Wednesday, November 4, 2015

Strategically Planning a Cluster

While reading the article “Your Strategy Needs a Strategy”, by Martin Reeves, Clair Love and Phillip Tillmanns, from the Harvard Business Review collection, we can clearly understand the purpose of assertive strategic planning on firms and industries. However, can we take a step beyond single strategic planning and design it for a region, or a cluster? Can strategic planning be transposed to a regional context? An aligned strategy for clusters can bring competitiveness and economic development for the region. The decision making on a collective view favors the community and the region.

First, it is important to understand the meaning of a cluster. Michael Porter defines cluster in his article “Clusters and the New Economics of Competition”, as geographic concentration of companies and institutions that are interconnected in a specific field or industry. It is acceptable that each industry in a particular cluster has its own strategy to success in the market. Following that thought, we conclude that because companies are closely surrounded by competition, then there could be no gains on having a common strategy for the group. However, when thinking of small industries, a greater strategic plan for the group can be seen as a competitive advantage in the market.

I worked closely to a shoe manufacturing cluster in the metropolitan region of Belo Horizonte, in Brazil. Most industries were concentrated in the small city of Nova Serrana. They were mainly family-owned small businesses who planned their strategy based on the classical style, where they could predict the shoe industry into two visible seasons in Brazil, winter and summer. Any changes that were to be made to the industries would require a large investment, unreachable to their reality. Hence, these industries hardly interacted. With the changes in the market, foreign companies bombarded the Brazilian market with fast-fashion in shoes. Suddenly these companies struggled to place themselves in their stand-alone, classical strategy. However, the need to adopt an adaptive strategy would require specialization in the industry and collective effort. As a cluster, these companies invested in a common platform for innovation and re-designed their relations with partners and suppliers in order to attend the high demand that fast-fashion required. The strategic planning for that shoe cluster in Nova Serrana envisioned the transition to the fast-fashion market as a group. The industries in the group would position themselves as manufacturers of good quality and trendy shoes.

Gains can be measured on how much the sales went up for each industry or by how many jobs were created. However, the real value of the collective strategic planning was evidenced by the change of the mindset in the city of Nova Serrana. They began to discuss what is better for the future of their industrial park. The community began to see itself as a deliverer of fast-fashion and style. Decisions on governmental and corporate levels were made based on what the strategic positioning for the region was.

The main lesson from is the importance of applying the right strategy for your strategy from a cluster perspective. In the world of small businesses, strategic planning for clusters can be the key to industrial competitiveness and regional development.

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