Digital Transformation and Cluster Evolution
The analysis of the cluster’s role in business digital transformation, and its reverse impact on the cluster based on the HAv case, yields exciting insight, as it highlights the need for a nuanced understanding of discussed categories (Figure 7.4):
- 1. First, the cluster contribution to the development of 14.0 processes could derive from the CO involvement/cluster initiatives (Solvell, 2015; Ketels, 2004); with the co-ordinated actions being initiated by the managing authorities, rather than purely cluster features and assets. Even the ambiguous isomorphism, attributed to clusters and usually associated with inertia (Pinkse, Vemay & D'lppolito, 2018), may be leveraged. Thanks to the collective identity and collective actions, the transition towards 14.0 can be legitimised and facilitated (Heivas-Oliver, 2019; Hervas-Oliver et al., 2019a).
- 2. Secondly, the impact 14.0 might exercise upon clusters should not be limited to technology, according to the narrow definition of 14.0.
Figure 7.4 The (digital) transformation-induced future-oriented (cluster) transformation Source: Author’s own proposal
It can instead materialise, thanks to the broader implications, such as the changes of value creation (Nambisan, Lyytinen, Majchrzak & Song, 2017; Teece, 2017) and business models—still rather an underresearched area of 14.0 (Spaini et al„ 2019). On the one hand, digital transformation can be understood in terms of a disruptive BMI. On the other, it requires itself to be the BMI, as the most difficult and challenging type of changes, as compared to product and sendee innovations (Ulrich & Fibitz, 2019; Amit & Zott, 2001). I4.0-related BMI encompasses, among others: sendee orientation, a partners’ network and customer-oriented production or integration, personalisation and flexibility (Ibarra, Ganzarain & Igartua, 2018). It should also be stressed, that 14.0 presence has come in HAv in many forms, reflecting perhaps the ‘interpretative flexibility’ (Vemay, D'Ippolito & Pinkse, 2018): (1) various bodies work on it and implement it—ZAL in terms of technologies, HCAT+ in terms of educational needs. Airbus—as one of the major players, a user, and adopter of these solutions. (2) 14.0 as the topic o/intemational co-operation encompasses such dimensions, such as R&R projects, HR co-operation, or collaboration in supply chain access. Finally, (3), 14.0 is regarded as both an instrument facilitating distant collaboration and the topic of such co-operation (knowledge).
Hence, the digital transformation stimulates the cluster transformation ‘sensu largo’. It facilitates business sophistication and affects future-readiness, understood as the level of preparedness to exploit digital transformation, which encompasses adaptive attitudes, business agility and IT integration (The 2017 IMD World Digital Competitiveness Ranking). 14.0 also assists the cluster in the self-discovery, which is critical for competitiveness and structural transformation. Clusters contribute to this transformation, as the case of HAv shows, not only by its intrinsic feamres and attributes (knowledge base and business linkages), but also due to the CO’s activities. The RV and ICs are provided and the processes of stretching take place, thanks to organised initiatives, such as supply chain excellence, with other aviation clusters in Germany, moderated actions by local institutions (ZAL HCAT+) or the creation of co-leaming spaces.
The process taking place in HAv seems to have a resemblance to knowledge spill-overs, pertaining to the entrepreneurial ecosystems, where the shared knowledge base refers to the generic business process—i.e., how to organise effectively for entrepreneurial opportunity pursuit and BMI (Autio, Nambisan, Thomas & Wright. 2018). It minors the idea of GPT platforms, into which the clusters may develop (Cooke, 2017). Clusters in the 14.0 era might indeed moiph and transform more into entrepreneurial ecosystems (Stam & Spigel, 2016). Whereas the previous clusters are chiefly defined as geographic concentrations of interconnected companies (Porter,2000 ); entrepreneurial ecosystems are conceptualised as a set of inter-dependent entities and various factors, which are co-ordinated in a way, enabling the emergence of productive entrepreneurship on the given territory (Stam, 2018; Stam & Spigel, 2016). It is possible for industrial clusters to be associated with established specialisation, but entrepreneurial ecosystems are linked with diversity and new specialisations. The cluster policy is about reinforcing existing industrial specialisations; while the entrepreneurial ecosystem policy aims at enabling industrial diversification. It would also be highly desirable to ascertain that the cluster poses the attributes critical for proper business ecosystems—sustainability, self-govemance and capacity to evolve.
The studied concepts of blending and lwbbing illuminate the need to see the evolution of clusters, as linked to the processes of scale and scope (Njos et al„ 2017 b).
- 14.0 is a holistic topic, encompassing business models, mind-sets, value creation, not just technology. All partners along the value chain must adjust together in a standard way. As put by one of the HAv experts (CE2), ‘Cluster can see more, has a better perspective, and it is even of more relevance as 14.0 is holistic—from design, innovation to recycling every element, and every partner should adopt'. The cluster seems to offer the right scale and be the right unit for change. However, they will have to re-define themselves, to continue providing value for their members.
- 14.0 is about ‘evolutionary revolution’, and the cluster might be particularly well suited to advance it, as it offers the knowledge environment critical for major radical innovation (revolution), as well as a business ecosystem, which is supposed to implement these solutions (evolution).
Advancement of 14.0 can be associated with disruptive technologies and revolutionary innovations. Implementation of the above often requires breaking the existing lobby, which favours classic solutions. Thus, it requires joining forces, creating coalitions and speaking with one voice, and this is where the cluster can come in. It can offer unique value being an integrator of these solutions.
For many companies, the cluster can facilitate digital transformation by enabling efficient mutual learning from each other and allowing observation. So, the cluster should have the ‘content 4.0’. Too many members of the cluster are too small to do everything by themselves, so they need guidance and provision of information, to get partners.
In other words, it is not only the complexity of the holistic nature of 14.0 (along and across value chains), which makes the cluster pre-destined as a facilitating environment, but also the dismptive character of 14.0 (radical, breakthrough), which, for successful implementation, requires a joint collaborative approach and coalition building.
As the cluster ‘knows more’, its task is to facilitate the challenge of 14.0, to be a vehicle for digital transformation, or as put by one HAv expert (COl), ‘to act as a key account manager to facilitate the 1.40'. Nevertheless, ‘clusters would change, due to digital business transformation, because the whole society would change; 14.0 impacts the cluster as it influences the lives of people’.
These megatrends cause a natural need for the cluster to adjust, to be able to fulfil its role. The impact of 14.0 on the cluster is tough to predict. As put by one of the HAv members (COl), ‘clusters have been in the past and, I would think—they will continue, to be a usefiil tool, despite the digital transformation and obvious need to change business models’. The ability—diagnosed in the literature—to explore new knowledge, rather than only exploit it, would also become critical for cluster sustain (Gau- carczyk, 2015).
On the one hand, there are voices, claiming that the cluster, under the I4.0’s pressure, would change, although, it would be an incremental process, step-by-step, done in an orderly fashion, visible in the content of meetings or then agendas. As put by one interviewee (CC6), ‘the core of the cluster is networking, and that would be done today, tomorrow, the day after tomorrow’. On the other hand, as seen by some local experts, most likely this change will not be a linear process, but an exponential one, as
14.0 is all about radical change and disruptive technologies, implying far- reaching modifications. All in all, these ambiguous opinions seem to reflect the general confusing attitude towards 14.0—for some—the radical and revolutionary, for others—‘only' evolutionary and gradual. Nevertheless, these two visions of cluster change can be reconciled. For even the far- reaching and non-linear cluster transformation would not happen overnight, but instead would emerge hr a gradual process, со-shaped by the constituent cluster members (compare cluster role for incremental innovations—Hervas- Oliver et al., 2019b). How this transformation might violate the conservative nature of the cluster as a local and specialised phenomenon, remains to be seen. Likewise, the question if/lrow current regional clusters might evolve into entrepreneurial ecosystems is precisely thanks to the digital affordances (Autio, Nanrbisan, Thomas & Wright, 2018).
Digital transformation would re-shape clusters hr the future. As argued by one company representative, (CC2) ‘you still need personal contact, people around, meeting face-to-face, being introduced to each other, but affordances for the digital transformation offers, might make clusters morph into virtual states/digital villages’.
Clusters would need to re-invent themselves, think how they can ‘destroy their business’ (CC2). If they do not want to become redundant, they will have to. (CC2) ‘Many benefits cluster provide now, can be replicated by digital transformation, so, clusters must shape the digital transformation, not be a victim of it’.
Distant communication and data exchange can indeed make co-location unimportant, and subsequently, pose an impending threat to the cluster. The cluster, therefore, needs somehow to bend under this pressure, by employing the tools the 14.0 offers. A cluster’s importance and attractiveness, in times of 14.0, requires efforts, which in general, can be described as moving towards ‘cluster 2.0’. where classic properties are being enhanced by adding the modem digital tools. Thanks to modem digital tools, distant collaboration, exchange of data and sharing of knowledge are now possible, even from remote locations. Thus, it is the task of cluster managers to make them also work for the cluster; to harness them for agile internal CO. Clusters need to exceed and be superior to the rest, i.e. they need to out-perfonn, outdo and out-rival; they need to offer more than a general ‘location-abstract or space-neutral’ business environment can provide. Clusters need to be better than the rest—leverage the classic asset stemming from co-location and proximity, but add an extra layer, deriving from the opportunities brought about by 14.0.
As assessing the cluster development requires drawing on multiple dimensions and variables (number of films, turnover, number of employees, patents granted, export markets, etc.), diagnosing the current stage in the cluster’s evolution path is complicated. The more, as there is no consensus in the literature about how many, and which, precisely, phases of lifecycle should be distinguished (Valdaliso, Elola & Franco, 2016; Kuiy, da Rocha & da Silva, 2019). In fact, there might be more possible trajectories of cluster development than one lifecycle.
As argued by Bergman (2008), a cluster can experience a renaissance with re-adjustment and re-structuring. A cluster can provide networking (via setting up neutral platforms), which is critical for advancing 14.0. Nevertheless, this digital transformation, alongside some other trends, can lead to the emergence of new areas of activity, such as UAM, leading to cluster modification and renewal. It was beyond the scope of this volume to analyse and establish the current stage of the HAv lifecycle. Nevertheless, the digital transformation might have already contributed to its renewal. As argued by one expert (CE4), ‘in the past, we did not see many start-ups in the aerospace industry, and that has changed. It is partly because digitalisation makes it easier for smaller companies to participate, and they can contribute to a bigger network in a model, independent way’.
Only with some time lags can certain stages be diagnosed. How the digital transformation will play out on the HAv life cycle, and in general, how the 14.0 might affect the existence of many industrial clusters remains to be seen. It is too early to diagnose whether this 14.0 impact might provide a unique opportunity for the continuous ‘ongoing change’ (upward slope). It could result in the cluster renewal (Trippl & Todtling, 2008) associated with incremental change (as some HAv members see it). It may lead to diversification (inclusion of new activities without abandoning the original one), or instead, to radical change (as some HAv experts predict with drastic modifications). ‘Shifting sands in supply chains' encompass the development of UAM with air taxis, drones (UAV), electric propulsion systems or the likely return of supersonic planes (55th HAv Forum, 2019). It would also be interesting to see how these new trends would impact on cluster evolution. In particular, how the current hype about UAM would normalise at some point and how to make this new trend sustainable in the long run, by providing the right infrastructure, developing certificates and technologies, considering the aerospace industry’s integrity and by accounting for social acceptance.