II. On the Role of Knowledge, Business Relations and Policy in Making Cluster Relevant for Industry 4.0

Intelligent Technical Systems: OstWestfalen-Lippe—It’s OWL Cluster

It’s OWL Facts and Figures

The German region, OstWestfalen-Lippe (OWL), in the state of North Rhine-Westphalia, hosting it’s OWL leading-edge cluster, can be regarded as the best practice homeland for the development of 14.0. It implements the idea of smart specialisation, where natural bottom-up advantages are met with top-down support. OWL is ‘at the top of North Rhine-Westphalia’, not only in geogr aphical terms, but also economically. The region is one of the most active commercial areas in Germany. It is marked by outstanding value added and employment in the mechanical engineering, electrical and electronics industries, as well as the automotive supply sector. It can boast a broad industrial mix, with a focus on the manufacturing sector, medium- sized, family-run films and a dynamic research community based on the field of ITSs, which offers companies direct access to cutting-edge research.

It’s OWL is one of the 15 recent winners of the Leading-Edge Cluster Competition, initiated by the Federal Ministry of Education and Research (BMBF), which becomes a flagship high-tech strategy of federal government (Rothgang et al, 2017; Deutschlands Spitzencluster, 2014). It u'as intended to be a regional pooling of economy and science along the value chain.

So far altogether. 47 projects and 171 transfer projects have been conducted. Companies have created around 7,500 new jobs since 2012, apart from 34 business start-ups, representing an area of flexible production which has been set up (Who makes SMEs ready for the digital fiinire?, 2019).

The core competences of it’s OWL are mechanical engineering, electrical/ electronics and automotive supply industries. The business population consists of strong brands, hidden champions (HCs), many SMEs and independent family owned companies. Research builds on the symbiosis of IT and engineering sciences. There are 22 main industry partners (investment in innovation projects), 86 associated companies (co-operation in transfer projects), 24 engineering and consulting companies (multipliers), 17 universities and research institutes, 30 economy-oriented organisations (courtesy of the representative of it’s OWL Cluster management GmbH, 2018). To remain competitive, the cluster is seeking international co-operation, for instance, by forging strategic partnerships with relevant foreign cluster partners, such as DIMECC (www.dimecc.com) (Finland). The region positions itself as the enabler for 14.0 and Digitalisation. The cutting-edge cluster— it’s OWL—pools technologies, which are essential for innovative leaps, in the form of technology platform generated during the cross-sectional projects. This platform enables the subsequent technology transfer, and thereby facilitates the access to 14.0, which is critical for medium-sized manufacturing firms. This unique technology is supposed to guarantee growth and employment in core industries, and secure in the long run, manufacturing production in Germany.

Knowledge Generation and Technology Transfer

The fourth industrial revolution implies that expectations towards CPS, the backbone of 14.0, are formidable, causing enormous challenges to the R&D community. Nevertheless, the interactive character of learning processes and peculiarities of knowledge generation, imply that geographical space emerges as a necessary dimension. Knowledge creation and dissemination require mutual trust, understanding, some compatibility of beliefs, close daily co-operation, shared norms or face-to-face interactions facilitated by various forms of proximity.

The importance of co-location derives from the inter-related nature of Tesearch-developmeut-innovation' and production in some industries (www.makers-rise.org/about/). There is a substantial overlap in geographic concentration between GVCs and global innovation networks, and the GVC hubs are often hubs of global innovation networks. The presence of local Knowledge-Intensive Business Sendee (KIBS) firms proves critical for the manufacturing fabric (Vendrell-Herrero & Wilson, 2017). It can produce a virtuous circle of regional growth (Lafuente, Vaillant & Vendrell-Herrero, 2017). The business strategy, which rests on complementing the product offerings with services, is labelled as servitisatiou or product-sendee innovation (Bustinza, Vendrell-Herrero, Santini. Bellandi, & De Propris, 2017). It heralds a shift to a hybrid model, where manufacturing and services are increasingly intertwined. Inserting services to the existing business models becomes a condition ‘sine qua non', particularly for SMEs. The processes of territorial co-location and knowledge transfer between manufacturing SMEs and KIBS in Europe are confirmed in available studies (Lafuente, Vaillant & Vendrell-Herrero, 2017).

The agglomeration of both sendee-related knowledge and specialised manufacturing competences arise as an essential factor. As KIBS often face unique problems with some of then- clients, they demand direct contacts with them, to be able to provide optimal solutions. A high share of these interactions, especially in the early stages of co-operation, reveals a tacit nature, justifying the physical proximity (Muller & Zenker, 2001). KIBS firms are supposed to enrich the existing manufacturing businesses, as well as the new ones, with advanced sendees (Corroclier & Cusmano, 2014; Lafuente, Vaillant & Serarols, 2010). A KIBS segment can safeguard territorial resilience, manufacturing renaissance, firms’ competitiveness and regional development. Close co-operation between manufacturing and KIBS may be responsible for generating RV, i.e. the benefits of co-existence of diversified, yet complementary, industries (Frenken, Van Oort & Ver- burg, 2007).

It’s OWL cluster focuses on the structure, composition and functioning of the underpinning of 14.0, i.e. the technology systems and on what makes them intelligent. ITSs consist of four units: the underlying system and the three kinds of technologies: sensor, actuator and the information processing one. The latter plays a fundamental role by binding through the communication system, the sensors and the actuators. Whereas sensors acquire, from the external environment, the critical information, actuators execute a physical action based on the core underpinning system (www.its-owl.com/fileadmin/PDF/ Infonnationsmaterialien/2015-Ou_the_road_to_Industry_4.0_-_Solutions_ from_the_Leading-Edge_Cluster_it_s_OWL.pdf). Such underlying systems are usually the mechanical structures—machinery or equipment. When all four units are found together, this is called a sub-system. Multiple sub-systems linked in a group (such as in a vehicle or machine tool) are called a ‘system’. When systems communicate with each other and work together, regardless of physical separation, this is a networked system.

Thanks to the implementation of 47 research projects to the tune of EUR 100 million, it’s OWL offers concrete products, technologies and practical solutions for using ITSs in broader industry (Who makes . . . , 2018). The core regional research focitses on cross-sectoral subjects, such as plug- and-produce, intelligent networking or energy efficiency, which are built upon the local expertise in developing sub-systems, systems and networked systems.

The goal is to leverage the knowledge obtained hr innovation projects with leading firms and make it transferable to other smaller companies. This proliferation, which features high on the cluster management agenda, implies selecting (literally, ‘taking out of brackets the common element’/1 factor out’) some current technologies identified as crucial for the development of 14.0 and making them available through the technology platforms.

The strength of the region derives, undoubtedly, from its scientific and research potential. Six universities are engaged in the Leading-Edge Cluster, it’s OWL. These are Bielefeld University, Paderbom University, University of Applied Sciences Ostwestfalen-Lippe. Bielefeld University of Applied Sciences, Hamrn-Lippstadt University of Applied Sciences and the private university of Applied Economic Sciences, Fachliochschule der Wirtschaft (FHDW). They are recognised for their inter-disciplinary character. Fhst- class pure research is conducted by the Cluster of Excellence Center in Cognitive Interactive Technology (CITEC) at Bielefeld University and three collaborative research centres. Essential roles are also played by the Heinz Nixdorf Institute (Paderbom University), the CoR-Lab Research Centre for Cognition and Robotics (Bielefeld University), the Institute of Industrial IT (University of Applied Sciences Ostwestfalen-Lippe) and the Institute of System Dynamics and Mechatronics (Bielefeld University of Applied Sciences). Additionally, several research institutes, such as the Fraunhofer IEM (Paderbom) and the Fraunhofer IOSB Industrial Automation application centre (Lemgo), collaborate with business aiming to find the new applications for obtained research results. Overall, around 1,000 scientists are representing 18 research institutes and three Fraunhofer Institutes involved in ITSs research in OWL including groups such as Audi, Boeing, Fujitsu, Honda and Siemens, who have chosen to work with research institutes in the region (www.its-owl.de/de/ueber-ims/region/wissenschaft-forschung/).

It’s OWL sees its role in and acts primarily as a technology platform. It serves as the basis for dissemination of knowledge and the transfer of technologies and methods developed in innovative projects and assures that they are all accessible to cluster SMEs. Various types of projects can be distinguished. Cross-sectional projects involve self-optimisation, human- machine interactions, plug-and-play; innovative projects focus on sub-systems, systems and network systems, whereas sustainability initiatives (to make companies more competitive) are based on work 4.0; forecasting, market focus or counterfeit prevention.

Representatives of it’s OWL (from Lemgo—Smart Factory or Garage33), undisputedly confirm the role of spatial proximity. Daily contacts, frequent interactions and other benefits provided by co-location, imply that ‘something is in the air' and there is a ‘feeling of belonging’.

The technology transfer seems to be the backbone of cluster existence, given the intense research in the area and the large population of SMEs, which is one of the most strategic assets of the cluster. The starting point for refinement of the modes of technology transfer was some disappointment with existing methods. It’s OWL representatives name, among other factors, the fact that most research results do not find their way to the market. Innovation needs to be measured by an increase in market share and margins, rather than publications. Many researchers are not closely interlinked with the industry. The industry does not know enough about existing strengths in research. Joint projects to implement excellent research results are not widely spread. The smaller the companies get, the more significant becomes the gap to science/research. Best practice models are not visible enough, so most people need to ‘fly their own learning curve’. Despite these clear obstacles, recognition of the benefits of co-operation, especially amongst competitors, proves feasible in the case of it’s OWL. Companies, although often rivals, acknowledge the need for collaboration and sharing ‘know-how’, as a way to stay competitive internationally and when compared to the rivals outside the cluster.

In general, four pillars of research-related activities can be distinguished. The first one encompasses generating innovation through cutting-edge research and usually implies bilateral, high calibre, advanced, breakthrough projects between larger firms and academia. Technology transfer, or in general, the proliferation of the results of projects mentioned above, is regarded as the central element of cluster. Likewise, the development of entrepreneurship in digital industries includes technology scouting, infrastructure sharing or creating digital leadership programmes. The final crucial aspect and task of it’s OWL constitutes the provision of solutions for the modem digitally transformed labour market.

The transfer usually results from actions undertaken by both sides— providers and beneficiaries, which means there is demand from the companies’ side and an offer provided by the researcher, simultaneously. Often, the exchange is facilitated by some third party who carries the information and brokers the transfer later on. Many barriers can hamper the transfer. These are present on both sides, among researchers, as well as in the firms, themselves. A lack of opportunities for making contact are usually quoted, as well as: missing or insufficient information media; bad experiences from previous projects discouraging further collaboration; some prejudice against potential partners; problems with confidentiality and copyright; or a lack of capability, willingness and resources; conflicting goals; and diverging expectation concerning the schedule or unclear priorities of technology transfer. Nevertheless, it is often challenging to obtain the necessary approvals, adhere to copyrights, observe intellectual property rights and so define the terms and conditions, in order that meaningful transfer of knowledge, originating in innovative research projects, can happen. The objective of technology transfer is to provide mainly SMEs with the access to ITS development, contained in the technology platform, so that they can move from mechanical, through mechatrorric, to the ITS.

Crucial areas of co-operation are self-optimisation (machine learning and maintenance), hitman-machine interaction (augmented reality and robotics), intelligent networking (Plug & Play), energy efficiency (energy management) and system engineering (SE) (cross-disciplinary and interface standardisation, based on material provided by courtesy of the representative of it’s OWL. Cluster management GmbH, 2018, www.its-owl.com/fileadmin/ PDF/Infonnationsmaterialien/2017-Technology_Transfer_web.pdf). Available statistics revealed that most popular are the projects in the area of mechanical engineering and construction, mechatronics and electrical technology, followed by chemistry, medical and automotive technology (Figure 3.1). Systems engineering and human-machine interactions proved to be the most important topics of these projects (Figure 3.2).

Technology transfer happens in stages. It usually starts with an overview and actions, such as information days or trade shows, and proceeds through intensifying understanding, along with specifying demands for implementing concrete solutions.

hi the eyes of it’s OWL members, the key for the success of these projects is the implementation of a stepwise approach, which implies going from sensitisation events to tailored transfer projects. Also critical is a close involvement of transfer multipliers, which is based on forceful contacting and integration of a wide range of SMEs. An important role is played by the setting up of technology transfer-labs, which allow for the demonstration of new technologies. Finally, successful transfer project implementations are inherently related to creating an ethos of co-operation.

Projects conducted in it’s OWL—sectors (2018)

Figure 3.1 Projects conducted in it’s OWL—sectors (2018)

Source: Own elaboration based on data—courtesy of the representative of it’s OWL Clustennanagement GmbH, 2018

Projects conducted in it’s OWL—areas (2018)

Figure 3.2 Projects conducted in it’s OWL—areas (2018)

Source. Own elaboration based on data—courtesy of the representative of it’s OWL Clusterinanagement GmbH, 2018

Table 3.1 The four-stage technology transfer model

Transfer projects for concrete problems

Use, integration

Vertical

transfer

Targeted workshops with selected content

Trial and testing

Knowledge sharing groups and further training

Deeper understanding

Horizontal

transfer

Transfer events, ‘solutions' event programme and trade fairs

Interest and preliminary information

Source: Based on material provided by courtesy of the representative of it’s OWL Clustermanagement GmbH, 2018, www.its-owl.com/fileadmin/PDF/Infonnationsmaterialien/ 2017-Technology_Transfer_web.pdf

The transfer philosophy helps, not only to break down the barriers, but also to create a culture of co-operation. To assure the successful sharing of technology, it seems critical to safeguard the ‘win-win’ situation, so that both—the transfer providers and recipients—can benefit from such exchange. As it looks, it is precisely the transfer of technologies and dissemination of knowledge, which is the focus of it’s OWL activities, rather than fostering purely research-oriented innovation projects.

It must be stressed that the cluster’s role in facilitating knowledge development draws on two dimensions. The knowledge stock encompassing the rich scientific landscape, the set of research units, universities, laboratories and research instinitions, such as the Fraunhofer Institute’s Mediatronic and System Design, which is diversified but represents related areas, and is accompanied by the mechanisms enabling the generation and smooth dissemination of this knowledge (e.g. the technology transfer centres, or conducted projects, in the case of it’s OWL: cross-sectional projects, innovative projects and sustainability initiatives). The importance of both the knowledge base and the mechanisms enabling its dissemination (access to it for a possible large pool of local actors) suggests the role played by these knowledge-related assets. They can be seen as a specific public good, which, in fact, might be understood in terms of ICs. ICs might be regarded as a particular category of cluster commons (Solvell, 2015).

 
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