29 Sep 2014

Harvard’s Michael Porter Unveils New Tool to Improve Economic Development


MINNEAPOLIS—Michael E. Porter, Harvard’s Bishop William Lawrence University Professor, based at Harvard Business School, launched the new U.S. Cluster Mapping tool this morning in Minneapolis as part of a two-day conference called Mapping the Midwest’s Future and held by the University of Minnesota’s Humphrey School of Public Affairs.

The conference hosted over 150 business leaders, policymakers, economic development officials and academics from twelve Midwest states (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin) and four Canadian provinces (Alberta, Manitoba, Ontario, and Saskatchewan).

Based on path-breaking research led by Professor Porter, the U.S. Cluster Mapping tool provides detailed data on the presence of “clusters” -- regional concentrations of related industries such as aerospace and defense in Kansas and recreational goods in Wisconsin – and regional economies throughout the United States. It is useful to view economic development through the lens of clusters rather than specific types of companies, industries, or sectors, because clusters capture the important linkages and potential spillovers of technology, skills, and information that cut across firms and industries. The cluster perspective provides a powerful understanding of the specific profile and industry dynamics shaping a regional economy and highlights opportunities for coordination and joint action.

The U.S. Cluster Mapping tool allows for new regional perspectives on economies and the competitive industry landscape at national, state, and local levels. It can also offer insights into new and emerging clusters in different regions. Charts and maps from the tool illustrate, for example, that the Midwest, generally regarded as the country’s “breadbasket,” is also a major center of production technology and heavy machinery.

There are many positive examples of clusters helping to drive regional development initiatives in the Midwest, from Milwaukee’s Water Council, which aims to align the regional freshwater research community and water-related industries to further establish the Milwaukee Region as a world hub for water-related research and economic development, to NorTech, a technology-focused organization that strengthens Northeast Ohio's economic vitality by accelerating the pace of innovation in the region. As Professor Porter discussed in his presentation, the U.S. Cluster Mapping tool helps drive better regional economic strategy by positioning clusters as a framework that can organize the implementation of many public policies and investments directed at economic development.

The U.S. Cluster Mapping tool provides powerful insights to support a region’s efforts to develop an economic strategy to create more jobs, income, and innovation. Effective regional economic strategies are based on private-public collaboration to identify and strengthen the distinctive competitive position of a region in light of its location, existing strengths, and business environment qualities. In contrast, prevailing regional economic development efforts are often government driven, fail to identify the location’s unique value proposition, and revolve around chasing investment in generically “attractive” industries.

In his speech to conference attendees, Professor Porter laid out a cluster-based approach to economic development and growth, focusing on competitiveness and innovation. He emphasized the need for a bottom-up approach led by the private sector and highlighted the critical role of “institutions for collaboration” (that is, cluster- supporting organizations like chambers of commerce, trade unions, and industry and professional associations) and the necessary alignment with other economic development policies such as workforce development, export promotion, and specialized infrastructure and research initiatives.

Porter concluded with a call to action to business leaders and other influencers to explore the data available through the tool, register their organization, engage with partners, and work with peers around the country to develop and enhance the practice of cluster-based economic development.

Other speakers at the conference included Doug Baker, Chairman and CEO of Ecolab, Inc.; Matt Erskine, Deputy Assistant Secretary for Economic Development at the U.S. Economic Development Administration; Mayor Jim Hovland of Edina, Minn.; Matt Rose, Executive Chairman of the BNSF Railway; and Tim Welsh, Director at McKinsey & Company and Board Chair of Greater MSP, a regional economic development organization spearheaded by the Humphrey School that focuses on supporting strong regional clusters in the greater Minneapolis-St. Paul region.

The U.S. Cluster Mapping Project is part of the Harvard Business School’s U.S. Competitiveness Project, a multifaceted, multifaculty, long-term effort codirected by Professor Porter that focuses on understanding and improving the competitiveness of the United States.


Jim Aisner

Christian Camerota

About Harvard Business School

Founded in 1908 as part of Harvard University, Harvard Business School is located on a 40-acre campus in Boston. Its faculty of more than 250 offers full-time programs leading to the MBA and PhD degrees, as well as more than 175 Executive Education programs, and Harvard Business School Online, the School’s digital learning platform. For more than a century, faculty have drawn on their research, their experience in working with organizations worldwide, and their passion for teaching, to educate leaders who make a difference in the world. The School and its curriculum attract the boldest thinkers and the most collaborative learners who will go on to shape the practice of business and entrepreneurship around the globe.