The Business Case for Clusters

by Sarah Rahman, Mark Muro | October 7, 2010

The academic case for clusters (mounted by the likes Michael Porter and others) already exists. The policy case (frequently made by us in Metro Program papers and on these pages) also exists. Now, the business case for cluster strategies and federal and state cluster policies has been gaining prominence, and that is what was recently asserted really powerfully by Eli Lilly and Co. President and CEO John Lechleiter.

At a major event on innovation clusters last month, Dr. Lechleiter delivered a strong address explaining how his Fortune 500 firm benefits from actively supporting and engaging in the vibrant, 1,600-company strong and growing life sciences cluster in its headquarters state of Indiana. Indeed, Lilly was one of the lead initiators of the statewide BioCrossroads cluster initiative that has successfully fostered connections between research institutions, corporations, government, and philanthropy to provide capital and business development assistance to entrepreneurs and form new enterprises, like a health information exchange and an orthopedics hub, to advance particular cluster priorities.

So, what’s in all this for Lilly’s bottom-line?

Dr. Lechleiter’s noted in his keynote speech that “the life sciences cluster strategy dovetails perfectly with [Lilly’s] own strategy as an innovation-based pharmaceutical company.” Specifically, in his own words, engagement with a regional innovation cluster across the state and concentrated in Indianapolis has helped Lilly:

Other speakers last month, including Jason Furman of the National Economic Council, provided important affirmations of the cluster paradigm from multiple perspectives. Furman’s remarks, for example, may have been the highest-level acknowledgement of the economic centrality of regional economies ever, as we recently noted.  And yet, it was equally important to hear a major U.S. corporate executive placing clusters and other regional dynamics and policy right alongside the more typical big business agenda items of tax, trade, and education reforms as a way to enhance American innovation and growth. In this regard, Lechleiter’s framing was so seemingly obvious and tangible that it made the regional basis of economic activity seem not a contestable proposition, but a simple economic fact.  Which makes us wonder what other titans of business will soon make the same case.  

 

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