – which is what we call the Superclusters. Superclusters really compete globally.

They have a large share of export value creation and they really have a disproportional value creation in them. One country might sustain several but probably no more than 10 Superclusters.

When you’re really analyze them, it takes easily 10 years+ to fully develop. These clusters are large, they have a large number of players and they can easily have 500 plus members covering government representatives, entrepreneurs, investors, academics, and of course large companies all coming together to form and develop the Supercluster.

 

What does this mean to them?

Well first of all, it means governments can take a much more active role than – perhaps at least in some regions – they traditionally have. The example in Canada shows that governments can really go in and design and lead Superclusters. I think that this is a revelation. Governments, even in a global competition, can take a much more active role than they traditionally have.

 

What are some examples of Superclusters today?

The best example that we have right now is actually Canada. Canada has this new government which I’m sure you are familiar with, and led by its new innovation minister, is really driving a lot of great work around Innovation Superclusters.

They just announced almost a billion Canadian dollars to be invested over the coming decade.

Their program aims to create 50 billion Canadian dollars of value and more than 50000 jobs. Now what’s interesting is that these jobs are all built around what we call the industries of the future.

So there are jobs around AI and jobs around the ocean space, the ocean economies, and Canada is doing this really thought-through well-developed government programs. If you want to look to the best examples you want to look to Canada.

It’s worth mentioning that Malaysia – and this is a project we’ve been involved with – Malaysia has also invested significantly in trying to understand, map out and start developing superclusters.

This work is still early but we’re very optimistic to see what’s going to happen in Malaysia and the Southeast Asia region in the coming decade.

 

What is driving superclusters globally?

That’s a great question and it’s also something that I know government leaders and political leaders are discussing. I think, to quote the great book The World Is Flat, I think that countries and regions are competing, they’re locked in the global innovation race.

Israel, Shanghai, Shenzen, Silicon Valley, of course Boston. These are all regions that are attracting outsized investment, outsized talent, and outsized value creation. Governments want that. Governments want to attract this, probably much more than they have so far.

So global competition, global innovation, the global race and Superclusters is just good government policies for creating economic growth.

 

How do you expect Superclusters to evolve in the coming decade?

Superclusters as a phenomenon is still fairly new. They’ve been partially in the literature and in the research but really developing them on the massive scale that we’re now starting to see, I think there’s a lot of work that’s going to happen here in the next decade.

Now some argue that Superclusters are really emergent by design. That means that they grow and develop by themselves. Government don’t have a big role to play.

Now we would argue that the opposite is true. Governments can actively shape – by good policies of course – what Superclusters should look like.

So what I expect to see in the coming decade are three things:

One, I think we’ll see more aggressive government policies for innovation. Naturally China, we’re seeing that already. But also the other economies across Asia will invest more, will lead more when it comes to developing Superclusters.

Number two is I think the speed of the development of Superclusters will pick up. Canada has spent some time doing this. I think as governments learn the tools that we have developed, as they learn the policies that’s working well let’s say in Canada, the speed of Superclusters are going to pick up significantly.

The third thing that’s going to evolve in the coming decade is simply value creation. I think that as more and more startups attract capital, get exits, reinvest in the ecosystem, governments will realize that they need to actively attract not only capital per se, but the ecosystem and the Superclusters that support capital and startups at a faster scale.

So there’s a lot of forces speaking for and supporting and driving Superclusters globally.

 

How can governments get started on Innovation Superclusters?

The answer to that is they need political leadership and they need political will.

If you look at Canada, it has really been a top down effort and that’s gotten the country to where it is right now. You do need a burning soul to lead this, you need somebody with passion and a big capacity to actually lead this.

So governments can get started by having a strong political leader or a strong agency leader in in driving this.

In Malaysia, a lot of this work has been on the leadership of the Ministry of Finance, but also the CEO of the Malaysian Global Creativity and Innovation Centre, Ashran Dato’ Ghazi. Governments need that leadership in place.

Second is governments need to assess what they currently have in place. I think most governments will say “we have several of the building blocks but we’re of course missing some”.

So after doing that mapping, the governments can say “OK, what do we need to improve?”, “What are the tweaks that we need?”, “What are the upgrades that we need?”, and “What are the investments and the policies that we need?”.

The third – start running programs on the ground. Start engaging the ecosystem by town halls, by dialogue workshops, reach out to key players across media, corporate, startups, investors and the ground level and the grassroot engaged.

So you need leadership, you need an assessment of where you are, then start tweaking and you need to engage the wider ecosystem.

 

Final question: what are the top three pieces of advice you would offer anyone looking to get started on building Superclusters?

Well, three pieces of advice I would offer is:

Number one – the government can have a much more active role than perhaps many governments have had, with the right tools, with the right frameworks in place. The government can genuinely lead national transformation through building Superclusters. So the first one is yes and governments actually can.

Second we need to understand what we call the industries of the future. The industries of the future are the potential, quite likely growth industries, that your country or your region will see and we need to start shaping policies around that. Most governments regretfully have policies to protect the industries of the past. They might have regulations in place, they might have funding programs in place, they might have taxation schemes in place to support old industries rather than shape new ones.

So the second advice is really to understand what are the potential industries of the future in our country or in our region.

And then the third advice is to really just do it. This is not rocket science, it’s complicated it’s complex, it’s system level thinking, but building, shaping, scaling Superclusters is fully within the grasp of virtually any government worldwide.

It does take political will, it does take political leadership and it probably takes a 10-year horizon. But with those things in place, any country or any region can successfully build Innovation Superclusters around industries of the future.

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