The Creative Enterprise Cluster: A Montana Business Case Study

Mon, 14 Nov 2005 02:54:41 -0500

[ Introduction - Business Clusters In The Small ]
[ Montana's Creative Enterprise Cluster Input/Output Diagram ]
[ Montana's Creative Enterprise Cluster ]
[ Digging Deeper ]

Related page:
[ This article at Sohodojo ]

Introduction - Business Clusters In The Small

Two of the hot topics today among regional and local economic developers are creative class and business cluster dynamics. In his award-winning book, The Rise of the Creative Class, Carnegie Mellon distinguished professor of regional economic development, Richard Florida, makes a compelling case for the counter-intuitive source of success factors in regional and local economies. Stuart Rosenfeld of Regional Technology Strategies (RTS), among others, champions the importance of recognizing business clusters, community ecosystems of associated businesses, as a dynamic source of regional and local economic well-being.

In both these important areas, creative class and business clusters, the collective power of the small is validated and encouraged. And in both these domains of new economic development thinking, the power and importance of networking is recognized. We are, indeed, in a new era of the Network Society and its associated Network Economy.

Many who have read Dr. Florida's book are left with a feeling of, "Great, that is fascinating... and very urban. What about folks like me that live in small towns and rural areas? How do creative class dynamics affect me?"

These are important and timely questions. At NARFI and Sohodojo, we've already written a few pieces describing tROCCits, or the Rise Of Creative Class in the small. For more on the implications of creative class dynamics in rural and distressed urban communities, see our Iowa Creative Economy Unconference presentation, and more recently, Nanocorps in Micropolis.

Adding Business Cluster Spice to Creative Class Chili

While Florida's theory can open our eyes to social and personal dynamics that affect regional economies, we need to turn to the emerging domain of business clusters to reveal additional insights about how creative class folks like to do business. Sure, some creative classers do work and enjoy working for large megacorps doing creative work 'in the large'. But more and more we find creative individuals in small business, including creative self-employment.

Many 'creatives' have been rugged individualists all along. But modern communication technologies and modern transportation systems make it increasingly possible for more folks to make their living in creative enterprises wherever they choose to be.


	RTS Cluster Guru Stuart Rosenfeld

Recognizing that the geographic isolation and rural nature of much of the state had a significant impact on the health of Montana's economy, Chief Business Officer Dave Gibson of the Montana Governor's Office of Economic Opportunity turned to business cluster guru Stuart Rosenfeld and RTS Inc. to conduct a significant study of Montana's existing and potential business clusters. The result of this exhaustive study was The Montana Business Clusters Study document. A 52-page summary of the Montana Business Cluster Study is available in MS-Word (.doc) format.

NARFI's Creative Enterprise Cluster Agenda

• Network Economy Research

• NARFI Communities of Practice

• NARFI Rural Entrepreneurism Community of Practice

The Creative Enterprise Cluster (CEC) represents 5% of the employed workforce in Montana. The CEC makes a significant contribution to the Montana economy. With the emerging Network Society and Network Economy, the contribution of the Creative Enterprise Cluster to Montana's economy is likely to grow and broaden. The CEC has the potential to invigorate local and regional economies in our rural and reservation communities.

The North American Rural Futures Institute (NARFI) has an active and evolving Creative Enterprise Cluster research and social action agenda in collaboration with its strategic partners, Sohodojo and The Richard Florida Creativity Group. For details of NARFI's Creative Enterprise Cluster agenda, follow the above links to relevant sections of the NARFI Program Update.

Rosenfeld's RTS study identified six clusters in Montana: the Wood-Based Product Cluster, Agri-Food Cluster, Experience Enterprise and Tourism Cluster, Life Sciences Cluster, Information Technology Cluster, and Creative Enterprise Cluster. The first five clusters are relatively conventional and expected given Montana's resource-based industries, agriculture, tourism and the ubiquitious reach of technology industries. It is the sixth cluster, the Creative Enterprise Cluster, that is especially interesting as an emerging 'new kid on the block' in cluster business analyses.

While geographic concentration is a primary feature of most business clusters, the Creative Enterprise Cluster transcends space – Who, What and Why are more important than Where and How Much. Shared interests defines the bond of community of the creative individuals and small businesses that comprise the Creative Enterprise Cluster. Once overlooked and dismissed as marginal contributors to local and regional economic vitality, creative researchers such as Richard Florida and Stuart Rosenfeld are shining a bright and constructive light on the self-employed and very small businesses that make up the Creative Enterprise Cluster.

The following is the chapter on the Creative Enterprise Cluster excerpted from the Summary of the Montana Business Cluster Study by Stuart Rosenfeld and the staff of RTS. While this analysis is specific to Montana, the concepts and insights are applicable to Creative Enterprises everywhere. Does your state have a Creative Enterprise Cluster analysis and action agenda?

Montana's Creative Enterprise Cluster Input/Output Diagram

Source: Summary of the Montana Business Clusters Study Primary Author: Stuart Rosenfeld, RTS Inc.

Montana's Creative Enterprise Cluster

Source: Summary of the Montana Business Clusters Study Primary Author: Stuart Rosenfeld, RTS Inc.

Sub-sections:
[ Description ]
[ Geographic Concentrations ]
[ Competitiveness Profile ]
[ Challenges and Possibilities ]
[ Suggested Actions ]

"The creative centers tend to be the economic winners of our age."

Richard Florida

The Rise of the Creative Class, 2002

Description

In Montana, the companies and individuals that produce and use creativity of form,
design, sound, and language are the basis for the creative enterprise cluster. This cluster consists of all
enterprises in the state whose principal competitive advantages are derived
from distinctive appearance, form, or content.

The cluster accounts
for more than four percent of the state�s establishments with employees, more
than five percent of all establishments, and about four percent of the state�s
workforce. It provides additional economic benefit in the form of inputs to
manufactured goods and services, contribution to a quality of life that
attracts talent, encouragement of innovation, positive impact on education, and
production of ancillary income that allows families to remain in some other
business or lifestyle of choice.

The success of the creative enterprise cluster will be characterized by slow and
steady growth and will depend heavily upon maintaining a high quality of life,
a supportive and accepting environment, social infrastructure, and tailored
support services.

Geographic Concentrations

Southwest Montana has the highest number and greatest concentration of creative
enterprises. Although talent is
dispersed across the entire state, there is a tendency for companies with
employees�particularly creative services�to be concentrated in and around
Missoula, Bozeman, Kalispell, Livingston, and Billings.

Some individual artists, crafters, and writers are clustered in these places because
they initially were drawn to Montana or supported in their efforts by
universities, creative arts schools and workshops, or residencies in these
cities. Others�especially those whose work is inspired by the scenic beauty of
the forests, mountains, lakes, rivers, waterfalls, and other wilderness
areas�might live almost anywhere in the state.

Art also flourishes on the reservations, in the
products that are part of the cultural heritage of the tribes and in
historically accurate clothing and household products. Each tribe builds on its
traditions to make products that are sold to tourists and contribute to local
economies. Most businesses are family run. As their children pursue educational
paths that lead to careers off the reservations, owners pass on their skills to
apprentices.

Competitiveness Profile

Skills and labor: The creative enterprise cluster relies heavily on people
with creative minds and highly developed skills gained through formal or
informal learning. Approximately 18,436 Montanans work in the creative
enterprise cluster. In 2000 � 2001, Montana two-year institutions of higher
education awarded 43 certificates, and Montana four-year institutions awarded
512 degrees related to this cluster.

Montana institutions of higher education offer
some sequenced programs that prepare people for careers in fields where art,
aesthetics, and creativity are essential, but few required courses within
occupational career fields. One of the state�s best-known and largest programs
is the film/video program at Montana State University. With approximately 600
students (about 55 percent from out of state), it is one of the largest in the
western states.

Many creative and innovative people who apply
their talents to products and services do not have degrees in art or design.
Know-how is highly valued within the creative enterprise cluster, and people of
all ages and backgrounds come to Montana to learn directly from working artists
and artisans. Other creative people develop skills while earning a living in
another field or learn skills at home and turn them into products that can
replace or supplement family income.

Relationships and social capital: The fact that this cluster is dominated by people who work alone or in very
small enterprises much of the time contributes to a strong culture of
association and collective activities. To keep up with trends, market
opportunities, and new techniques and technologies, creative workers depend on
networks, associations and guilds, and friends and acquaintances. The
associative structure of the cluster focuses on shared interests within the
cluster�symphonies, weavers, potters, and web designers have their own networks
and organizations where they associate for marketing and promotion, learning,
cost sharing, and accessing services.

A wide range of nonprofit associations works to
facilitate these relationships. In the arts sector in particular, nonprofit
organizations provide a social infrastructure and source of services.
Furthermore, these associations themselves are important sources of employment
and income, and contribute to the sector�s productive capacity.

Suppliers and services: Because the key
ingredient in this cluster is knowledge, the most important input is human
capital. Suppliers of goods do not need to be nearby since most materials and
supplies are easily purchased from distributors. Close access to knowledgeable
supply and equipment distributors and support services are far more important
than proximity to the companies that actually manufacture the supplies or
equipment.

Marketing and delivering products and services: Marketing outside the region is generally difficult for
individual artists, writers, and crafts people, many of whom lack business
acumen and interests. They tend to rely on intermediaries�galleries, shops,
agents, publishers, advertisers, and state promotional efforts�to find
customers. Some artisans and artists
turn to their associations and nonprofit organizations for help with marketing.
Despite the efforts of the associations and the State, creative enterprises
interested in growth and expansion find it difficult to efficiently market
their products. The World Trade Center in Missoula has helped a few creative
enterprises find overseas markets, but the scale is miniscule compared to the
potential.

Transportation of goods is not a problem. Packaging, shipping, and insurance for goods are
available through standard chain-mailing houses, Federal Express, UPS, and
other multinational services. Content, of course, is easily transmitted over
the Internet. The larger transportation problem is personal travel. Getting
customers to come to fairs and shows is made difficult by the cost and time to
get to Montana, especially from the eastern U.S.

Technology and innovation: Innovation is at the core of this cluster and represents
its strongest competitive advantage. Technology and the creative arts are
increasingly intertwined through computer-based design, drafting, and graphic
arts programs; filming, digital photography, art, and music; optics and
imaging; and web-based marketing. Firms with products that incorporate art into
products and creative content into services also use a variety of industrial
and information technologies to meet market demand. Access to the experts who
keep abreast of new market technologies is more important than proximity to the
developers and producers of the technologies.

Despite the use
of technology in some parts of the cluster, businesses in this cluster are not
typically associated with highly advanced technology. Technologies associated
with handicrafts are often developed by an individual and shared informally.
Technologies used by architects and designers are most often products of the
information technology sectors and used as they become commercially available.

Entrepreneurship and capital: The creative enterprise cluster is made up largely of entrepreneurs and small
companies. The capital investment needed to start many of the enterprises based
on art and design is relatively low. Creative enterprises tend not to attract
significant capital because they are unable to promise the rapid growth most
investors seek. Enterprises that move into larger scale production may need
equipment and technology, but often can share it.

Equity and opportunity: Creativity spans all
classes, races, and genders. People who have the resources to develop their
skills or make marketing connections may benefit most from creativity, but
talent is found in all cultures and all communities. This cluster, which
depends less than most other clusters upon infrastructure and high levels of
formal education, can reach all parts of Montana. It is particularly important
to Native Americans, who have well established art and craft traditions. This
cluster also has an influence on youth, especially in rural communities, by
engaging them in the arts to spur educational aspirations and attainment.

Challenges and Possibilities


	From Trent Williams' Clusters of Creativity: Innovation and Growth in Montana

In light of its intrinsic value and potential impacts on other clusters, the
creative enterprise cluster has not reached its full potential. Perhaps because
it is dominated by entrepreneurs and micro-enterprises, it lacks recognition as
a job and wealth generator.

Despite some outstanding
and well connected talent, support crews, and an outstanding university
program, Montana�s film industry has not been able to compete with states and
countries that offer tax incentives or subsidies to major production companies.

The universities offer
good programs for this cluster, but support below the university level is weak
and not commensurate with the cluster�s impacts on the economy. Even though
they derive most of their incomes from out of state, creative enterprises lack
outlets for marketing, especially outside the U.S. Cluster growth could also be
slowed by significant change in the ecology and population. The state�s
attractive-ness as a place to live, work, and create is based on the scale of
life and access to natural diversity and beauty.

The creative enterprise cluster offers three important opportunities with
substantial potential for Montana that go beyond the growth of the cluster
itself:

Transferring creative art to products in other industries. Industrial design is an undervalued asset in the U.S., and Montana has a chance to take advantage of it.
Attracting growth industries and potential entrepreneurs. People in many growth industries choose to do business in Montana because of its amenities, not because of the conventional factors of production.
Using local art to establish Montana as a recognized brand name for products.

Suggested Actions

1. Establish a Creative Enterprise Cluster Leadership Council.

A Creative Enterprise Cluster Leadership Council
can communicate industry issues and opportunities to government; provide
feedback on effectiveness of state-sponsored programs and actions to support
the creative enterprise cluster; foster creative enterprise cluster awareness
throughout the state and within the legislature; transmit information from
state government back to the creative enterprise community; sponsor networking
functions; and link to other clusters through leadership councils.

Action: State government should take the lead in forming and
staffing a Creative Enterprise Cluster Leadership Council.

2. Recognize and develop measures for the economic impacts of creative enterprises.

The arts are too often viewed as a "frill" in economic analysis and not as a major
source of growth and advantage, in part because they are dominated by
individuals and very small enterprises. Creativity is a primary competitive
advantage of many Montana companies in other clusters as well as the core of a
cluster itself.

Action: The State should treat this as an area for potential growth, promoting its products and
encouraging talented people and small companies to move to the state.

3. Expand emphasis on design competencies in secondary and higher education.

The aesthetics of design are vastly underappreciated in most American industries.
One way to change that is to integrate art, creativity, and design into the
educational system. A small number of colleges in different parts of the state
should be designated as Design Colleges. These colleges would build different
types of expertise, take responsibility for benchmarking exemplary practices at
other colleges, and develop curricula to be shared with other institutions.

Action: Increase the emphasis
on art and design in high school and college programs, offer concentrations in
design, and investigate the possibility of establishing a full-scale design
center at a college/university in the state.

4. Recruit technical talent.

The creative enterprise cluster could become a major marketing tool for the state,
complementing the draw of the state�s natural resources. The state should
develop a state "brand" for artists and for its creative environment and
support structure. Branding the state as a "creative" place can be used to
recruit talented university faculty members, professionals, researchers, small
and mid-sized companies, teleworkers, and independent contractors who can
expand the economy, blend into it, and enhance the creative impulse.

Action: Offer incentives to entrepreneurs and
individuals with demonstrated creative talents who have the potential to
produce goods or attract tourists and entrepreneurs, and who choose to live in
less prosperous parts of state.

5. Establish a statewide one-stop resource center.

The center would serve as a broker for existing resources and services and develop
support to fill gaps in services. This center should have a broad focus on all
creative enterprises and be staffed by people who understand the arts. It could
also match artists/designers with companies that make goods or services
anywhere, branding Montana as a major source of creative content for
industry.

Action: The state should
establish and staff a cluster one-stop resource center that develops a single
point of contact for information, works with existing associations and
nonprofit organizations to provide missing services, and points individuals to
existing resources and associations.

6. Link creative enterprises with companies making products that depend on appearance and content.

Although some Montana artists and writers provide product and content to manufacturers
and service providers, there is room for growth through structured networking
opportunities and brokers who can guide Montana companies to creative
enterprises that will make their products and services more attractive, unique,
and competitive.

Action: The state should
organize a series of workshops bringing together artists and writers interested
in commercial applications, companies that make final products, and
associations that represent them with the intent to form an ad hoc task force
to recommend ways to more effectively integrate art and industry.

7. Promote Montana�s galleries, studios, and workshops as tourist destinations.

The element of this cluster that makes original work is a natural attraction for
tourists that appreciate and purchase local goods. Places with concentrations
of creative people also draw tourists. The attraction of arts and crafts should
be merged with cultural heritage and nature to motivate more tourism and
provide opportunities to purchase goods.

Action: Strengthen links
between creative enterprises and tourism to enhance both. Integrate nonprofit arts organizations into
state tourism and marketing efforts.

8. Promote and support classes and workshops operated by nonprofit organizations and intermediaries.

Educational programs taught by expert artists and artisans attract people who spend money
in the state, return, and spread the word about the state�s creative
environment. The state should support programs that attract resident artists
and artisans and pass on the skills of Montana.

Action: Make workshops and classes in creative arts
eligible for state workforce development and training funds.

9. Connect Montana artisans to distant artisans and markets.

Matching Montana�s creativity cluster to other regions that depend on creative
enterprise�Denmark, northern Italy, or the South Island of New Zealand�is one
approach to share ideas and markets. Innovation and creativity require stimuli.
Connections to different cultures and experiences can catalyze creativity,
improve production techniques, and help locate new markets. The state could
begin transforming existing sister city relationships to regional economic
partnerships and defining collaborative activities.

Action: Through the
cluster one-stop, help artisan networks make the necessary connections to
establish partnering relationships with peer groups in other countries, leading
to shared marketing activities.

-- End of Creative Enterprise Cluster excerpt --

Digging Deeper

Want to know more about Montana's business clusters? Check out the following:

The Montana Business Clusters Study Summary (MS-Word format) - five more business cluster analyses just as thorough and insightful as the Creative Enterprise Cluster chapter presented here. A must-read for Montanans and anyone interested in cluster business analysis.
Clusters as Economic Development Strategies - Stuart Rosenfeld's keynote presentation at the Montana Economic Development Summit 2003. Montana's clusters are used are the focus of examples and recommendations, but this PowerPoint presentation is the definitive Cram Course on business clusters. Recommended for all, but especially valuable for regional and local economic developers and legislators wanting to understand how to support existing and nurture emerging business clusters.
Clusters of Creativity: Innovation and Growth in Montana - RTS' Trent Williams presentation at Montana Economic Development Summit 2003. This PowerPoint presentation is an excellent 'summary of the summary' of the Montana Business Clusters Study Summary cited above.

Stuart Rosenfeld and Regional Technology Strategies are leading experts in cluster business analysis and development. Fortunately, their excellent work is often done for public sector clients. This results in their excellent publications being available on-line and free of charge. Among the best of the best, we recommend the following:

Just Clusters: Economic Development Strategies that Reach More People and Places - The result of a Ford Foundation grant that brought together 23 practitioners, policy makers, and researches to share best practices and case examples to refocuses cluster strategy on equitable participation for those too often without access to funding and infrastructure support to evolve cluster businesses.
A Governor�s Guide to Cluster-Based Economic Development - Stuart Rosenfeld's How-To guide for public sector support of existing and emerging business clusters. Targetted for state governors, this document is nonetheless valuable for anyone interested in cluster business dynamics.

And here are two RTS publications that are especially of interest to us at Sohodojo given these documents' focus on 'less favored regions' (our interest in distressed urban and rural communities fits here) and rural communities:

Creating Smart Systems: A guide to cluster strategies in less favoured regions - Stuart Rosenfeld's report to the European Union - Regional Innovation Strategies group contains an excellent primer on cluster concepts followed by practical advice on business cluster dynamics and action recommendations to support existing and nurture emerging business clusters..
Networks and Clusters: The Yin and Yang of Rural Development - Stuart Rosenfeld's report to the Federal Reserve Bank of Kansas City, in addition to its focus on the unique demands of the rural context, this publication makes the connection between network concepts and cluster business dynamics. A double-barrel winner! (Tip: Read this along with Barab�si's Linked: The New Science of Networks.)

NARFI - Microenterprise Networks