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
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.
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.
“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.
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.
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.
“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.
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.
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 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