2. Cluster Development & Business Networks:
Making the Connection

A New Vision

In recent decades, Saskatchewan has been under-performing relative to other provinces in Canada. In particular the firms in the southwest region of the province frequently lack critical mass, with an absence of trust and linkages at the all-important local level. We have ‘clumps’ of co-located firms, rather than interactive, densely networked clusters as can be seen in many other vibrant economies. Cluster development in key economic sectors is a complex and long-term undertaking that requires a unique and critical mass of existing community resources, as well as the commitment of many stakeholders and local champions. This collaboration or working interdependently does not come easily to many of our firms and support organizations. But building early successes in non-threatening arenas provides the foundation for later, bigger collaboration and increased productivity levels.

Research shows a clear link between increased productivity levels and the levels of innovation through business networks at the national, provincial, regional and corporate levels: areas of the country that show more evidence of innovation through business networks are richer and grow faster, and companies that do so perform better financially and have higher share prices. Innovation should not be viewed as exclusively based in large urban centers. Many smaller communities throughout the region have significant knowledge and entrepreneurial resources; though they may lack the networks, infrastructure, investment capital, or shared vision to live up to their innovative potential.

In an effort to increase our productivity levels, increased focus is now being placed on fostering the Southwest region’s innovation capacity and performance in the context of a global economy. The new economy is all about speed, quality, flexibility, innovation, networks and building critical mass. This new style of doing business demands a team approach at a local level, a clustering approach. Therefore, cluster development through business networks has moved to the forefront of economic development practice for the southwest region. Instead of focusing on individual companies, clusters encourage practitioners, urban and municipal leaders and scholars to think about regional economies in terms of groupings of related firms and supporting infrastructure to increase regional productivity levels and economic growth.

This new strategy will focus on building a united vision and the networks to engage in the creation of strong industry clusters in the region that will innovate and attract local and external investment to the Southwest. New and existing partnerships will be developed and strengthened with key economic development stakeholder groups including: private – public partnerships with business and industry, municipal, provincial and federal governments and agencies, nongovernment organizations, and institutions. There will be an increased awareness by industry business of their role and the influence that they can bring to bear in the creation, expansion and attraction of new complimentary business to the region. The synergistic effect of industries working together with support organizations and business service providers will result in innovative solutions to problems, and ultimately make all sectors more competitive resulting in significant new investment and jobs in the region.

Cluster development through business networks can contribute to regional economic growth under the right circumstances, but there are no guarantees and no perfect formula. This report identifies specific recommendations for how government policy-makers community leaders and the private sector can use the cluster concept: to understand a regional economy and the sources of its competitiveness; to promote greater collaboration among regional firms; and to maximize the impact of government services to private industry.

ASBNC Philosophy

The ASBNC is an economic development philosophy and process that focuses on supporting and enhancing existing key industry/sector business network opportunities and infrastructure as opposed to a development model that seeks to attract new business to the jurisdiction in question.

Ultimately the ASBNC is a management tool / systematic process to build a framework on how to move forward with rural revitalization with the main focus on business retention, expansion and investment attraction of key industry sectors. The ASBNC is a structured and focused approach to connect with the key industry business community to identify and address where possible, their needs, concerns and business opportunities. It is an effective means of gathering business input for the purpose of creating and implementing a strategic industry development plan.

Economic development practitioners and studies indicate that a much greater economic impact can be achieved if local communities in a region focus and take care of their key industry sector businesses. The reasons for this approach include the following:

• Existing businesses have built the local and regional economy to the level of success it is today and they are key resources for developing strategic priorities for community and business development projects.
• 60%-70% of new jobs created come from existing businesses.
• Attraction programs are unlikely to be successful if existing firms are not happy.
• It is less costly to retain an existing job than to attract a new business/jobs.
• Import replacement through existing businesses reduces economic leakage and increase local direct employment.

The ASBNC can be instrumental in strengthening relationships between the business sector and the community and at the same time aid in the development of a prosperous economy. Taking care of business makes common sense. Planners, municipal officials and economic development professionals are encouraged to participate in the ASBNC to help facilitate and accelerate their industry and community development efforts.

ASBNC Benefits

First and foremost the ASBNC is a regional effort and will not yield results unless community leaders, development organizations and industry work together, support the action and join in the effort. Key industry sector businesses have a better chance of success when they recognize the opportunities of private-public sector partnerships and linkages. Furthermore, a strong coalition team must be in place to properly channel the energies invested in the ASBNC.

So why would private sector companies want to be part of the ASBNC? For many reasons:

• An opportunity to respond to their business needs.
• Develops a creative partnership with other industry players and government.
• Facilitates local business growth and job creation.
• They become an integral stakeholder in strategic action plan development and implementation of initiatives for industry development.

Community stakeholders want to be part of the ASBNC for many reasons:

• Enhances the business development capacity of community leaders.
• Establishes a resource network to meet the needs of local businesses.
• Makes the community and its leaders an active partner with local businesses in industry
  development.
• Addresses business needs and opportunities through locally developed action plans.
• Encourages greater local involvement in industry development.
• Strengthens local capacity for economic development.
• Creates greater economic development self -reliance.
• Builds strategic private and public sector alliances.
• Improves the business climate, leading to job creation opportunities.

Measurable Results

In the long term, the ASBNC will assist local business to become more competitive by evaluating and addressing their broader needs and concerns, and by taking advantage of new alliances to implement opportunities for growth. Businesses that stay competitive are more likely to remain in the region and possibly expand. The ASBNC process establishes a business / industry development plan for the regions key sectors. The process creates a broad based regional coalition to sustain long-term key industry sector business development efforts.

Future results of the ASBNC will be as follows: businesses and jobs retained; business expansions, new jobs created and increased tax assessment; new export contracts for business; import replacement opportunities implemented; improved communication with business community; pro-business attitude established in the region; increased regional capacity for business and industry development; strategic sector development plans developed, enhanced investment attraction.

Factors that will determine the success of the ASBNC are as follows:

• Community and organizational readiness for business and industry development.
• Local champions to support the implementation of industry initiatives.
• Immediate follow up to identified urgent issues.
• Maintaining business network / cluster development momentum.
• Commitment to industry and business development.
• Strong regional and business leadership and commitment to business development.
• Ability to undertake industry development projects in a cooperative manner.
• Business resource network, business network advisors, and overall project coordinator.
• Budget / funding, and an ability to coordinate and facilitate the entire process.

Southwest
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