Industry clusters are all the buzz in economic development circles. Greater Baltimore is no exception, with increasing attention given to our biotech and cyber communities. Every region touts their unique sectors in the race to remain competitive. But boosterism isn’t enough. With lessons learned from many different regional efforts, a recent Brookings Paper provides a playbook for communities to better understand how clusters work and, more importantly, how to navigate their challenges. It’s a playbook worth understanding as our region accelerates its industry focused efforts.

The report starts somberly. “[T]here are glaring gaps between the recognition that clusters play an important role in an economy that demands concentration and specialization and the practical ability to develop initiatives that help firms within clusters become more competitive and spur growth.” Simply put, saying you have a cluster doesn’t make it successful. The Brookings authors set out to explain when clusters make sense for a community and when they don’t.

The premise of industry focused economic development is that regions succeed or fail based on their ability to “specialize in high value industries and evolve those specializations over time.” The authors suggest that clusters have three elements to their DNA: a shared ecosystem of facilities, suppliers and infrastructure; an interconnected and interdependent workforce; and a knowledge-based environment where information is shared, driving innovation.

The Brookings work suggests that a region’s cluster strategy should begin with data and insight – even when clusters are known. This work requires understanding how truly “geographically proximate and economically interdependent” the cluster is, drilling into such specific measures as commonality of supply chains, similarity of occupations, interconnectedness of technological expertise (and the complexity of such knowledge), and industry stage of development.

After measuring what matters, the authors underscore that a cluster strategy must “identify cluster constraints and opportunities and subsequently [develop] market-oriented responses that are able to draw on the capabilities and resources of the cluster’s firms.” The report suggests that efforts to cultivate industry clusters fall into five areas:

• Understanding information and network gaps, and improving the quality and exchange of knowledge
• Talent development – working directly with employers to teach what matters
• Cultivating translational research by universities and labs that is directly relevant to the cluster
• Fostering infrastructure and placemaking – literally ensuring there is a physical environment that fosters cluster growth
• Bridging gaps in access to capital

In reaching these conclusions, the Brookings authors studied five very different successful clusters. While these clusters focus on different industries and have varied ecosystems, the study found five common traits among these initiatives:

• “Focused on establishing a robust ecosystem, not quick job gains”
• “Industry-driven, university-fueled, government funded”
• “Placing a collective big bet on a unique opportunity”
• “Championed by passionate, dedicated leaders”
• “Anchored by a physical center”

It’s easy to glance down these commonalities and conclude we have them covered. But each is nuanced and not so easy to pull off. Of these traits, one stands out to me as critical for Greater Baltimore’s success – that industry must drive the cluster’s growth. Not universities, not government. Industry. Too many conversations happen without the group that matters most being in the room. And more than being in the room, driving the discussion. Plenty of regions have amazing assets; Greater Baltimore certainly does as well. What this excellent work from Brookings underscores is that it really isn’t about the assets you have; it’s about first truly understanding them and then figuring out what to do with them intentionally.

With more than 30 years’ experience in law and business, Newt Fowler, a partner in Womble Bond Dickinson’s business practice, advises many investors, entrepreneurs and technology companies, guiding them through all aspects of business planning, financing transactions, technology commercialization and M&A. He’s the past board chair of TEDCO and serves on the Board of the Economic Alliance of Greater Baltimore. Newt can be reached at newt.fowler@wbd-us.com.