Dual Strategy—A Business Ecosystem
The core of the cluster constitutes the critical mass of companies. Business— the concentration of firms representing one or more related industries, buyers and customers, service providers and the support entities is, hence, a ‘sine qua non’ condition of any cluster existence. Given the transformation triggered by the 14.0. the emergence of new business models is expected. The concept of a fractal company—an open hierarchical system consisting of independent self-similar, self-organised, self-optimising goal-oriented units—may resemble the co-opetiton typical for clusters. The idea of a ‘connected enterprise’ emblematic of a new 14.0 business model can also be diagnosed in the ‘modus operandi’ of clusters. The cluster epitomises the broader understanding of 14.0 that must not be limited only to the digitalisation of production processes. It encompasses the whole ecosystem consisting of humans, machines, rales and organisations. The entrepreneurial digital ecosystem seems to be a pre-requisite for efficient and effective transformation towards 14.0, and clusters could offer such an environment.
As the argument of the exploitation of economies of scale seems to expire, if firms are to remain competitive, they need to deliver customisation, while at the same time, secure high levels of scalability and efficiency. They have to morph towards innovation-intensive and difficult-to-imitate business models, based on services and the digital upgrading of products. Servitisation of manufacturing (Dimache & Roche, 2013) may suggest contamination of sendee practices and strategies to manufacturing. It leads to new business models in production, with features such as the pervasive penetration of digital technology; increasing involvement of customers in manufacturing processes; and new relationships between manufacturing and services. The competitiveness of the manufacturing sector increasingly relies on its capability of inserting into the operation, certain value-adding services and it, therefore, depends on the possibility of providing integrated ‘service-good’ packages (Cusumano. Kalil & Suarez, 2015).
Regional economic performance does not just come from the regional economic specialisation or the agglomeration of films, in purely quantitative terms. It. instead, derives from the inter-connections and complementarities. Processes of territorial servitisation can improve local competitiveness and employment through the virtuous cycle, when the local manufacturing base creates supplementary' KIBS businesses, which further facilitate the emergence of new manufacturers (Lafuente, Vaillant & Vendrell-Herrero, 2017). Territorial servitisation might be seen as responsible for ‘RV’, as it stipulates the potential of diversification.
As diagnosed in the high-tech strategy of the German goveimnent and inferred from various reports, this transition towards 14.0 can be successful, only when a dual strategy is applied, i.e. a close interaction between factoiy outfitters and manufacturing companies is present (Gausemeier & Klocke, 2016). Whereas factoiy outfitters must position themselves as lead suppliers, to be able to adapt to production requirements, manufacturers must create markets that allow ITSs to be built and run in production.
The structure of it’s OWL, dominated by both the electrical industry and mechanical and plant engineering, embodies this dual strategy. Many of the CCs, such as those globally renowned for electronic connector technology, are factoiy outfitters, who set standards in the field of industrial automation. These developments also benefit the machinery and equipment manufacturers, who can improve their potential for innovation, due to the use of these ITSs. Supplemented by a robust research community, it’s OWL pools both the expertise (supply) and market needs (demand). It belongs to the most active production clusters in Europe, marked by a high concentration of employment and innovation capacity, as well as export quota (www. ostwestfaleu-lippe.de/nnages/Zahlen_Daten_Fakten_OWL_2017.pdf). The region hosts 400 companies representing the mechanical, engineering, electrical and electronics industries, as well as the automotive supply industry, which employs around 80,000 individuals, and annually generates revenue to the nine of EUR 17 billion.
The cluster consists of many family-run and medium-sized firms. These include global market leaders and strong brands, such as Claas, Gilde- meister. Hella, Miele and Wincor Nixdorf, but also many HCs. Becklioff, Hailing. KEB. Lenze, Phoenix Contact, Wago and Weidmuller set global standards in industrial electronics and hold 75% of the global market share for connector technology. They are unknown to the broader public but are global leaders hi the niche markets. The study by Rammer and Spielkamp (2019) revealed that the HCs’ competitive strategy rests on technology leadership and customisation. Although they do not invest more in innovation, they achieve higher innovation success thanks to appropriate human capital and HR management practices that mobilise the creative potential of their employees.
The OWL region is also marked by a broad mix of manufacturing industries, with a focus on the furniture, food, plastics and metal sectors, where 1,696 companies are employing 190,000 individuals, and generating revenue of EUR 38 billion (based on it’s OWL materials, incl. Who makes SMEs ready for the digital future ?, Cluster management, 2019, www.its- owd.eom/fileadiiiiii/PDF/Iiifomiatioiismaterialien/2019_Infobroschuere_ EN_inkl_Proj ekteWEB .pdf).
These firms work together hi various industry initiatives, and cluster programmes are designed and structured in a way to safeguard the highest added value and employment in the region.
The initiative Garage 33 (name due to the nearby highway number 33 and postcode of Paderbom), which started in May 2017, provides a comprehensive start-up ecosystem for local firms. Garage 33 is tasked primarily with the organisation of workshops, series of competitions or roundtables. It actively seeks and invites business angels—private companies who can invest so-called ‘smart money’, time and knowledge in promising initiatives. Garage 33 helps start-ups from ‘A to Z’, with business coaching. The concept of ‘lean start-up' enables young, promising, although risky endeavours, the necessaiy process of testing (trial and error phase), before marketing and commercialisation. Garage 33 accompanies students, graduates or young scholars, who wish to start then- own business. It organises the start-up weekends, calls for ideas, conducts live hacking, arena meetings, community parties and meet-ups. It provides scholarships and financing, networking and mentoring, by arranging so-called disruptive workshops, whose aim is to shake up the current business models and provide a breakthrough or a game-changer for a given business. All activities are always carried out according to the principle ‘take and give’. Some support and learning are also possible for Garage 33 management, itself, thanks to contacts with more mature peers’ initiatives, wiiich may serve as a benchmark of best practices.
Summing up, this section seems to confirm the cluster role in assuring better efficiency of doing business, in particular, 14.0 business. Cou- certation of suppliers and customers, the existence of trading relations, demand-supply links, all relate to the core assumption of the dual strategy. It assumes the co-existence of factoiy outfitters and manufacturers; of excellent supply providers (engineering) and market creators (manufacturers), which are seen as crucial for successful digital business transformation. Whereas the supply side can benefit from scale economies—in clusters, in particular, the external scale economies and associated positive externalities can thrive; the demand side can take advantage of network effects, assuming that the more consumers are involved, the better. It’s OWL gathers the representatives of various sectors and market segments. Firms come from mechanical engineering, the electrical and electronics industry, the automotive supply industry and manufacturing, and are pre-dominantly, small and medium, family-run companies, often HCs. The B2B environment seems to be. indeed, one of the critical elements of cluster attractiveness for 14.0. The idiosyncrasy of 14.0 and the cross-sectoral, horizontal attributes of it, determines that instead of specialisation, we should rather speak of RV; of the co-existence of diversified, yet complementary industries and the transformation towards smart diversification (Suwala & Micek. 2018).