Balancing Diversification and Specialisation

The general findings of the interviews with respect to RV might be summarised as conditional balance. Cluster members and experts tend to agree that the right proportion of specialisation and diversification looks differently at various levels, from contrasting perspectives, and depending on the company’s status and position in the value chain hierarchy. When at the cluster level, specific diversification is positive and brings more resilience, likewise in case of large firms (OEM or first-tier suppliers), the focused clearly defined specialisation should characterise small firms and further n-tier contractors. (CC5) ‘In fact, the diversification depends on who you are in the hierarchy, if you are a system integrator. First or second-tier companies can afford diversification, but if you are a 3rd, 4th or 5th tier supplier, you simply need to be focused, to specialise in some narrow area’.

However, the servitisation of manufacturing, as well as progress in implementing 14.0 technologies, results in a glowing number of firms with a diversified portfolio of products and services, offering quite universal horizontal solutions. The tendency of narrowly defined specialisation and clear division of task aligns with the accompanying trend of providing a broader portfolio of products and sendees, so, the ‘diversification (with)in specialisation' co-exists with ‘specialisation in diversification’.

For big companies, it is more common to look mto other sectors. The need for a more diversified portfolio, with more diversification than specialisation, may seem top-down induced. It answers the many needs of local firms, in particular, those who are simultaneously members of both HAv and other Hamburg clusters. Such dual membership makes them prone to more cross-sectoral co-operation. The topic of co-operation matters, as for more general issues, there is always more interest among members to join forces. The more universal the aspect of potential collaboration, the higher the chance of success. It also holds for manufacturing firms, and in particular for SMEs, which might be more gratefiil and appreciate this top-down assistance than large firms, equipped adequately to fend for themselves. They seem to have recognised the needs and benefits of more diversification, some time ago. They have been enriching then' portfolio or diverging toward some multi-utilities, also searching for solutions for their problems iii related sectors.

Digitalisation is undoubtedly the challenge that intersects various industries, including aviation. Cluster experts see this trend as horizontal cross- sectoral issue spreading across different industries, and it is the task of cluster authorities to apply these mega societal changes, such as 14.0, or climate change, to work for all industries. As a result, it is equally important to hone the excellence in a given particular, often narrowly defined, industry; yet, at the same time, to seek collaboration across the sectors, along the defined megatrends like 14.0. Ultimately, there is a need to build the regional matrix—to cater to the needs of silos, the vertical industries, and to bind them horizontally, along joint topics.

The daily need to strike a balance between specialisation and diversification is not a general challenge for the cluster, as such. It is mirrored in its members’ often SMEs, daily decisions. Codification of knowledge and modularisation processes, as implemented by Airbus, have influenced the relations with local firms. They found themselves needing to fit into the new structure of first-tier or second-tier suppliers. Some members have decided to focus on a particular field of expertise. Others have ventured in new areas and spread the specialisation. The local diversification within specialisation can also materialise via the processes of internal re-configuration and tendencies to share risk and responsibilities among OEM and first-tier contractors.

Within this explicit aviation specialisation, some internal diversification can be identified, mainly due to Airbus activities. There are three centres: CFK valley with lightweight specialisation in Stade, the main production facility in Hamburg Finkenwerde, and the EcoMat (Centre for Eco-efficient Materials & Technologies) in Bremen. The latter is focusing on material nanotechnology, AI, and covers all stages of an aircraft’s life cycle, from research in new materials, to certification and production. There is consequently, some specialisation (a division of tasks) of these three places, which must link to Airbus’s plans and projects. These techno-centres are nodes iii Airbus’s networks with their networks. It provides some heterogeneity and diversification, reflecting that slowly, the HAv cluster becomes more diversified and globally oriented. (CE2) ‘Airbus seems to be like a spider in the web. It can sew the orientation, the directions’. In fact, this company decides about specialisatiou-and-diversification balance and distribution.

The complementary partners who bring corresponding abilities and skills are vital for clusters. (CC1) ‘We offer software, conceptual design, system, programming, but need manufacturers, someone who does the hardware’. HAv companies tend to see more diversity as something positive. (CC3) ‘It seems that earlier, HAv was more specific and focused, now it is getting more diverse, which is fine. Also, foreign firms are entering, and new companies bring their competences’. Obviously, each film needs to be concentrated and focused on its own field of expertise. However, there also seems to be a natural need to integrate more from outside, as it helps to increase efficiency, adapt to market requirements, to be more competitive iii the future.

(CC8) ‘It is positive, to re-integrate more other related areas and activities, bringing all together’. As stressed by one firm, both specialisation and diversification are positive. On the one hand, companies need to concentrate on core business and sub-contracting certain activities, which are not strategic. On the other hand, the integration of activities helps achieve a specific size, which defines their position on the market.

There also clear voices that core competencies and specialisation define a cluster’s competitive edge. (CC2) ‘We know aviation, we know how a plane works, but also know the lighting. It makes sense to get insight from other fields, have a general overview from other sectors, but we should stay focused’. Some members even fear the de-focusing of activities, allowing the diversification, if an}', then only in closely related areas. (CC12) T think in aviation, this specialisation is necessaiy, however, it is good to see how other industries are solving similar problems as well’.

As it seems, the list of HAv companies represents almost the whole value chain, with three big players and a lot of smaller companies—first, second, and subsequent tier suppliers. So, the activities comprise different technical specialisations, but also services like human resources, consulting or training. There are many highly specialised entities and some accompanying sendee providers. (CE3) ‘There is no contradiction in it, that is still the aviation cluster’. Specialisation and diversification are therefore, not contradictory, but there is instead a clear division of tasks of different members within this aviation specialisation. Actually, both are important: specialisation and diversification have to be reconciled. It happens more easily in the case of horizontal technologies, which are not specific to one industry, and if one cluster can leant from another. (CC11) ‘You need to find a fine balance. On the one hand, you need to be careful of staying too focused, to limit your focus on too few subjects; on the other hand, you should not spread it too widely, because you may end up fragmenting your attention, spreading resources too wide’. Clusters are well-advised to focus on the particular industry, but within that scope, they should tiy to cover as many different subjects as possible.

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