Inno Clust Prog Manual v5initiatives.sampitroda.com/innovationclusters/resources/Innovation... · India is also estimated to have 5,000 regional MSME clusters 2 comprising of industrial,

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INNOVATION CLUSTERS

PROGRAM GUIDE

NATIONAL INNOVATION COUNCIL

GOVERNMENT OF INDIA

1

National Innovation Council

Table of Contents

I. Overview............................................................................................................................................................. 3

a. Innovation at Clusters................................................................................................................................ 3

b. Innovation needs an enabling ecosystem............................................................................................ 3

c. Innovation Clusters Initiative .................................................................................................................. 4

d. Industry Ownership ................................................................................................................................... 6

e. Role of the Government ............................................................................................................................ 6

f. Role of National Innovation Council ..................................................................................................... 6

II. Purpose of the Program Manual ................................................................................................................. 7

a. How to Use this Manual............................................................................................................................. 7

b. Illustrative Example: Food Processing Cluster, Krishnagiri, Tamilnadu ................................... 8

c. Organization of the Manual ...................................................................................................................... 8

III. Innovative Cluster Ecosystems: Case Studies .................................................................................... 8

a. International: Silicon Valley & Cambridge Cluster ........................................................................... 8

b. India: Tirupur Exporters Association (TEA) ...................................................................................... 9

c. Lessons to learn from TEA .................................................................................................................... 11

d. Traits of Innovative Cluster Ecosystems .......................................................................................... 12

IV. Building an Industry Innovation Cluster: Key Elements ............................................................. 12

a. The Connector ........................................................................................................................................... 12

Illustration ...................................................................................................................................................... 13

Support activity: Online collaboration and knowledge sharing .................................................... 14

Sustaining the CIC ......................................................................................................................................... 14

b. The Innovator ............................................................................................................................................ 16

Illustration ...................................................................................................................................................... 16

Support activity: Innovation Enablers ................................................................................................... 16

Support activity: Mentoring ...................................................................................................................... 17

Support activity: Innovation Toolkit ...................................................................................................... 18

c. The Channel ............................................................................................................................................... 19

Establishing channels of cooperation: Innovation Initiatives ........................................................ 19

Illustration ...................................................................................................................................................... 20

V. Building an Industry Innovation Cluster: Procedure ........................................................................ 20

a. Creating an innovation ecosystem for your organization ........................................................... 20

Illustration ...................................................................................................................................................... 21

b. Measuring the readiness of a Cluster ................................................................................................. 21

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Illustration ...................................................................................................................................................... 22

c. Creating a CIC ............................................................................................................................................ 22

d. Diagnostic of the Cluster ........................................................................................................................ 23

e. Preparing the Cluster Ecosystem Map .............................................................................................. 24

Illustration ...................................................................................................................................................... 25

f. Detailing the Industry Value Chain ..................................................................................................... 25

Illustration ...................................................................................................................................................... 26

g. Detailing the Production Value Chain ................................................................................................ 26

h. SWOT Analysis .......................................................................................................................................... 27

i. Prioritizing areas for action .................................................................................................................. 28

Illustration ...................................................................................................................................................... 28

j. Creating action plans for selected activities .................................................................................... 29

Illustration ...................................................................................................................................................... 29

k. Monitoring and Evaluation ................................................................................................................... 30

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I. Overview

One of the most important drivers of sustained growth in productivity and competitiveness of

industry is undoubtedly innovation. Examples from across the globe have shown how and why a

business should innovate to be relevant with changing times. Innovation not only in technology,

but also in products, processes, services, delivery models and organizational models are the

need of the hour.

a. Innovation at Clusters

Today, Micro Small and Medium Enterprises (MSMEs) and start-ups are viewed as major

engines of job creation and inclusive growth, both in developing and developed countries alike.

In 2010-11, MSMEs represented 45% of manufactured output and 40% of exports1.

India is also estimated to have 5,000 regional MSME clusters2 comprising of industrial,

handicraft and handloom clusters such as Gems cluster in Surat, Brassware cluster in

Moradabad and Textiles cluster in Tirupur. Innovation can play a pivotal role in driving growth

in MSME clusters by creating new products, services and business models.

However, innovation in MSME clusters in India suffers from lack of access to technology, R&D,

financing, skills, mentors and effective collaborative ecosystems, which in turn impact their

growth and productivity. In this context, the National Innovation Council (NInC) has set out to

create models for transforming regional MSME clusters into innovation ecosystems with

collaborative partnerships among stakeholders.

b. Innovation needs an enabling ecosystem

Since MSMEs themselves cannot garner the above mentioned capabilities in most cases, the way

to address gaps is by building partnerships with relevant stakeholders. A cluster-based

approach can allow MSMEs to leverage economies of scale. As a result, MSME clusters can

attract the right partnerships to form innovation ecosystems that benefit all. Such partnerships,

inherently present in some clusters, need to be strengthened and cultivated in others.

Partnerships within the innovation ecosystem will provide following benefits to the industry:

• Provide R&D capability with access to technology, people, skills and labs

• Provide risk capital in the form of grants, venture funding and other forms of credit

• Provide access and participation of skilled outside mentors and advisors

• Connect industry to sectorial experts, industry bodies and professional organizations

• Provide access to programs and schemes of public and private organizations

1 MSME Annual Report, Ministry of MSME, Government of India 2 http://clusterobservatory.in

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The ecosystems will encourage collaboration and cooperation through sharing and networking

forums which enable formal and informal interactions. Further, support for entrepreneurs who

bring in energy, motivation and disruptive ideas will be easily available. Entrepreneurs help

push the limits and challenge the status quo from time to time and will help the cluster sustain

its competitive edge.

Figure I Industry Innovation Ecosystem

In summary, ecosystems will encourage an innovation mind-set of risk taking by providing

support and enhancing acceptance of failure.

c. Innovation Clusters Initiative

Till now interventions by various Government and non-Government agencies have not

addressed industry requirements from the perspective presented above. Also, some innovations

bear fruit in longer timeframes and require sustained focus for their success, which makes

active buy-in of stakeholders extremely important.

Also, most interventions focus on providing either grants-in-aid or one-time capacity building

support. Yet, for the diverse and dynamic needs of

the industry, it becomes important that channels to

bring in resources on a need-basis be established.

Since MSMEs do not have the means of gathering all

resources required, unlike major corporations,

collaborating with partners becomes crucial.

However, for economies of scale, cluster-level collaboration will prove beneficial to both the

engaging parties.

For MSMEs leveraging

collective strength for

sustained growth is one of the

best means

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The ideal mechanism for cluster-level engagement is through the cluster-level bodies. But most

such organizations have never engaged in collaborative effort before and are not equipped to

manage such programs. We believe it can be made possible by expanding the role of the local

industry body to act as the hub of the innovation ecosystem and become a facilitator and

catalyst for collaboration.

At the same time, the operations of the cluster body have to be self-sustained, with minimal

dependency on outside agencies. Hence evolving a business and sustainability model for these

will also be critical.

The Industry Innovation Cluster initiative aims to address these concerns and provide a model

for seeding innovation in MSME clusters by creating hubs to cultivate and manage vibrant

ecosystems of collaboration.

Figure II CIC as the hub of the innovation ecosystem

To kick-start an innovation ecosystem, NInC proposes the creation of Cluster Innovation

Centres (CIC) at MSME clusters as part of the Innovation Clusters Initiative. This centre is

envisaged as a small group of people who will manage the innovation ecosystem as an arm of

the cluster association or as a virtual group. The CIC will actively seek relationships to address

the needs of the cluster and establish frameworks for knowledge and best practice sharing.

The CIC will also be the focal point for efforts and interventions, effectively managing the

execution of initiatives for the cluster. The CIC will actively seek innovation initiatives, in

consultation with relevant stakeholders and formulate action plans. The innovation initiatives

would match the strategic interests of all collaborators and provide significant benefit to the

cluster members.

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The CIC will play the role of:

• The Connector: A networking and sharing hub for members of the cluster and partners

• The Innovator: Catalyse and manage innovation initiatives within the cluster

• The Channel: Facilitate in-bound and out-bound flow of knowledge and resources

d. Industry Ownership

For long-term impact, sustainability and dynamic responsiveness of interventions and

initiatives they have to be the responsibility and be driven by the industry itself. A successful

example of the same is the Tirupur Knitwear Export Cluster, where the Tirupur Exporters

Association pro-actively sought to improve the status of the industry by launching demand-

driven initiatives. This effort was fully supported by the National/State Government and other

stakeholders, with the cluster achieving tremendous growth in a short time period.

With industry in the driver’s seat, the role of the Governments then becomes to play catalysts

and facilitators. Global examples of successful industry clusters also show that industry

leadership and participation in conjunction with Government agencies are a must from

inception for innovation initiatives.

e. Role of the Government

As it becomes the role of a business to innovate, it becomes the responsibility of the

Government to facilitate and provide the right environment for innovation. Government,

traditionally, has been providing impetus to improvement in focused areas via interventions

targeted at a particular aspect of the industry. However, such activity seems to wane in

relevance as the environment in that sector keeps changing ever so constantly, owing to the

global nature of business. Thus, it becomes imperative that Government programs, even when

proposing a framework for support, be flexible to address the changing demand and nature of

the demands of the industry, especially for innovation to prosper.

f. Role of National Innovation Council

Through the Innovation Cluster Initiative, NInC aims to create models to foster innovation in

MSME clusters and work with relevant Government and non-government organizations to

replicate such models across all sectors of the industry. In doing so, NInC also aims to connect

various stakeholders in symbiotic relationships, thus enabling sharing of knowledge and access

to emerging needs and trends. This will help both policy makers, organizations/institutions

having an impact on the growth of the industry and professional organizations stay in-tune with

the industry.

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II. Purpose of the Program Manual

The Pilot Phase of the Innovation Cluster Initiative began in November 2011, with activities in

seven clusters (listed below) across the country. This manual offers a set of guidelines and

showcases observations, lessons from pre and post the launch of the Pilot Phase. The manual is

intended as a workbook for structuring of similar programs and initiatives to seed and foster

innovations in MSME clusters.

Auto Components Cluster, Faridabad, Haryana Ayurveda Cluster, Thrissur, Kerala

Bamboo Cluster, Agartala, Tripura Brassware Cluster, Moradabad, Uttar Pradesh

Food Processing Cluster, Krishnagiri, Tamilnadu Furniture Cluster, Ernakulam, Kerala

Life Sciences Cluster, Ahmedabad, Gujarat

Table 1 Pilot Phase Clusters

Adaption, addition to and omission of activities detailed below might be needed to suit the

mandates of the organizations/agencies intending to use this workbook. Advice for such

scenarios is embedded throughout, where deemed necessary.

a. How to Use this Manual

This manual is not prescriptive but aims to

bring out the salient aspects which should not

be ignored while designing and implementing

programs which aim to foster innovation. The

following table shows how the reader will

need to interpret the contents for his benefit.

Post-it notes, as shown, are also placed at each

relevant section to direct the reader in

interpreting the topics discussed.

If you are As a Then you need to

Defining a program/policy Government body or Department

Consider provisioning for activities detailed and allow flexibility for

adaptation

Executing the program Implementing agency Use the templates for effective

management and be aware of

probable idiosyncrasies

A cluster body Industry association Use the elements for self-analysis and for deriving activities to take up

Table 2 Guide to use this Manual

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b. Illustrative Example: Food Processing Cluster, Krishnagiri, Tamilnadu

As an illustration, the example of a Food Processing Cluster at Krishnagiri, Tamilnadu (hereafter

referred to as FPCK) is used throughout this document. A generic profile of the cluster is

presented here for context and background.

The climate in Krishnagiri, semi-arid in nature, makes it one of the largest mango producing

regions in the country. The major variety of mango produced in the region is ‘totapuri’. This

variety of mango is best suited for pulp production and hence the concentration of Pulp

Processing units in the region.

The cluster is made of about 200 nurseries that produce saplings, 3000 farmers with land

holdings of various sizes and 80 Pulp Processing Units. The cluster processes about 1,50,000

tonnes of mango annually, with close to 1,000 tonnes fresh fruit being exported as well. Since

mango is a seasonal fruit, some units have also diversified into producing pulp of other fruits

such as guava, amla and vegetables like tomato.

Processed pulp is sold in both domestic and export markets, with almost equal share. A small

percentage of fresh fruit is also sold for house-hold consumption largely in the domestic market.

c. Organization of the Manual

Section III of the manual brings out lessons to be learnt from national and international

examples of clusters and the traits observed.

Section IV gives the vision of the Industry Innovation Cluster initiative and what it aims to

achieve.

Section V details the key elements which enable building innovation ecosystems and the need

for these elements.

Section VI details the procedure followed in executing the program, provides templates that can

be used for capturing data and managing the program.

III. Innovative Cluster Ecosystems: Case Studies

a. International: Silicon Valley & Cambridge Cluster

An oft quoted example of a successful cluster is that of Silicon Valley, U.S.A., a cluster which

emerged organically. The region is famous for being a fertile ground for innovators and is home

to some of the most successful industries in the recent decades. The strength of the Silicon

Valley ecosystem, apart from merit and diversity of human capital available, is the presence of

professional services including lawyers, accountants, venture capitalists and mentors. Along

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with existence of relevant stakeholders in geographic proximity, formal and informal learning

and sharing through various forums of interactions is one of the significant strengths of the

region3.

In some cases, it has been the presence of vibrant Universities which have aided the growth and

emergence of clusters. Stanford University and Cambridge University are recognized as major

contributors in the emergence of Silicon Valley and Cambridge Cluster respectively. Other

examples of successful clusters are the biotech clusters in Sweden and Switzerlan d. Apart from

having a strong history in technology and in life sciences, significant drivers for their success

have been4:

• Access to technology (close collaborations between research/academia and industry)

• Access to investment

• Talented individuals (education system linked to industry)

• Government support

Notwithstanding the diversity in their formation,

the common elements for the success of these

clusters include geographic grouping of industry,

professional service providers, education and

research institutions, financial institutions and

Government/non-Government agencies connected

in symbiotic relationships. Such relationships enable the industry to assimilate the needed

resources for their growth and development.

Providing a conducive environment for innovation and thus growth, then becomes effective

creation and management of connected ecosystems. And since the industry knows best what the

needs are, such relationships should be constantly sought and relevant initiatives taken up.

b. India: Tirupur Exporters Association (TEA)

The following is a case study of one such cluster which leveraged its inherent strengths and

understanding its needs sought support and collaborations from multiple stakeholders to grow.

Profile

Tirupur is a small town in Southern India where the Knitwear industry originated in the 30s as

a Cottage Industry. Easy availability of raw material (hosiery yarn), labour and access to market

induced many people to enter the business, thus creating a natural cluster. Leveraging social

3 Lecture by John Roos, “Silicon Valley: An Ecosystem”; http://academicearth.org/lectures/silicon-valley-an-ecosystem 4 Article by Patrik Frei, Johan Ohlsson, “The Key to Successful Biotech Clusters in Switzerland and Sweden”;

http://www.siteselection.com/LifeSciences/2010/may/Biotech.cfm

The growth of some of the

most successful clusters is

organic with minimal

intervention

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capital and entrepreneurial spirit in the region, the industry quickly reached SME status and

dominated the domestic market for close to five decades. Having reached saturation on the

domestic front, the members of the clusters sought export markets, but quickly realized there

are multiple areas which need improvement for them to become globally competitive. The

businesses also realized many of the issues are common to all of them yet couldn’t be resolved

individually.

Tirupur Exporters Association

In 1990, an exporter Mr Shaktivel, with a few like-minded exporters formed the Tirupur

Exporters Association, now popularly known as TEA. Traditionally industry associations have

been functioning as liaison offices with the focus being on making representations to the

Government and other agencies, in short advocacy. The founders realized that to achieve rapid

growth and address the immediate needs of the industry, TEA should take responsibility for its

own development. With a carefully picked Executive Committee, a think-tank sought to chart

out the vision and mission for the cluster for more than a decade.

Initiatives

Through internal brainstorming and dialogue with relevant stakeholders, TEA identified issues

to be tackled to help the cluster grow steadily and aggressively addressed all of them

systematically and simultaneously. The following is a summary of the initiatives undertaken

over the years for all-round development of the cluster and the region:

Infrastructure

Water supply

& Sewage

scheme

With collective benefit as the main-stay, TEA could emphasise to the

local Government the need for these. Focusing on ownership

(joint/single) and timely delivery, the resource support provided was

utilized to the fullest extent. Roads

Electricity

Manufacturing Capacities

Recognizing need for modernization of manufacturing, TEA created

model industrial complex and constantly supported member

industries. The proactive effort by the industry was supported by the

Government with subsidies

Raw Materials Understanding the importance of backward integration, TEA advised

many industries to start their own rolling mills

Technology

Realizing the need for technology upgradation, TEA sought the best

technology, provided machine manufacturers the forum to introduce

latest technologies to its members, facilitated knowledge sharing

among members. TEA was also instrumental in the introduction of the

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Technology Upgradation Fund Scheme (TUFS)

Finance

TEA persuaded financial institutions to open specialized branches and

services for its members. Frequent interactions with the officials of

these institutions and impeccable track records of the cluster members

helped in gaining special status more than once

Manpower

The cluster as a whole employs close to 4,00,000 people and TEA

forged collaborations with institutes like NIFT, regional engineering

institutions to provide scholarships, internships and placement for

their graduates

Quality

Continuous upgradation and adherence to quality norms was

prioritized. TEA organizes and coordinates activities at member units,

helps recruit professionals at reduced fee and also operates a

Standards Compliance Cell offering consulting at nominal fee

Logistics To ease transport of products for export, TEA formed JVs and

partnerships with private and Government agencies (Customs Office)

Labour Relations TEA facilitates liaison with Unions and constantly strives to ensure

above average benefits to the workforce

Marketing With the ambition of making Tirupur a global sourcing hub, TEA

organizes periodic Trade Fairs attended by a global audience

Environment

Zero Liquid Discharge technology has been introduced to comply with

environment laws. TEA supported creation of Common Effluent

Treatment Plants

Table 3 Initiatives of TEA

The above showcase successful initiatives, yet there are also unsung songs of failures which

taught TEA valuable lessons in both conceptualization and execution of initiatives.

c. Lessons to learn from TEA

The following factors become apparent from the TEA example:

• The industry, through a body working for the growth and development of the industry

(hereafter referred to as cluster body), takes ownership of its growth

• An industry think-tank prepares a roadmap and prioritizes specific activities that need to

be taken up

• Risk-taking ability in the leaders and understanding the value of lessons derived from

failures both by leaders and cluster members

• The cluster body owns the delivery of the roadmap and is guided by the think-tank

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• The cluster body seeks collaborations and support from relevant stakeholders, while

ensuring mutual benefit

• All-round growth and development needs

innovations not only in technology but also in

processes, products/services, business models

and organizational models

• The role of the various Government agencies is

of support and facilitation

d. Traits of Innovative Cluster Ecosystems

The following are the traits observed nationally and globally

• Strong linkages with relevant stakeholders, inherent in some cases and cultivated in others

• Strong leaders who envision growth of the cluster

• Strong industry/cluster body capable of translating the vision into reality

• Existence of common needs, opportunities and/or threats

• Access to skilled mentors and advisors

• Risk-taking and acceptance of failures

• Supported by policy and Government programs (existing or created on-demand)

IV. Building an Industry Innovation Cluster: Key Elements

To build a successful Innovation Cluster, the CIC should play the following roles:

1. The Connector: Become a networking hub which enables knowledge sharing between the

members of the cluster and seeks collaboration with external organizations for demand-

driven innovation within the cluster

2. The Innovator: Be the executive body which will catalyse and manage activities leading to

demand-driven innovation and growth of the cluster

3. The Channel: Facilitate pathways for resource mobilization including technology, R&D,

skills, mentors, finance, outreach and market linkages

a. The Connector

To kick-start innovation ecosystem activity at the cluster, a Cluster Innovation Centre (CIC)

needs to be created. This centre, a lean cell with 3-4 people, will own the building of the

ecosystem, actively seeking relationships with external stakeholders to address the needs of the

cluster and establish frameworks for knowledge and best practice sharing among the members

(units) of the cluster.

TEA shows how with

industry-ownership and

strong leadership, the

necessary elements for

growth can be fostered

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The CIC will be the focal point for efforts and interventions, effectively managing the execution

of initiatives for the cluster. Initiatives selected should match the strategic interests of all

collaborators and provide significant benefit to the cluster members. The CIC will actively seek

such initiatives, in consultation with relevant stakeholders and formulate the detailed plans for

such initiatives.

The deliverables of the CIC will be the following:

• Understand the needs of the cluster

• Initiate and execute initiatives which will address these needs by collaborating as needed

• Document the progress of the initiatives and lessons learnt in the process

• Share the knowledge and results

The ideal host for the CIC will be the cluster body which has the mandate of working for the

development of the cluster. Such bodies exist in multiple forms in clusters:

• Business Membership Organization

• Special Purpose Vehicle with public-private partnership

• Government/Private Industry

Development Body/Society

It can also be the case that some clusters may

have multiple such bodies operating. In such

scenarios, close consultations with all the

relevant organizations need to be held to

ensure their buy-in and find a host

organization with everyone’s agreement or

create the CIC as an independent

organization with all the others as equity

partners.

In cases where there is no such body existing,

in consultation with the cluster members and

other relevant stakeholders one such body might need to be created.

Illustration

Even after being one of the leading mango pulp processing clusters in the country, FPCK did not

have a functional cluster body. With the leadership of one of the senior entreprenurs and

professional service providers in the region, the Krishmaa Cluster Development Society

(hereafter referred to as KCDS) was formed, operating a business membership organization.

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The association has the mandate of working for the benefit of the entire cluster ecosystem and

has found support from all stakeholders. Stakeholders like the regional Tamilnadu Agricultural

University and the State Horticulture Department have actively supported this initiative from

inception.

Support activity: Online collaboration and knowledge sharing

Leveraging the power of information and communication technology (ICT) for connecting with

experts around the globe and for sharing knowledge among both internal and stakeholders is

imperative. The Prime Minister has launched the India Innovation Portal

(www.innovation.gov.in). The portal aims to network people, ideas, experiences and resources

to galvanise the innovation community in India.

The portal also offers collaboration space in form of Communities, to foster cross fertilisation of

ideas and knowledge flows, thus providing a platform for developing multi-stakeholder

partnerships and for facilitating national and global collaborations. Figure III is a snapshot of

one such community.

Figure III Communities on India Innovation Portal

Sustaining the CIC

The CIC should operate as a self-sustaining entity to ensure its relevance in ever-changing

business environments and to reduce the burden on the host organization. The following are

the envisaged activities to help the CIC sustain:

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Figure IV Products & Services of a CIC

1. IP: IP which the CIC will generate or co-own either in the form of technologies or products,

processes which will be licensed to the members of the cluster on a priority and may be

licensed to any interested third party

2. Reports: Various survey reports which will be made available to the cluster and other

interested parties

3. Training: Providing training of various kinds, relevant to the cluster

4. IT & Shared Facilities: Developing needed IT software in collaboration with professional

agencies and providing the same as a product at nominal cost to cluster members and

housing facilities such as product design studios which are made available to the cluster

members for a nominal fee

5. Library: Act as a library of information and provide access to knowledge networks

(national or global) by subscribing on behalf of

the cluster

6. Knowledge Sessions: Workshops, events and

others

7. Consulting: As a service

8. Technology Commercialization: As a service

9. BD & Marketing: As a service

10. Program Management: As a service

11. Supply-chain Management: As a service

12. Certification & Accreditation: As a service

By ensuring that these activities stay relevant, the CIC should be able to generate revenues to

sustain its operations for a longer period of time. A business model involving one or more of

these elements needs to be created as part of operationalizing the CIC.

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b. The Innovator

If the CIC is the organizational framework to seed collaborative ecosystems to foster innovation,

it has been observed that the CIC should also be adequately competent to deliver the

responsibilities of the role it has been assigned. Typical MSME cluster members and bodies lack

the professional touch to manage collaborations and also effectively manage the process of

innovation as they have never done so before. It thus becomes imperative for the various

members and stakeholders to be aware of the best practices in managing innovation

understand relevant areas which impact innovation and learn best practices of business and

project management in general. This will enable them become ‘innovators’ in their own right.

Apart from understanding the nature of innovation,

the members of the cluster will also need to build

capacity in various areas which might impact

innovation and business in general. Design,

technology, finance, IP, quality standards and others

are examples of such areas and the CIC shall be

instrumental in arranging exposure to these on demand.

Apart from building capacity, the CIC will also play the role of a knowledge hub. Collecting

information which might be useful for the various activities of the cluster and consciously

capturing knowledge from the various activities being undertaken is essential, creating a ready

reference.

Illustration

Though members of FPCK acknowledged the need to collaborate, little was done to proactively

seek partnerships with stakeholders. The members of the cluster had to be educated about the

benefits of collaboration and thus have now started seeking partnerships.

Being a community of entrepreneurs, it was also observed that some innovators had tried

challenging the status quo experimenting with new products and processes. Yet, due to lack of

proper guidance and know-how of managing innovation, they failed and thus developed a fear

of failure. By conducting sessions to increase their exposure to innovation management, project

planning and good business practices in general, they are now going ahead with greater

confidence.

Support activity: Innovation Enablers

Exposure and working knowledge of the areas (refer Figure V) is deemed necessary for the CIC

to operate effectively. As can be seen, expertise in these areas is necessary to carry out the kind

of functions of the CIC. Given that continuous learning is the order of the day, even experienced

Typical cluster bodies do not

have the expertise and

experience to manage

collaborations and innovation

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cluster development functionaries will also need to keep themselves abreast of the new

methods and practices in these areas. Periodic training and exposure sessions need to be

organized depending on the needs of the cluster and its members. Having said so, the CIC being

a hub of knowledge sharing, can play a powerful role in dissemination of knowledge from

various quarters to itself, the cluster members and the entire ecosystem alike.

Figure V CIC: Basic areas of exposure for CIC and/or Cluster Members

Apart from the CIC, the cluster members and stakeholders also will need to be exposed to the

best in areas of interest. The CIC and the

mentor group will have to assess the gap areas

carefully and seek to plug the gap with focused

capacity building sessions. These sessions will

vary in priority from time-to-time and will also

depend on the needs of the industry sector, the

demography of the cluster and urgency to fill

the gap. In most cases, the CIC may need to

take the help of professionals or educational

institutions to work towards building the

necessary skills and expertise. Being demand-

focused such measures will be welcomed by

the cluster and thus ensure active participation

and full impact.

Support activity: Mentoring

While the CIC is actively pursuing initiatives for the benefit of the cluster, it is imperative that a

think-tank be guiding the CIC in the right direction. A mentor group that takes a macro view of

the cluster, its needs and synergizes the strengths of the stakeholders who are part of the

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cluster ecosystem will help the CIC become effective. Such a mentor group with representation

from the cluster members, stakeholders like R&D institutions, educational institutions, finance

institutions, professional bodies, Government, major customers and well-wishers needs to be

brought together to support the CIC.

Support activity: Innovation Toolkit

As a ready-reference and for streamlining day-to-day operations, the CIC and the cluster

members may need access to:

• Best practices, case studies, etc. to help

streamline its operations

• Policies, Programs, Schemes: Government

and non-Government

• Notifications of events, workshops, news,

etc.

• Directories of stakeholder agencies,

professionals, possible partners, others

• Documentation templates of proposals, reports, etc.

• IT Tools useful to cluster members and to ease CIC operations

This information repository may not be available and hence will need to be built and constantly

updated. But easy access to such information will greatly ease the functioning of the CIC.

National Innovation Council has created one such generic repository and it is available online

through the ‘Clusters’ tab on the India Innovation Portal. Interested readers please visit the URL

http://innovation.gov.in/innovation/inntoolkit/index.html.

Figure VI Innovation Toolkit Snapshot

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c. The Channel

The impact of collaborations and innovations thereof will be measured in terms of gains seen in

productivity and competitiveness of the cluster and the benefits to the cluster community at-

large. Showcasing the accessibility of channels from which resources can be leveraged and

generating short, medium and longer term returns on the resources invested becomes vital to

ensure continuous support of the cluster for

the CIC.

Most initiatives taken-up can be made

operational in stages where impact is visible

at periodic intervals, thus reassuring every

one of the approach being taken and the

eventual gains to be derived. This approach

also ensures that flexibility is available for

mid-course corrections when the results

don’t seem to be visible. It is also difficult to

assume that all actors in the initiative are

convinced of the veracity on day-one. Even in

such cases, the stage-wise approach helps in

winning over the parties and eventually

gathering full support for large-scale implementation and impact.

Exploring synergies with the stakeholders in the cluster ecosystem, demand-driven initiatives

need to be selected and pilot/prototype demonstrations carried out. Thus with smaller resource

investments, benefits of the initiative can be better assessed and full-scale implementation

planned.

Establishing channels of cooperation: Innovation Initiatives

To mitigate risk of failure and to ensure full cooperation of all relevant stakeholders, it is better

to showcase the benefits of an innovative initiative in a small scale pilot. Such pilots also bring

out the hidden need for resources, expertise and help clarify the impact of full-scale

implementations. With a proof-of-concept it also becomes easy to bring in more support and

collaborations to widen the scope of the activity.

As part of the Industry Innovation Cluster initiative, such pilot initiatives have been undertaken

in all the clusters and at the time of preparing this document are heading towards fruitful

results. The proven pilots are expected to be openly embraced and support for such activity

forthcoming for scale-up.

20


These initiatives will also engage the CIC in actual implementation and provide hands-on

experience.

Illustration

Energized by the support from the National Innovation Council, Krishmaa Cluster Development

Society (KCDS) started engaging with potential partners to seek resources needed for growth of

the cluster.

KCDS engaged with the Central Food Technology Research Institute (CFTRI) at Mysore and

showcased their needs. CFTRI in-turn came forward with potential applications of their

technologies to suit the needs of the cluster. This interaction has led to multiple pilot prototypes

being executed in the cluster including introduction of better processes for manufacturing of

mango bar, mango flavoured corn flakes and better pre/post-harvest protocols for mango

farming.

Management of liquid waste (in the form of effluents from the processing units) and solid waste

(the skin and kernel of the mango post processing) has been a major concern for the cluster.

With restrictions on dumping and increasing environmental concern, the members were

seeking a solution to this problem. By roping in the expertise of the National Institute of

Interdisciplinary Science and Technology (NIIST) at Trivandrum, KCDS is building a prototype

plant for drying of solid waste and extraction of butter from mango kernels (used in edible

products).

Though everyone in the cluster was aware of the benefits of using IT for business management,

only few of the cluster members had tried the same. By partnering with an entrepreneur

providing ERP (Enterprise Resource Planning) solutions to food processing industries, the

cluster body has also engaged in infusion of IT skills into the cluster. The entrepreneur, seeing

KCDS as an entry point into the entire cluster, has also agreed to provide his product at a

discount while agreeing to train and place an IT resource person at the disposal of KCDS for a

period of one year to begin with.

V. Building an Industry Innovation Cluster: Procedure

As with any program, procedures ensure clarity, effectiveness, management and timely delivery

of objectives of the program. The following sections provide details of the procedures.

a. Creating an innovation ecosystem for your organization

Given the multi-disciplinary and cross-functional nature of innovation, it is important that the

organization focusing on innovation has an ecosystem of collaborators and complementing

21


organizations which will enable in making the endeavour a success. This will also help in

addressing the realistic needs of the industry or cluster. Having decided to focus on innovation

it becomes important for the organization to understand its own strengths and weaknesses in

delivering the same and start fostering such

collaborations before moving forward.

Doing so also increases the chances of success as

inputs from different sources will improve the

effectiveness, alignment and ease of functioning

of the program.

Illustration

With forward-looking leadership and with a goal

of development of the entire cluster, KCDS

actively involved relevant stakeholders from

inception. Exploring synergies with region

institutions like CFTRI, Tamilnadu Agricultural University, the lead bank, State Government

Departments and also the close-by mango processing cluster in Andhra Pradesh, KCDS has

created a vibrant platform to launch itself on the path of growth.

b. Measuring the readiness of a Cluster

For success of the program, it is imperative there is a fertile ground for the ecosystem to foster.

The readiness of the cluster to move towards engaging various stakeholders and forming a

conducive ecosystem for collaboration and innovation can be judged by the following key

elements:

• Presence of strong leadership in the cluster

to drive the program

• Presence of strong cluster body and

executive to host and kick-start CIC

• Strong felt-need for change in the growth

trajectory of the cluster

• Willingness of the cluster members and

stakeholders to invest in innovation

• Alignment of cluster objectives with relevant policy/programs

• Strong needs and/or opportunities for innovation

22


The above list is by no means complete, yet should provide a good way of increasing the

chances of success of the program.

Even though historical data may suggest that a particular cluster is a perfect candidate, it is

advised that an unbiased analysis of the cluster body and the members be carried out before

proceeding further. Some of the parameters outlined above are soft/human in nature. It is

advised that multiple face-to-face interactions be carried out to judge these. In some cases,

indicators of the above parameters only start emerging after continuous interactions and close

observation of the reality in the cluster.

Illustration

The following is the analysis of the Food Processing Cluster at Krishnagiri:

Presence of strong leadership Yes Mr. Sathyamurthy

Presence of strong cluster body No

Strong felt need for change Yes All members interacted with support the need for change

Willingness to invest Yes Multiple members came forward to invest given proof of

significant benefits

Alignment of cluster objectives Yes Good alignment with objectives of the initiative of the


Needs and opportunities Yes Better farming practices, waste management, storage

protocols for mangoes, IT

Table 4 Analysis of Food Processing Cluster, Krishnagiri

c. Creating a CIC

In consultation with the cluster members

and stakeholders, the host institution for the

CIC has to be ascertained. While choosing a

host institution, care has to be taken to

ensure that the objectives of the host are

synchronized with that of the CIC. Though

innovation may not necessarily be the

mandate of the host, wholesome

development of the cluster/industry sector,

which will enable the CIC to seek innovation

leading to not only new products or process

improvements but also innovations in

organizational and business models, should be sought. The host also has to acknowledge

23


resource investments that need to be made for establishing the CIC and making it fully

operational.

The staffing of the CIC with the right kind of human resources is also of utmost importance.

Depending on the needs of the cluster it is advised that resources with relevant exposure or

with necessary innovation quotient and understanding of the need for innovation be engaged.

In exceptional circumstances, some of the entrepreneurs from the cluster might also be

engaged but full-time dedication of such a person will be a shortcoming. Enthusiasm for

innovation-driven growth of the cluster and attitude to judge the needs of the cluster members

will play a crucial role in the success of the CIC.

d. Diagnostic of the Cluster

The cluster diagnostic is a document which captures the present environment of the cluster. It

helps present the macro scenario, while also giving brief details of the activities of the members

of the cluster. A typical cluster diagnostic should

capture relevant information among the

following:

1. Profile of the cluster

Details like geographic location, sector,

product portfolio, number of units, number

of people employed, average skillset of

manpower, annual turn-over of the cluster,

other historic and important detail

2. Macro environment of the cluster and sector

Evolution of the cluster, current status of cluster, status of the sector (state, national,

global), projections of the future of the sector

3. Cluster ecosystem map

Detailed separately below

4. Cluster-level institutional framework and details of the same

Industry/cluster bodies, Government (state, national, international) bodies, professional

service providers, voluntary organizations

5. Value chain of the industry/sector


24


6. Value chain of the product(s) produced by the cluster


7. Status of, access and SWOT analysis

With respect to technology/R&D, skilled manpower, finance, market, infrastructure and

Government policy. SWOT analysis detailed separately below

8. Challenges faced by the cluster in any of the above areas and steps being taken if any to

overcome them

9. Opportunities known to the cluster if any beyond the above areas and steps being taken if

any to exploit the same

10. Details of on-going cluster-level interventions if any

11. Activities identified on priority for action


e. Preparing the Cluster Ecosystem Map

A cluster ecosystem map gives an overview of the various stakeholders who have an impact on

the growth of the cluster. The ecosystem map will showcase the areas where the cluster can

seek more collaborations for its benefit.

The ecosystem map should be used in conjunction with the production value chain(s) to derive

the areas of interest, where activities need to be taken up to benefit the cluster members. A

simple ecosystem map which lists out all the relevant stakeholders and interacting

organizations helps in highlighting the interactions in the ecosystem. The strength of these

connections/partnerships will also be an informative metric for evaluating the cohesion in the

ecosystem. Figure VII is a template of a simple cluster ecosystem map.

Figure VII Cluster Ecosystem Map Template

25


Illustration

Figure VIII is a simple representation of the cluster ecosystem for FPCK.

Figure VIII Cluster map of FPCK

f. Detailing the Industry Value Chain

The industry value chain captures the generic flow of product development and manufacture

from concept to reaching the end-customer at the macro level. This gives an overview of how

expertise from various domains interacts with the cluster and has an impact on the cluster.

Used in unison with the cluster ecosystem map (Figure VII above), the significant stakeholders

who impact the cluster can be identified and collaborations with the same assessed. As needed

these can then be improved upon or further consolidated to benefit the cluster.

This analysis also showcases the external factors which impact the cluster and the industry and

as such will bring out the areas in which collaborations should be sought or the need of the

cluster should be showcased. Figure IX shows a template.

Figure IX Industry Value Chain Template

26


Illustration

Figure X is a representative value chain of the primary product of the cluster. It shows how at

various stages the level of know-how or availability of resources in the cluster is known and

gaps identified for action.

Figure X Mango Processing Industry Value Chain

g. Detailing the Production Value Chain

The production value chain in Figure XI depicts:

• End-to-end production process for the

product(s) manufactured for the cluster

• Key elements like technology, skills, others

which go into each stage of production

• Significant stakeholders/partners who

impact the elements

Thus, this is a technical analysis of the entire

production process. Such analysis should be

conducted for the entire product portfolio of the

cluster.

Used in unison with the cluster ecosystem map

(Figure VII above), the significant stakeholders who impact the cluster can be identified and

collaborations with the same assessed. As needed these can then be improved upon or further

consolidated to benefit the cluster.

27


Figure XI Production Value Chain

h. SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It is a simple and

structured way of exploring key challenges in a particular area of interest. A SWOT analysis

provides an overview of the key drivers for change from the current status. The analysis can be

used to make strategic decisions for the growth of the cluster like where to invest the available

resources and how does it impact the overall cluster.

Figure XII SWOT Template

28


i. Prioritizing areas for action

The analysis as detailed above can throw light on numerous areas where interventions could

lead to a growth in productivity or competitiveness of the product(s). Yet it becomes important

to prioritize and identify the most important factors which will have a significant impact on the

cluster as a whole. The top areas can then be identified and options for the same need to be

explored in detail, in consultation with relevant stakeholders. Post discussions, the

actions/initiatives to be undertaken by the CIC (under the guidance of the mentor group) need

to be identified. Figure XIII is the flow for capturing the priorities and ascertaining initiatives to

take up:

Figure XIII Prioritizing Activities

Illustration

Figure XIV is a representative set of prioritized activities of KCDS.

Figure XIV Prioritized activities of KCDS

29


j. Creating action plans for selected activities

An action plan is a summary of:

• The tasks involved

• Significant milestones/checkpoints

• Time period for the tasks to be completed

• Resource requirements

• Estimated budget

• Collaborating partners

• Dependencies

As such the action plan provides a

comprehensive picture of the activity/initiative

being undertaken for planning and monitoring.

The action plan needs to be prepared in

consultation with all stakeholders and will act

as a master plan document. Individual action

plans for all collaborating partners can also be

derived in a similar format from this and dependencies highlighted.

Individual action plans need to be prepared for the selected activities for action derived from

the prioritization exercise (activity depicted in Figure XIII). Table 5 is a template of an action

plan:

No Tasks Start

Date

End

Date

Resource Requirements Budget Partner Dependency

HR Materials Others

1

2

3 Dependant on

task 1

4 Milest

one 1 Total

5 Dependant on

milestone 1

6 Milest

one 2 Total

Table 5 Action plan Template

Illustration

Table 6 is a representative action plan for fresh fruit storage pilot and related activity.

30


No Tasks Start

Date

End

Date

Resource Requirements

Budget Partner Dependenc

y HR Materials Other

s

1 Procureme

nt of fruit May July - - - 2,70,000

Elite

Mango

Producer

-

2 Pack house

expenses May July -

Fungicides,

Sanitizers,

Bags

- 9,000 - -

3

Cold

storage

charges

May Sep - - - 45,000

Kiran

Storage

Pvt. Ltd.

Dependant

on task 2

4 Storage

Trial 3,24,000

5 Packaging

for export May Oct -

Packing

material - 1,45,000 -

Volume

dependant

on storage

trial

6 Sea

shipment May Oct - - - 25,000 - -

7 Trial

shipment 1,70,000 - -

Table 6 Storage Trial Action Plan

k. Monitoring and Evaluation

Monitoring and evaluation help you understand how well you are doing a particular task and

whether it has had the intended impact or not. As such these are differently viewed by different

actors or participants in the same activity. The monitoring and evaluation mechanism has to

synchronize with the objectives set forth for the activity being undertaken.

Monitoring

Monitoring is the systematic collection and analysis of information as an activity progresses

and aimed at improving efficiency and effectiveness. Using the action plan as a baseline,

monitoring will involve the following:

• Establishing indicators for efficiency, effectiveness and impact

• Creating systems to collect information on these indicators

• Recording the information

• Analysing the information

31


• Using the information to take corrective actions as needed, including modifications to the

action plan in exceptional cases

• Reporting the same to stakeholders

involved

Monitoring is internal to the

organization performing the activity.

Evaluation

Evaluation is the comparison of actual

project impact against envisaged or

agreed plans. Using the objectives set

out to achieve as the benchmark,

evaluation will compare the results

achieved and how they have been

achieved. Evaluation lets you derive

lessons on the execution strategy/plan

for activity and helps plan future activities to overcome the issues faced in the current activity.

Evaluation will involve the following:

• Establishing objectives and scope of impact of the activity

• Assessing progress towards the same periodically and end-impact

• Evaluate activity implementation strategy chosen, how effective the strategy was and why

were issues faced during the implementation

• Looking at how the activity progressed assessing if the utilization of resources was efficient,

opportunity costs associated with strategic decisions taken, applicability of this strategy for

future activities and implications for relevant stakeholders

32


Appendix A Checklist for Government Body or Department for creating

a Program or Policy

Building an Innovation Cluster: Key Elements

The Connector

Provide for creation of a CIC and a mentoring body

Make sustainability model mandatory with provision for

support as needed

The Innovator Provision for enabler or training modules and cite resources or organization for acquiring such knowledge as appropriate

The Channel Provide for creation of a CIC and a mentoring body

Building an Innovation Cluster: Procedure

Creating an innovation ecosystem

Understand the nuances of complementary programs and seek synergies

Measuring the readiness of a cluster

Use the pointers provided as selection criteria for beneficiaries

Creation of a CIC May provide descriptions of the ideal candidate profile and provision for CIC operations and cite complementary programs

Diagnostic of the cluster Should be mandatory with the proposal received from

candidate beneficiaries

Cluster ecosystem map Make this information mandatory in proposals received from candidate beneficiaries

Detail of industry value chain Make this information mandatory in proposals received from candidate beneficiaries

Detail of the production value chain

Make this information mandatory in proposals received from candidate beneficiaries

SWOT analysis Make this information mandatory in proposals received from candidate beneficiaries

Prioritized areas for action Make this information mandatory in proposals received from candidate beneficiaries

Action plans for selected activities

Make this information mandatory in proposals received from candidate beneficiaries

Monitoring and evaluation

metrics

Create evaluation metrics based on program objectives and

seek periodic evaluation

33


Appendix B Checklist for Implementing Agency


The Connector

Establish a CIC in consultation with cluster stakeholders and create a mentoring body comprising of proactive

stakeholders

Ensure a business model is in created and use it for successful closure of engagement

The Innovator

Use in-house expertise to handhold and/or showcase gaps and arrange for training/exposure

Seed ‘Innovation Toolkits’ as a repository with basic information and let the CIC own its growth

The Channel Identify and prioritize needs and build prototypes; let CIC own the delivery and hand-hold. Use successful prototype

delivery for closure of engagement



Seek support of stakeholders and potential collaborators


Use the pointers provided as selection criteria

Creation of a CIC Help the cluster in creating the CIC and in identifying the right human resources for the same

Diagnostic of the cluster Help the CIC prepare the same with support from cluster members and stakeholders

Cluster ecosystem map Help the CIC prepare the same with input from cluster members and stakeholders

Detail of industry value chain Help the CIC prepare the same with support from cluster members and stakeholders. Use the information to identify gaps and areas for intervention


Help the CIC prepare the same with support from cluster members and stakeholders. Use the information to identify

gaps and areas for intervention

SWOT analysis Help the CIC prepare the same with support from cluster

members and stakeholders. Use the information to identify gaps and areas for intervention

Prioritized areas for action Help the CIC prepare the same with support from cluster members and stakeholders


Hand-hold the CIC in preparing in consultation with collaborators

Monitoring and evaluation metrics

Guide CIC to ensure monitoring frameworks are established. Use evaluation metrics for successful closure of engagement

34


Appendix C Checklist for Cluster Body


The Connector

Establish a CIC and create a mentoring body comprising of proactive stakeholders

Ensure a business model emerges as activities take shape

The Innovator

Assess knowledge gaps, prioritize and arrange for

training/exposure

Advise the CIC on usefulness of the Innovation Toolkit and oversee its creation

The Channel Identify and prioritize needs and build prototypes; let CIC

own the delivery



Seek support of stakeholders and potential collaborators


Use the pointers provided for self-assessment

Creation of a CIC In consultation with stakeholders, identify right human resources

Diagnostic of the cluster Help CIC prepare the same with support from cluster

members and stakeholders

Cluster ecosystem map Help CIC prepare the same with support from cluster members and stakeholders

Detail of industry value chain Help CIC prepare the same with support from cluster members and stakeholders. Use the information to identify gaps and areas for intervention


Help CIC prepare the same with support from cluster members and stakeholders. Use the information to identify gaps and areas for intervention

SWOT analysis Help CIC prepare the same with support from cluster members and stakeholders. Use the information to identify

gaps and areas for intervention

Prioritized areas for action Help CIC prepare the same with support from cluster

members and stakeholders


Work with the CIC to prepare action plans for priority activities

Monitoring and evaluation metrics

Create evaluation metrics based on objectives set forth for

CIC; help CIC establish a monitoring framework; report status to all collaborators and stakeholders periodically

35


CONTACT US

NATIONAL INNOVATION COUNCIL

Office of Adviser to the Prime Minister

Public Information Infrastructure and Innovations

Planning Commission, Yojana Bhawan

Parliament Street, New Delhi – 110001

Telephone: +91 - 11- 2309 6622

Website: http://innovation.gov.in/innovation/clusterInnovation.action

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