Technology Cluster Strategy 2009

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Los Alamos National Laboratory
Technology Cluster Strategy
Northern New Mexico Regional Economic Development Initiative
Bennett Collier, Andy Gunter, Jacqueline Shen, Peter Zullo
Summer 2009
Table of Contents
Executive Summary....................................................................................................................................... 3
Introduction .................................................................................................................................................. 3
Recommendations ........................................................................................................................................ 4
Branding ................................................................................................................................................ 4
Networking............................................................................................................................................ 4
Government .......................................................................................................................................... 5
Overarching ........................................................................................................................................... 5
Characterization of the Technology Cluster ................................................................................................. 5
S.W.O.T. Analysis .......................................................................................................................................... 6
Value Chain Analysis ..................................................................................................................................... 7
Cluster Competitors and Their Success Factors ............................................................................................ 8
Suggestions for Future Study ...................................................................................................................... 14
Acknowledgements..................................................................................................................................... 15
Works Cited ................................................................................................................................................. 16
Appendix A: Past Studies & Reports ........................................................................................................... 18
Appendix B: A Case Study of Research Triangle Park ................................................................................. 18
Appendix C: Full List of Considered Tactics................................................................................................. 20
Branding .............................................................................................................................................. 20
Networking.......................................................................................................................................... 20
Government ........................................................................................................................................ 20
Executive Summary
Three strategies for developing Northern New Mexico’s economy beyond its government base were
synthesized. These strategies and the tactics within them are products of publicly-held meetings with
the private sector. By following the recommendations set forth, a stronger technology cluster in the
region will arise, creating jobs, wealth, and economic diversity.
The overarching recommendation for the Technology Cluster is to identify a private sector group or
organization to implement the branding, networking and government recommendations, thereby
creating both central leadership and a driving force for the cluster. Through meetings following
completion of the Technology Cluster Strategy, REDI has identified the Northern New Mexico Chapter of
the New Mexico Technology Council (NMTC) as the Technology Cluster leader and implementer. REDI
and NMTC have developed a scope of work for NMTC to implement the branding and networking
recommendations in 2010 and 2011, pending funding from REDI, and as described in the Technology
Action Plan at the end of this document. Government recommendations will be considered in future
years, and may be implemented by NMTC, if the organization develops policy and advocacy capabilities
within the next one to two years.
Introduction
The Northern New Mexico Regional Economic Development Initiative (REDI) is one of Los Alamos
country’s Progress through Partnering initiatives, funded by increased gross receipts tax revenue from
the change in Los Alamos National Laboratory’s (LANL) contractor status, and is cooperated with the
counties of Los Alamos, Rio Arriba, Santa Fe, and Taos (Northern New Mexico). REDI developed a
regional economic development strategic plan in February 2009 which involved a four-cluster industry
development approach. The following report is focused on strategies and action steps involved with the
technology cluster strategy, and was prepared by a group of 2009 summer MBA interns at LANL’s
Technology Transfer division.
The team involved with the project held a series of three public meetings to solicit research and ideas on
how to develop the technology cluster in Northern New Mexico. In parallel, an evaluation of the
technology cluster’s seven segments against a competitive framework was conducted. The seven
segments of the cluster as defined by the REDI report were Energy & Environment, Aerospace,
Bioscience/Life Sciences, Imaging/Detection, Nanotechnology, Optics/Photonics, New Media, and
Information Technology. Each segment was treated as a cluster for the purposes of evaluation and
comparison to analogues using Harvard Business School’s Institute for Strategy and Competitiveness
Cluster Profiles project (HBS: Institute for Strategy and Competitiveness, 2008).
Recommendations
The following tactical recommendations are grouped under three categories of strategies, alongside an
overarching strategy. These strategies are laid out in order of priority in addition to the tactics under
them. Although the creation of all possible strategies and tactics was a result of MBA-conducted
secondary and primary research, the following list represents the items which were voted on by the
private sector and are representative of that voice’s opinion.
Branding
 Brand NNM as a place of a culture of innovation. Anchor this claim behind the national
laboratories and strategically leverage Albuquerque as a proximal asset for travel, capital, and
academic resources by way of the Rail Runner
o There is work underway to suggest that a technology conference be held in Northern
New Mexico in 2010, with a branding effort done in parallel. This initiative may not
pursue the goals of long-term branding and multidimensional marketing channel
approach, which is what is suggested here.
 Seek out motivated, independently-minded entrepreneurs of the “Young Professional”
demographic and try to lure them to the region by highlighting NNM’s natural strengths
o There seems to be no existing initiatives around this tactic currently
 Create a web-video (YouTube subscription channel with periodic updates of new videos) & TV
video campaign highlighting NNM as technology hub
o Although a YouTube video is for Southern New Mexico is publicly available for tourism
(http://www.youtube.com/watch?v=6cW5Aijyos4), NNM should establish a subscription
channel for technology marketing which would be periodically updated with a new focus
of its technology competency.
Networking
 Harmonize the Northern New Mexico professional networks into one communication medium
o Santa Fe Business Network (LinkedIn group) has a broad, unilateral reach to individuals
in NNM and may serve as a “meta” layer over the other organizations.
 Consortium of business leaders who can work with local colleges to help them understand
graduate needs in future, and can get programs to meet those needs
o There exist conferences in New Mexico which try to attract academic participants in
addition to private industry attendees, however the conferences do not communicate
the needs of the industry to academia in a direct, accountable fashion.
 Target the Young Professional demographic to NNM networking events, via free food and
spirits, in order to invigorate the attendee presence and bring in fresh ideas
o New Mexico Technology Council (NMTC) hosts a regular “Beer and Gear” event, but the
topics of such meetings may solely attract young professionals. The successful elements
of the Beer and Gear event, alcohol and interesting topics, should be designed into
existing organizational meetings to lure an additional, new audience.
Government
 Extend the tax relief offered by New Mexico Partnership, for a select group of industries, to a
broader group. The current ‘High Wage Jobs’ tax credit offers incentives for businesses adding
skilled employees, but it does not offer incentive to hire lower-wage support-staff (whose wages
may still be above-median depending on the region).
o For more information on current tax-credits, and where there may be gaps in the taxincentive code, see:
http://www.nmpartnership.com/WhyNM_Incentives_GeneralTaxCredits.aspx
 Develop a repository of completed grant work within the state (grants funded by the state for
research, those funded by in-state universities, or those funded by the federal government and
completed in New Mexico). Make the repository available as a ‘knowledge source’ for university
researchers and students to access. Sponsor lab-space in local universities and research
institutions for students and professors to pursue further advancements of the grants’ scientific
results. As a model, the National Science Foundation recently awarded University of North
Carolina at Chapel Hill money to fund a similar effort. Information may be found at:
http://uncnews.unc.edu/content/view/2537/138/
 Establish more grants that give would-be entrepreneurs money to pursue a business project.
o Several members of the NNM business community expressed concern at the lack of
funding available (as grants, loans, or small equity investments) to develop their
businesses after they have run through initial funds from sources such as LANL’s VAF
awards. Their concern is that if their ventures are perceived as ‘too risky’ by venture
capitalists or earlier-stage angel investors, they will run out of funding to develop
prototypes, initiate manufacturing, or undertake other critical business functions.
Overarching
 Establish follow-up of REDI implementation which a private firm-composed panel
o The New Mexico Technology Council has a Board of Directors populated with leaders in
academia, the private sector, and the public sector. The NMTC organization would be an
excellent driver of this report’s tactics and would ensure the follow-through of the
recommendations put forth.
Characterization of the Technology Cluster
The construct used to evaluate the competitiveness of the technology cluster in Northern New Mexico is
Michael Porter’s Determinants of Cluster Competitiveness Diamond. The diamond framework
characterizes aspects of the cluster into five interrelated groups: Input Conditions, Related and
Supporting Industries, Demand Conditions, Context for Strategy and Rivalry, and Other. Porter used this
device to steer a meta-study of clusters throughout the world. The insights gained from the study are
crucial to establishing a sustainable technology cluster in New Mexico. One such insight is that a cluster
which solely relies on Input Conditions is doomed to be an uncompetitive player. Instead, a balance
effort to strengthen all the diamond edges with an emphasis on Input Conditions as the first priority will
lead to a competitive cluster in the global field (van der Linde, 2003).
The same template used in the meta-study was employed for every segment of the technology cluster in
NNM to determine the state of the cluster’s competitiveness. Because the segments were had a nominal
population of firms in each of them, gathering detailed information about each segment proved to be
challenging. However once each of the seven templates was populated, scores were averaged across the
segments to give a broad overview of the technology cluster as a whole.
The result was that the technology cluster was rather weak (Porter’s label) and was not changing for the
better or worse. Although the five groups were in the correct proportions of strength, each group
needed to be amplified to have a significant contribution to the competitiveness of the cluster.
S.W.O.T. Analysis
Strengths:
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Cultural diversity
Arts & Culture (Native American, Opera, Spanish market)
Climate and Outdoors
World renowned institutes (SFI, LANL, INFOMESA)
Local orgs supporting econ. dev (RDC, SMDC, SFEDI)
Tourism economic base
Many private schools
Ample government employment
Favorable tax and regulatory environment relative to some other major states (e.g. CA)
Large population of people with second hones and retirees
Publicly available high performance computing (NMCAC)
Weaknesses:
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Weak primary & secondary public education
Poor marketing link in value chain
Low number of successful LANL spin-offs
Socio-political climate discourages explosive business growth
Some infrastructure issues
Lack of affordable housing
Workforce quality
Population is sparse and isolated from rest of NM
Opportunities:
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Supporting Arts & Culture Industry
Collaboration of governments at many different levels (county, city, region)
Foster pueblo cooperative projects
Attract film industry
Leverage research capabilities of local institutes
Attract the businesses and talent leaving problematic states (e.g. CA)
Right-sizing business growth to gain socio-political buy-in
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Education 2.0 around technology, products, and services (e.g. remote education)
Threats:
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Water sustainability
Elected officials support recruitment rather than entrepreneurship
Roads
Weak telecommunication infrastructure
Ample government employment competes for skills, talent, and ambitions
Declining federal budget at LANL
20+ years to fruition
Value Chain Analysis
As documented in the Regional Economic Development Strategic Plan (REDSP), prepared by the Regional
Development Corporation in February of 2009, 156 companies in the technology, new media/IT, and
energy/green business clusters have been identified in the Northern New Mexico region. Of these, 51
were identified as technology companies. The authors used the categorization from this report to
create Figure 1 showing the distribution of these companies throughout the value chain.
(a)
(b)
Figure 1 –Value chain distribution of companies identified in the Northern New Mexico
Region. Chart (a) shows the distribution of companies in the technology, new media/IT, and
energy/green business clusters. Chart (b) shows the distribution of companies identified as
part of the technology cluster.
Of the 156 companies identified, 75 were categorized as R&D companies, 25 were categorized as
production, integration, or manufacturing companies, and 41 were categorized as retail companies.
Within the 51 companies of the technology subset, 32 were categorized as R&D companies, 11were
categorized as production, integration, or manufacturing companies, and 7 were categorized as
wholesale and distribution companies. In both groups, a heavy regional focus on research and
development can be observed, understandable based on the world class research facilities that exist in
the area. Past the R&D majority, it is interesting to note that there is a lack of companies at the
prototyping and marketing points in the value chain and a relatively small numbers of companies at the
Export/Wholesale point.
The significant absence of firms involved with marketing/distribution and design/prototyping presents a
potential problem for the success of the cluster. Although these two pieces of the value chain may be
outsourced to different geographies or contracted on a virtual basis, the R&D leadership of the region
will inevitably suffer if great ideas lose momentum on the “last mile” of the value delivery process.
Moreover, a stable, virtual chain link can only be installed in the NNM value chain if well developed and
mature links exist before and after the virtualized link. The nature of technology firms in this area is both
nascent and myopic (for good reason at such a stage in a business’ evolution process), suggesting a
dynamic marketing or prototyping chain link is unlikely to be successful.
A challenge cited in the REDSP is a lack of management firms in the area that can assist entrepreneurs in
growing their business, based on only a small number of firms in the area that specialize in this area.
The report recommends attraction and creation of such companies, as well as improvement of the
connections between existing management companies and entrepreneurs. It is also noted that
management companies focused on the New Media segment of the Media cluster are present and could
potentially be engaged to aid growth of a tech cluster.
Another challenge identified in the REDSP is the understanding of the value chain that is present in the
area. R&D firms can potentially focus on manufacturing of their inventions, whether or not they have
the requisite skills and expertise to do so. The report cites a need for better information for
entrepreneurs about how to get their technology to market, including options such as sale of the
technology or acquisition of the firm itself. It then goes on to recommend strategic recommendations
based on the limited manufacturing capabilities of the area, suggestions to explore development of
prototyping firms in the Espanola/Pojoaque valley, and potential partnerships with other regions with
strong manufacturing capabilities.
Cluster Competitors and Their Success Factors
Because the term “technology cluster” can encompass many different specialties, the seven segments
defined in the REDI plan were used as a basis for comparing against other global clusters. Those
segments are Aerospace, Bioscience/Life Sciences, Imaging/Detection, Nanotech, Optics/Photonics, New
Media, and Information Technology.
(1) Aerospace – Seattle Region
Seattle’s aerospace cluster dates to 1910, when Washington native William Boeing moved to the city
with the intention of starting an airplane business (Seattle: History, 2006). Six years later his seaplane
completed its first successful flight, and Boeing’s dream became reality. Boeing became something
much larger over the decades than even its founder could have imagined. Of the four or five major
aerospace companies that drove the industry’s growth in the twentieth century, all are now part of
Boeing. Experts estimate that for each person Boeing hires, an additional two jobs are created
elsewhere in the region to support that growth (NWA Spotlight).
These suppliers, however, as well as government officials, do not sit idly by expecting Boeing’s growth to
keep the region’s aerospace cluster strong. Instead, a coalition of government-sponsored groups from
Snohomish County and Seattle, and the region’s Aerospace Trade Association, began formulating
aerospace cluster initiatives earlier this decade (Aerospace Cluster Initiatives). The outcome of their
efforts was an action plan, developed in 2005, assigning responsibilities for five initiatives to local
government and business coalitions.
Key Takeaways:
1. The cluster’s creation was partly luck, but
focused efforts to keep Seattle an
aerospace center have resulted in
continued growth in the area’s high-tech
job market.
2. Local Boeing suppliers did not wait for the
government to take the lead; they created
a consortium of small- and medium-sized
businesses to champion their cause.
3. Together with government, local
aerospace businesses launched a
‘Workforce Development Initiative’ to
ensure ready access to skilled labor for
companies, thereby reinforcing their
choice to stay in the Seattle area.
RTP Case Study
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Involvement of enthusiastic
visionaries from government,
business, and academia was key
to RTP’s initial success.
Leaders rallied public support
by tapping sense of ‘pride’ in
the region, and used very few
tax dollars for the effort.
The project’s success required
perseverance over more than
two decades before RTP ‘took
off.’
Each initiative included key milestones and steps to
get there, as well as key persons responsible for
achieving those milestones. Each initiative’s objective was clearly defined to better its chances of
success.
Key takeaways applicable to the Northern New Mexico Project:
The aerospace industry has evolved into one where a few end-producers rely on hundreds of suppliers,
each of which usually specializes in just a few components of the overall plane or spacecraft. In Seattle
this model works because of Boeing’s presence. But in Northern New Mexico, the very few aerospace
companies that exist are unlikely to coalesce into a unified cluster without the presence of a larger
company closer to the final production stage.
The presence of Los Alamos National Laboratory increases the chances, however, that aerospacefocused lab spin-off companies may thrive in Northern New Mexico. While its inventions are not all
available to the public, the lab still stands as a center for aerospace innovation with, for example, its
Space Data Systems group.
Rather than by attempting to lure aerospace companies to the region, Northern New Mexico is likely to
see success in this sub-cluster another way. Its best opportunity is to nurture a small, but diverse and
growing group of aerospace start-ups in the region while they build contacts in Albuquerque, Seattle,
and other cities with a greater aerospace presence.
(2) Biosciences/Life Sciences – Greater Denver Region
Greater Denver is home to approximately 11,700 biosciences-related jobs across two major subsectors,
pharmaceuticals and biotechnology. At its heart are major research institutions such as UC-Denver’s
Health Sciences Center, the National Jewish Medical Research Center, and several others. But even
though huge research institutions, and companies of similar size such as Amgen, Roche, and Medtronic,
are all central to the cluster, an amazing 2/3 of all companies in the cluster employ less than 10 people
(Development Research Partners, Inc., 2005). These firms benefit from favorable tax policies and access
to funding for R&D from no fewer than five specialized venture capital firms. The area is also home to
two bioscience-specific business incubators. Finally, the former Fitzsimmons Army Medical Center is
now undergoing a renovation that will transform a state-of-the-art 227 acre campus, which will have
enough room to both foster start-ups, and allow for anchor tenants to develop.
Key Takeaways:
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The MetroDenver Economic Development Corporation actively touts these advantages via a sixpage brochure outlining statistics, regional growth both within biosciences and within the
general economy, and the upcoming developments that may persuade businesses to relocate or
start from that region.
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Marketing materials take care to emphasize the high quality-of-life measurements consistently
applied to the region based on outdoor lifestyles and cleanliness.
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According to a 2004 study by the Pacific Research Institute for Public Policy, Colorado ranks
second in the U.S. Economic Freedom Index, meaning its businesses face low regulatory hurdles
slowing down their success and growth.
(3) Imaging & Detection – Cleveland, OH
The biomedical imaging technology cluster has been growing for a number of years. The Ohio state
government has been instrumental in providing funding to universities, research institutions, and the
private sector to collaborate and foster relationships in research and development to commercialization.
In 2008, the government awarded $143 million to 10 projects for this purpose, with $24.9 million
awarded to several collaborations between schools and other partners in the Northeast for bio-medical
imaging development (Soder, 2008). A number of large and small medical imaging manufacturers with
operational plants in Cleveland and Northeastern Ohio also contribute to the growth of the imaging and
detection technology cluster, specifically for medical applications.
Note: The Imaging & Detection proto-cluster in Northern New Mexico spans a number of applications in
a wide variety of industries. According to the extended REDI report, companies listed under this subcluster include: Jemez Technology, Taos Techsonics, Tektronics, EcoSensors, Elemectric, Hytec,
Southwest Sciences, Sparks Mechanical, and Star Cryoelectroncics. These companies operate in
security, operations manufacturing, medical imaging, and optical & radiographic imaging systems, to
name a few industries. Given the broad nature of this sub-cluster and low number of data points with
which to draw conclusions, it is challenging to find a successful parallel sub-cluster in another region
truly comparable to that in Northern New Mexico.
Key Takeaways:
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Government funding dedicated to researchers at universities, research institutions, and the
private sector is a major factor that influences the potential success of a cluster.
Industry production and involvement in development is key to fueling the growth of a cluster.
(4) Nanotechnology – Arizona (statewide)
In the 1990’s, the Arizona state government began investing millions of dollars for R&D in
nanotechnology. As interest in nanotechnology grew, involvement from the private sector continued
the development and commercialization of institute is to advance innovations for improving human
health and quality of life through use-inspired, biosystems research and effective, multidisciplinary
partnerships. AzBio currently contains eight centers with a significant effort focused on nanoscale
biosystems and devices, including the Centers for Applied NanoBioscience, Single Molecule Biophysics,
and Bio-Optical Nanotechnologies. Combining the 301 initiative and ASU’s commitment, the Arizona
Biodesign Institute’s total investment over the next five years is estimated to be $200 million ($140
million for two new buildings) and approaching $500 million over 10 years. Approximately $100 million
of this is specifically coupled to nanotechnologies. More information on AzBio can be found at
http://www.azbio.org/. Additional investments in specific nanotechnology products. In January 2003,
theactivities include Proposition 301 Materials/Nanotechnologies seed funding and equipment matches
at approximately $0.5 million per year for shared user fabrication and characterization facilities at ASU
(the Center for Solid State Electronics Research (NanoFab, 2003) and the Center for Solid State Science
(LeRoy Eyring Center for Solid State Science, 2008), and upcoming seed investments in nanoelectronics
and in sensing (Murdock, Crosby, Stein, & Swami, 2003).
Additionally, The Arizona Nanotechnology Cluster, an Arizona not-for-profit organization, was formed to
share and promote technological advances in the fast-growing field of nanotechnology. The
organization’s membership includes an active group of interested engineers (electrical, mechanical and
chemical), scientists (medical and materials) and businesspeople from both industry and academia.
Arizona’s strength in semiconductors positions the state for research and development in
nanoelectronics and photonics. A number of partnerships between large companies such as Mitsubishi
Corporation, Materials and Electrochemical Research Corporation, and Research Corporation
Technologies fuel the momentum behind commercializing such materials through joint ventures.
Arizona’s research universities also contribute to the Nanotechnology Cluster. Arizona State University’s
Nanostructures Research Group and three departments within the newly established Biodesign Institute
and the University of Arizona’s Advanced Microsystems Laboratory and Microelectronics Design and Test
Laboratory are among the state’s world class research institutions with focus in nanoelectronics and
photonics. Additionally, a number of successful nanoelectronic startups have been spun out of Arizona’s
technology transfer endeavors, in part encouraged by discipline-specific entrepreneurship education
courses, such as “Entrepreneurship for Engineers” at the University of Arizona (Arizona Nanotechnology
Cluster, 2009).
Key takeaways:
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Trade organizations that facilitate active communication and collaboration between engineers,
scientists, and business people from industry and academia impact the success of the cluster.
Large corporations continue to fuel the momentum behind commercialization. However, if
attracting large corporations will negatively compete against smaller home-grown companies in
Northern New Mexico, encouraging technology transfer programs at the Lab and through the
universities has proven very successful as well.
Providing access to state-of-the-art facilities for investigators from the universities, state
agencies, and the private sector facilitates successful cross-communication and provides an
encouraging environment for start-ups.
(5) Optics/Photonics – Arizona (Tucson Centered)
Formed in the early 1940s to support astronomy in the area, the Arizona optics cluster has grown to
employ more than 25,000 people. This size and strength has allowed the cluster to compete on the
global scale with both small and large companies fulfilling the needs of many industries with optics. The
cluster is buoyed in large part by two organizations: The Optical Sciences Center at the University of
Arizona, which trains a large part of the workforce and has been cited with spinning out a significant
number of startup companies, and the Arizona Optics Industry Association (AOIA), which provides a
forum for communication and networking within the cluster. The AOIA has been perhaps the more
important of these for its active role in recruiting optics companies for Arizona. The organization has
drawn manufacturing firms, prototyping firms, consulting services firms, software companies and all
manner of hardware companies to the region (Young, 2007).
Companies operating in the optics cluster in Arizona were surveyed in 2007, identifying their top
challenges as finding qualified employees, a need for market analysis, and local networking
opportunities (Wiggins, 2007). The need for qualified employees is a bit surprising based on the close
collaboration between the Optical Sciences Center and industry. The Center plans to expand its
capabilities to train the local workforce, which likely needs more workers to support its growing size.
The AOIA facilitated market analysis in 2007 to help alleviate the second challenge and holds monthly
meetings and other events to promote networking in the area (Arizona Optics Industry Association).
Key Takeaways:
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Clusters can form either to support a local research institution, or through movement of
technology from local research institutions to private industry.
Trade organization formation in a cluster area can have a significant positive impact on the
success of a cluster.
Large, established clusters can still have problems attracting talent. Cooperation with academic
institutions can bring in new talent to help with the shortage.
(6) New Media - Toronto
Based on a PricewaterhouseCoopers report in 2000, Toronto’s New Media cluster is lacking a single,
unified voice (Conrath, 2000). The nature of the new media industry is to constantly innovate or else
collapse. Competition is regional as well as international, and Toronto’s cluster has strengthened its
international competitive presence in the space by having new media firms collaborate among each
other. However, the idea of firm collaboration materializes as firms age and mature. An additional 33%
of the New Media talent pool is freelance workers, reflecting a unique characteristic of the new media
sector and one which shares similarities to a typical firm within it: value is produced around a projectbased work schedule and a free flow of talent to supply these projects (Perrons, 2004). The talent pool
and their demands for an excellent public transportation system are met well with the infrastructure of
Toronto. Toronto government has also had mixed history with the new media cluster. Public policy has
removed impediments to the cluster’s growth, for example allowing mixed use of former industrial
areas for affordable new media space. However, complicated IP regulations and a failed, governmentrun marketing strategy of the cluster have tinged new media as well. Better yet, new media companies
of Toronto would like business-market firms to offer best practices and better access to clients.
Key Takeaways:
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After a critical mass of firms in a cluster is met, a unifying voice must brand them as a unified
group
As a firm matures & develops, it realizes the benefits of collaborating with like firms
Certain industries naturally attract young talent; the transportation and economic infrastructure
to support these individuals must exist in the cluster’s location.
(7) Information Technology – Bangalore, India
According to an article I the European Journal of Development Research (PIETER VAN DIJK, 2003),
Bangalore, the capital of the Karnataka state in India, is the location of the first IT cluster in India.
Government activity supporting the cluster, the large pool of inexpensive, skilled labor available, and
quality of life measures such as climate and a ‘green’ label were major factors in the growth of the
cluster.
Karnataka was the first Indian state to establish a comprehensive IT policy. Through this policy, it
created a separate Department of Information Technology to lead the efforts in the state. Infrastructure
investment was made to set up Electronics City on the outskirts of Bangalore, and Software Technology
Parks were created in a number of places throughout the state. State tax incentives were established for
IT companies setting up in Bangalore and incentives are also provided by the Indian government for
investments in Infrastructure. Karnataka also actively promotes Bangalore as the software capital of
India, adding to the global brand image of the city. The size of Bangalore and the quality of education
provided in the area leave the IT cluster in the city with a large pool of inexpensive skilled labor. There
are a number of centers of science and technology and centers of higher education in Bangalore, each of
which provides training and enhances the quality of the workforce in Bangalore. Additionally, the
quality of life in the city is attractive to potential residents. Bangalore is located at an elevation of 3000
feet, providing a more moderate climate than those of other Indian cities. The city also has a number of
green initiatives and citizens groups that work to use resources effectively and keep the city clean (Rau,
2006). IT is a relatively non-polluting industry and fits well with the culture in Bangalore.
Key Takeaways:
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Comprehensive government policies, along with ongoing support and branding communication
can create an environment where a cluster can grow.
Quality of life measures in cluster areas can be important factor in the attraction of talent.
Suggestions for Future Study
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Fix or replace public education system
o No more studies on this, look for some action around this issue
A cultural study of what’s important to people in NNM
o Perhaps they don’t want to develop the economy and want to keep it as is, despite the
government risk
Acknowledgements
The authors would like to thank Scott Beckman, Monica Abeita, and Ed Burckle of the Regional
Development Corporation, Steve Stringer, Belinda Padilla, and Steve Girrens of the Technology Transfer
Division at Los Alamos National Laboratory, and all the participants who attended the public REDI
meetings. The team would also like to thank the organizations behind the Santa Fe Complex and the
Santa Fe Incubator for use of their facilities to hold the meetings.
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(n.d.). Retrieved July 14, 2009, from Arizona Optics Industry Association: http://aoia.org/site/
(2009). Retrieved July 9, 2009, from Arizona Nanotechnology Cluster:
http://www.aznano.org/about_us.html
Aerospace Cluster Initiatives. (n.d.). Retrieved from Prosperity Partnerships:
http://www.prosperitypartnership.org/clusters/aero/aero_initiatives093005.pdf
Conrath, C. (2000, June 30). Toronto’s new media needs to speak with a single voice. itWorldCanada .
Development Research Partners, Inc. (2005, October). BIOSCIENCE: Metro Denver Industry Cluster
Profile. Retrieved August 1, 2009, from MetroDenver Economic Development Corporation:
http://www.fbla-pbl.cccs.edu/0708Documents/bioscience_100805.pdf
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Appendix A: Past Studies & Reports
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Foundation and New Mexico Community Capital, 2009. Print.
New Mexico State. New Mexico Governor Bill Richardson’s Office and New Mexico Economic
Development Department. Technology 21: A Science and Technology Roadmap for New Mexico’s Future.
Santa Fe: New Mexico Office of Science and Technology, 2009.
Regional Development Corporation. Regional Economic Development Strategic Plan. Santa Fe: RDCNM,
2009.
van der Linde, Claas. “The Demography of Clusters – Finding from the Cluster Meta-Study.” In: Brocker,
J., D. Dohse and R. Soltwedel (eds.) Innovation Clusters and Interregional Competition. Berlin,
Heidelberg, New York: Springer, 2003. 130-149.
Appendix B: A Case Study of Research Triangle Park
North Carolina’s Research Triangle Park (RTP) is frequently referenced as one of the nation’s most
successful clusters. It is home to nearly 100 companies in high-tech industries from biotechnology, to
crop sciences, to computing, providing high-wage jobs to nearly 40,000 employees. Originally, the
concept of RTP was created by a university professor and a local businessman interested in keeping the
locally-educated graduates closer to home.
Today, references to RTP usually do not mention the odds the park faced when it was just an idea or in
its earlier years. But the odds then were similar to those facing the many regions today, including
Northern New Mexico, that are undertaking similar economic projects. For that reason, while our
recommendations are customized to local factors of Northern New Mexico, the RTP story offers useful
examples, motivations, and takeaways for this region’s leaders as they continue this new effort.
Characteristics of the RTP region in the 1950’s:
Geographic, demographic, and business challenges:
 The triangle region sat between, but was not integrated with, two economic engines for the
state: The timber belt to the west, supplying the state’s furniture industry, and the agriculture
belt to the east. In addition, the furniture and tobacco industries were joined by the textile
industry as three clusters of businesses set to begin a decades-long decline.
 The cities of Raleigh, Durham, and Chapel Hill sat divided by a forest expanse widely considered
to be land that could not be developed. No four-lane highways existed between the three cities
(Durham, Chapel Hill only 10 miles apart, with both approximately 30 miles from Raleigh).

One-hundred fifty miles to the southwest, the city of Charlotte presented intra-state
competition to the cities of RTP. The RTP region did not offer the same employment prospects
as Charlotte or other locations such as Atlanta or Washington, D.C.
Political landscape:



State governor Luther Hodges was immediately supportive of the idea once local leaders briefed
him on the plan in 1954. As a former private-sector executive he would later exploit his contacts
in the northeast section of the country once the park began actively recruiting businesses.
Hodges gained support for the effort in two ways. He commissioned a study to evaluate the idea
of RTP in depth. As the study progressed, the public gained greater awareness of the project. In
addition, the governor frequently rallied support for the park by declaring that North Carolina
had to reverse the ‘brain drain’ of local graduates leaving the state.
With few exceptions (the aforementioned study being one), Hodges did not use state tax-payer
dollars to fund the effort. However, the North Carolina secretary of state negotiated a taxexempt status with the IRS for RTP’s for-profit branch that made profits on land rentals.
Involvement of private industry, universities, and citizens:
 The key reason the project did not rely on taxpayer dollars was the enthusiasm of state business
leaders at the executive level. RTP was originally owned by Pinelands Corporation—a company
chartered by local business leaders—which sold stock to fund land purchases.
 Pinelands faced financial distress in 1958, partly because the region’s universities were still
uneasy about involvement in a commercial venture. Wachovia Bank’s Chairman of the Board,
Archie Davis, set out to appeal to state citizens’ public spirit. He worked tirelessly over several
months to solicit donations eventually totaling $1.25 Million.
 With financing secured, local leaders created the non-profit Research Triangle Foundation of
North Carolina. The foundation assumed all of Pinelands’ assets and liabilities and, importantly
from the standpoint of gaining support, control of the foundation was placed with the local
universities.
Key takeaways applicable to the Northern New Mexico project:



The project required sustained effort from enthusiastic visionaries in private industry, local
research institutions, and the public sector. The project only succeeded once the research
universities offered full support and resources to it.
The project faced several setbacks initially, but with a broad base of support, it overcame those
setbacks through perseverance.
Once the project began to succeed, it still took two full decades to ensure the park’s long-term
viability by attracting enough tenants and supporting entrepreneurial ventures with wet-lab
space, computing resources, etc.

A key factor keeping universities committed to the park into the 1960’s and 70’s was the
Triangle Universities Computing Center. Home to one of the fastest computers in the world,
operated by IBM, it became a way for RTP to address universities’ data processing needs. This
assistance was extended not just for administrative tasks, but also for student projects – further
building future graduates’ interest in the region. The New Mexico Computing Applications
Center houses Encanto, a supercomputer available for pay-per-use and initially funded by the
state, which could be used in a similar fashion.
Appendix C: Full List of Considered Tactics
Branding
 Brand NNM as one of a culture of innovation. Anchor this claim behind the national laboratories
and strategically leverage Albuquerque as a proximal asset for travel, capital, and academic
resources by way of the Rail Runner
 Seek out motivated, independently-minded entrepreneurs of the “Young Professional”
demographic (ones that aren't married to the Silicon Valley culture of San Francisco) and try to
lure them to the region by highlighting NNM’s natural strengths
 Create a web-video (youTube subscription channel with updates periodically of new videos) &
TV video campaign highlight NNM as technology hub
 Publicize the real success stories from local high schools, e.g. - grads that go on to do great
things, internships/coops that are great during high school, etc. Make people think about good,
not bad, aspects of NNM public education
 Quarterly newsletter describing activities and updates of the REDI implementation plan
 Press releases on RDC website and column in local newspapers about the latest developments
of technology in NNM
 Develop a job database, regularly solicited from NNM tech firms, which RDC people can use to
recruit people to NNM
Networking
 Harmonize the Northern New Mexico professional networks into one communication medium
 Consortium of business leaders who can work with local colleges to help them understand
graduate needs in future - get programs to meet those needs
 Target the Young Professional demographic to NNM networking events, via free food and
spirits, in order to invigorate the attendee presence and bring in fresh ideas
 LANL career fair in NNM (academia and industry)
Government
 Extend tax relief to all types of small businesses, building on the tax breaks available via New
Mexico Partnership.





Develop a repository of completed grant work within the state (grants funded by the state for
research, those funded by in-state universities, or those funded by the federal government and
completed in New Mexico). Make the repository available as a ‘knowledge source’ for university
researchers and students to access. Sponsor lab-space in local universities and research
institutions for students and professors to pursue further advancements of the grants’ scientific
results. As a model, the National Science Foundation recently awarded University of North
Carolina at Chapel Hill money to fund a similar effort. Information may be found at:
o http://uncnews.unc.edu/content/view/2537/138/
Establish more grants that give would-be entrepreneurs money to pursue a business project.
o Several members of the NNM business community expressed concern at the lack of
funding available (as grants, loans, or small equity investments) to develop their
businesses after they have run through initial funds from sources such as LANL’s VAF
awards. Their concern is that if their ventures are perceived as ‘too risky’ by venture
capitalists or earlier-stage angel investors, they will run out of funding to develop
prototypes, initiate manufacturing, or undertake other critical business functions.
ChangeExamine and change regulations or policies that promote taking a business out-of-state.
In context, this would mean reviewing where New Mexico regulatory standards are more
stringent than the 50-state average, thereby indentifying industries that may be discouraged
from moving to, or staying in, New Mexico.your business out-of-state. Understand NM's level of
stringency on policies v. national average, as benchmark
Increase the allowable percentage of the Severance Tax Permanent Fund that is used to fund
Small Business Development in the state.
Allow businesses that are just a bit bigger than one or two people, and have just gotten a grant,
to stay in incubator longer to gain footing
Technology Action Plan
Lead Organization: New Mexico Technology Council (NMTC), Jeff Lunsford, President
Background and Overview
In 2009, Los Alamos National Laboratory’s Technology Transfer Division sponsored a Technology Cluster Strategy, lead by LANL Proctor & Gamble Industrial Fellow
Steve Stringer and LANL MBA Students. The Strategy identified numerous strengths for the cluster, including LANL and SNL, and a concentration of research and
development activities and companies. Recommendations included branding and networking to unify often disparate and uncoordinated efforts within this broad
cluster, in order that the cluster can mature and develop more depth in the value chain.
The Strategy identified the New Mexico Technology Council (NMTC) and its Northern NM Chapter as the lead organization in this area. Through financial
contributions of the Technology Integration Group (TIG), a major LANL subcontractor, NMTC is developing a single, unified Technology Cluster across various
industry sectors for the entire state. NMTC has two existing chapters in central and northern New Mexico through which it implements networking and education
programs. In order to grow its membership and develop a single voice for technology-related businesses, NMTC needs to evolve from a largely volunteer
organization to one with paid staff. This will require $40,000 from REDI partners to expand the cluster in Rio Arriba and Taos counties and to attract more young
professionals and tech-savvy youth to the NNM Chapter.
GOAL & OBJECTIVES
Grow and
strengthen a single,
unified NNM
Technology Cluster
- Expand network
of private cos. in
the cluster
- Grow institutional
capacity of the
cluster
- Increase public
awareness of the
cluster and its
regional impact
SCOPE OF WORK
MEASURE
1. Hire full-time staff person 30 days from
receipt of funding commitment.
2. Outreach to regional tech companies.
3. Constant web presence on NMTC site,
Facebook and Twitter.
4. Develop 20-25 profiles of regional tech
companies, young professionals and
tech-savvy youth.
5. Establish Leadership Council for NNM
NMTC Chapter 3 months from receipt
of funding commitment, to ensure all
tech cluster activities are coordinated.
6. Host networking events for the Tech
Cluster, and expand these into Taos/Rio
Arriba counties, depending on the
success of outreach efforts there.
1. Increase NNM individual memberships
by 15%.
2. Increase NNM corporate memberships
by 10.
3. Increase corporate memberships in
Taos/Rio Arriba companies by 5.
4. Increase individual memberships by
young professionals by 50.
5. Event attendance (total and by event).
6. Number of web and print articles.
7. Number of website visits.
FUNDING LEVERAGED_________
Committed:
$55,000
Technology Integration Group
This currently funds:
- $15,000 in NNM Networking Events
(Beer & Gear, Supercomputing
Challenge, Fractal Foundation, etc.)
- $15,000 in Educational Initiatives (21st
Century Classroom, etc.)
- $10,000 Tech X Annual Event (includes
$3k in scholarships)
- $10,000 Women in Technology Event
(includes $3k in scholarships)
- $5,000 NMTC Membership
Pending or In Process:
$15,000
Consortium of LANL Major Subcontractors
REDI Requested Contribution: $40,000
c
o
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