The Natural Edge Project The Natural Advantage of Nations Whole System Design Factor 5 Cents and Sustainability Higher Education and Sustainable Development




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The Natural Advantage of Nations (Vol. I): Business Opportunities, Innovation and Governance in the 21st Century

 
 

Section 2: Natural Advantage a Business Imperative

Chapter 7: Innovation and Competitiveness through Industry Cluster Development (Michael Fairbanks and Andrew Smith)
1 Cocoa beans. and what else?
1.1 The cluster development process
1.2 Government role in promoting cluster competitiveness
1.3 A way forward
2 References List from the Book
Sample of Resources to Support Chapter 7
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Background on Cluster Development

 

In this chapter CEO Michael Fairbanks and Andrew Smith, of On the Frontier (OTF), share their considerable experience in discussing their recent work in bringing greater prosperity to developing nations such as Rwanda and Macedonia . The OTF Group consists of leading strategy experts who have decades of experience on competitiveness in emerging markets. It advises developing companies, regions, and nations on how to be more innovative, increase productivity and create competitive advantage. (View Website)

Background on Cluster Development

Key Reference : Fairbanks , M. and Lindsey, S. (1997) Plowing the Sea: Nurturing the Hidden Sources of Growth in the Developing World, Boston: Harvard Business School Press.

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Modern interest in industry clustering goes back to Harvard Business School Professor Michael E. Porter's classic work, The Competitive Advantage of Nations . Using cases from around the world, Porter argues that in today's advanced economies regional clusters of related industries (rather than individual companies or single industries) are the source of jobs, income and export growth. Clustering is now almost universally used around the world. We can only benefit if the trend is from clustering to eco-clustering. The South Australian Environment Industry Cluster was initiated in August, 2000 by the South Australian Business Vision 2010, and is an interesting example of this. It has the support of the Commonwealth Department of Industry, Science and Resources as well as the Environment Protection Agency in South Australia.

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References from the Book

1. Australian companies can join the Buy Recycled Business Alliance network that already represents over AU$30 billion worth of purchasing power.

 

2. Porter, M. (1990) The Competitive Advantage of Nations, The Free Press, New York (reprinted in 1998).

 

3. Forde, H. (2003) Building an Entrepreneurial Economy Through a Systematically Managed Process of Cluster Driven Innovation, Industry Cluster Project, Business SA, Australia.

 

4. OTF Group is a strategy consulting firm based in Watertown, MA with project offices worldwide. The firm has led cluster competitiveness for the last 12 years in more than 25 countries and dozens of industries.

 

5. Clusters consist of all stakeholders in a given industry, including but not limited to private sector enterprises, suppliers, customers, labour, government, research institutes, training institutions, professional associations and other groups. Clusters promote firm-level competitiveness by increasing both the cooperation and competition among firms. The relationships developed within clusters accelerate product development and improve access to specialized inputs, market information and a skilled workforce. Developing strong clusters helps regions position themselves to respond to the challenges of the knowledge-based global economy.

 

6. Rogers , E. (1995) Diffusion of Innovations, The Free Press, New York , p262.

 

7. See description of the Seven Forms of Capital (Cultural, Human, Knowledge, Institutional, Financial, Infrastructure, Raw Materials) in Fairbanks, M. (2000) Changing The Mind of a Nation: Elements in a Process for Creating Prosperity, in Harrison, L. and Huntington, S. (eds), Culture Matters: How Values Shape Human Progress, Basic Books, New York.

 

8. Rwandan economic objectives and coffee sector data is from the forthcoming article by Rudasingwa, T. and Donahue, N. (2004) 'Context and Prospects of Nation Building: How Business Strategy is Transforming Rwanda', Fletcher Forum of World Affairs, vol 28, no 1.

 

9. Other stakeholders may include 'future generations'.

 

10. Figures from On The Frontier (OTF) Group Presentation (2002) Rwanda Coffee Strategy and Action Priorities, developed as part of the Rwanda Competitiveness and Innovation Program, 15 July.

 

11. Concept relates to the third principle of Natural Capitalism outlined in Hawken, P., Lovins, A. and Lovins, L. H. (1999) Natural Capitalism: Creating the Next Industrial Revolution, Earthscan, London.

 

12. The Jamaican energy sector example is based on preliminary meetings between the Natural Capitalism Group lead by Hunter Lovins, the OTF Group and Jamaican energy sector players in April 2003.

 

13. The cost figures estimated for efficiency technology are based on research conducted for the book, Small is Profitable (Lovins, A., Datta, K., Feiler, T., Rábago, K., Swisher, J., Lehmann, A. and Wicker, K. (2002) Small Is Profitable: The Hidden Economic Benefits of Making Electrical Resources the Right Size, Rocky Mountain Institute Publications, Colorado).

 

14. There are over 2.5 million smallholding cocoa farmers (under 5 hectares) supplying 90% of the worldwide cocoa production according to the International Cocoa Organization.