Switzerland’s ICT Cluster Zurich and its WinLink Cluster Initiative by Manuel Kaar Christoph Sax Daniela Strebel 31 January 2010 Elective Local Clusters and International Corporations Supervisor: Prof. Dr. Matthias Kiese MOC Paper WinLink Management Summary The information and communication technology (ICT) industry and the number of employees in this sector grew rapidly in the last 20 years. Especially in the region of greater Zurich, as almost one third of Switzerland’s ICT companies are located there. Zurich offers extremely favorable conditions. Two of Switzerland’s most important universities are located there.
The city and its region are very attractive because of the high quality of living. Furthermore, the infrastructure and especially the information technology (IT) infrastructure are well developed. Therefore, several global companies set up research centers. The Zurich area encompasses diverse supporting institutions for this industry. The banking sector, the Swiss government, and international Swiss companies create sophisticated domestic demand. Most of the results of the research point out that the geographical concentration of ICT firms and research centers can be seen as a local ICT cluster.
Although it is not a fully developed cluster, it can be classified as being in the growth phase. The cluster itself has a huge potential because of the likely synergies and the current lack of mutually beneficial relationships between these companies and institutions to gain competitive advantage. The Cluster Initiative (CI) WinLink supports the cluster in a moderate way because it is still a young and not fully developed initiative. The initiative needs to strengthen itself through a focus on the most promising sectors, as well as finding more members in order to have a strong financial base.
Furthermore, it is extremely dependent on one manager and it should start to deepen current relationships to existing clusters and to implement international benchmarking. M. Kaar, C. Sax & D. Strebel 31 January 2010 1 MOC Paper WinLink Table of Contents 1 Assessing the Industry Basics 1. 1 1. 2 History Facts and Figures 3 3 3 2 Assessing the Business Environment 2. 1 2. 2 2. 3 2. 4 Factor Conditions Context for Firm Strategy and Rivalry Supporting and Related Industries Demand Conditions 6 6 7 8 9 3 Identifying the Cluster 3. 1 3. 2 3. 3 3. 4 3. 5 3. Identifying the Existence of the Cluster Life Cycle of the Cluster Key Events in the Evolution of the Cluster The Role of Educational Institutions in the Cluster The Role of Government Agencies in the Cluster Cluster Map 11 11 13 15 17 17 18 4 Identifying the Cluster Initiative WinLink 4. 1 4. 2 The Social, Political and Economic Settings Setting Objectives and Monitoring Performance 20 20 20 20 21 21 21 22 22 22 23 4. 2. 1 Research and Network 4. 2. 2 Commercial Cooperation 4. 2. 3 Education and Training 4. 2. 4 Innovation and Technology 4. 2. 5 Cluster Expansion 4. 2. Benchmarking 4. 3 4. 4 Organizing the CI Process over Time Integrating the CI in a Microeconomic Policy Agenda 5 6 SWOT-Analysis WinLink Conclusion 6. 1 6. 2 Recommendations WinLink Further Research 24 25 25 27 Bibliography 28 M. Kaar, C. Sax & D. Strebel 31 January 2010 2 MOC Paper WinLink 1 Assessing the Industry Basics 1. 1 History Following a few points from the history of information and communication technology (ICT) in Switzerland according to ICTswitzerland (2007a): Date 1950 Event For the first time there is a computer installed at a university on the European continent.
It is the Z4 from Konrad Zuse at the Swiss Federal Institute of Technology (ETH) Zurich. Niklaus Wirth, professor at the ETH Zurich, develops the programming language „Pascal“ which is used worldwide for training purposes. With the trading system SOFFEX (today SWX) Swiss banks were the first to use a fully computerized stock exchange for options. At the European Organization for Nuclear Research CERN in Geneva an international physician group develops the concept of the World Wide Web (WWW). Table 1: ICT Industry Development 1970 1988 1993 1. 2 Facts and Figures
The following information and figures are taken from the website of the Federal Department for Statistics (Bundesamt fur Statistik) (2009) and detail the situation of the ICT industry in Switzerland. Firstly, a table is included with the development of the number of companies in the ICT industry in Switzerland from 1985 until 2005 and also in comparison with the total number of companies. 1985 Total ICT Companies Total Companies Share of ICT Companies in % 3’677 250’395 1. 5 1991 7’415 290’776 2. 6 1995 8’232 291’541 2. 8 1998 10’732 310’152 3. 5 2001 14’248 315’412 4. 5 2005 13’559 307’220 4. 4
Table 2: Development ICT Companies Switzerland M. Kaar, C. Sax & D. Strebel 31 January 2010 3 MOC Paper WinLink These figures show that the number of companies in the ICT industry grew rapidly in these 20 years and also that the share of them compared to the total number of companies tripled. From 2001 on the industry did not grow further until 2005 which can in part be explained with the global dot-com crisis. Secondly, a table is included with the development of the number of employees in the ICT industry in Switzerland from 1985 until 2005 and also in comparison with the total number of employees. 985 Total Employees in ICT Total Employees Share of Employees in ICT in % 90’392 3’277’458 2. 8 1991 121’012 3’760’903 3. 2 1995 120’493 3’198’250 3. 8 1998 137’517 3’470’724 4. 0 2001 173’777 3’671’750 4. 7 2005 155’447 3’698’734 4. 2 Table 3: Development ICT Employees Switzerland The analysis of these figures displays a similar situation as with the companies: the number of employees increased significantly over the years, in absolute numbers but also in comparison to the total number of employees. However, also since 2001 the number decreased due to the same reason as the companies.
As next step, the geographical distribution of ICT companies and employees was analyzed. For this analysis, figures for two cantons of Switzerland were used: Zurich and Berne. The data is from the Statistical Office Canton Zurich (Statistisches Amt des Kantons Zurich) (2009) and the Berne Economic Development Agency (Wirtschaftsforderung Kanton Bern WFB) (2009). M. Kaar, C. Sax & D. Strebel 31 January 2010 4 MOC Paper WinLink 2005 Companies Total ZH Share of Total in % BE Share of Total in % 13’559 3’930 29. 0 1’400 10. 3 Employees 155’447 35’724 23. 0 21’450 13. 8 Table 4: ICT Industry of ZH and BE
The analysis highlights that almost a third of the ICT companies are located in the canton of Zurich compared to 10% in Berne. Similar with the employees, in Zurich work 23% of the ICT employees versus 13. 8% in Berne. According to the Federal Department for Statistics (2009) the share of the ICT industry of the total Gross Domestic Product (GDP) of Switzerland stayed rather stable at around 5% as is depicted in figure 1. Share of ICT Industry of Gross Domestic Product (GDP), 1997-2007 In % 6. 0 5. 8 5. 6 5. 4 5. 2 5. 0 4. 8 4. 6 4. 4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
At prices previous years At current prices Figure 1: Share of ICT Industry of Gross Domestic Product (GDP) in Switzerland M. Kaar, C. Sax & D. Strebel 31 January 2010 5 MOC Paper WinLink 2 Assessing the Business Environment 2. 1 Factor Conditions In Zurich two important universities are located which are the ETH Zurich and the University of Zurich. The Academic Ranking of World Universities 2009 shows them in rank 23 respectively 54. These two institutions are a crucial source for ICT specialists as pointed out by Neumann (2009, p. 3), Schroder (2009, p. 19) and Kuster and Meier (2008, p. ). All of them see the proximity of business and academic institutions as an important resource for Switzerland and especially of the region of Zurich. There are other educational institutions situated in the area of Zurich which are also important for the ICT industry (e. g. the Zurich University of Applied Sciences in Winterthur with its School of Engineering). Many people in Switzerland speak more than one language and English is also widely spread. This is a crucial factor for companies operating internationally when they need employees as mentioned by Schroder (2009, p. 9). Since the universities of Switzerland cannot cover the demand for ICT specialists, there are other important factor conditions which help to attract specialists from abroad. According to the Mercer’s 2009 Quality of Living Survey, Zurich was ranked second in overall quality of living worldwide. This is valued as the most important advantage of the ICT location Switzerland according to Schroder (2009, p. 18). For general infrastructure Switzerland was ranked first in the Global Competitiveness Report 2009-2010 (World Economic Forum 2009).
In Zurich an international airport is located which provides companies with excellent flight connections (Gesellschaft fur Siedlungsentwicklung und Umwelt Zurich 1995, p. 8). This is important to establish M. Kaar, C. Sax & D. Strebel 31 January 2010 6 MOC Paper WinLink Zurich as international location for companies. Furthermore, Switzerland has a very reliable public transportation system including trains, buses and trams. The central location of Switzerland in Europe is a valuable point for companies to establish their headquarters there (Schroder 2009, p. 20).
Another advantage of Switzerland is the well-developed and always available IT infrastructure (Schroder 2009, p. 20). Many banking institutions are located in and around Zurich. They offer companies good access to financial services and capital. 2. 2 Context for Firm Strategy and Rivalry Switzerland has an extremely liberal labor law as stated by Neumann (2009, p. 4). This is especially an advantage for the early stages of a company and facilitates the situation for start-ups. The political stability (Moeckli 2007, p. 14) and the moderate tax levels of Switzerland are also important o companies according to Schroder (2009, p. 20 & p. 22) and Arvanitis et al. (2005, p. 198). The different circumstances offer a favourable environment for the creation of spin-offs and start-ups (The Greater Zurich Area 2009, p. 59). Numerous spin-offs are created from researches undertaken at the ETH Zurich. Several global companies such as Microsoft, Google and IBM have set up research centers and development centers in the surroundings of Zurich (see also chapter 3. 3). They create competition but not directly related to their products but in the labor market.
Since the number of ICT specialists is limited, the competition among companies for the best talent is increasing. However, at the same time they attract new talents to Switzerland (Neumann 2009, p. 4). The degree of competition in the different ICT market segments depends much on the single segment. In some segments many companies fight for market share within M. Kaar, C. Sax & D. Strebel 31 January 2010 7 MOC Paper WinLink the Zurich area, other companies are highly specialized and therefore do not experience much competition.
Examples for the first ones are Microsoft, SAP and IBM and for the latter Doodle AG and Avaloq Evolution Corporation. 2. 3 Supporting and Related Industries Very important supporters are institutions like universities. As already mentioned, there are several important institutions in this region. Furthermore, the patent applications are continuously on a high level. So it is not surprising that Switzerland ranked highly on Research and Development (R&D) spending in a study by the Organisation for Economic Co-operation and Development (OECD) in 2008.
Moreover, Switzerland possesses a highly developed education sector, which provides the industries with skilled workers. (Handelszeitung Fachverlag AG 2009). Another supporting institution is WinLink. It is a cluster-supporting institution founded by private companies and the Economic Promotion Departments of the canton of Zurich (Standortforderung Kanton Zurich) and of the region of Winterthur (Wirtschaftsforderung Winterthur). The objective of this organization is to develop competence in ICT, because the Zurich area has developed into an interesting location for international companies (Neue Zurcher Zeitung AG 2005).
Although Switzerland has no explicit cluster policy at the national level, there are different government-supported institutions that assist clusters. As previously mentioned, the Economic Promotion Department of the canton of Zurich and the Economic Promotion Department of the region of Winterthur are crucial for the initialization of the cluster and especially for the development of the cluster association WinLink (Noser 2009). Another supporter of the cluster is the M. Kaar, C. Sax & D. Strebel 31 January 2010 8 MOC Paper WinLink Commission for Technology and Innovation (Kommission fur Technologie und Innovation KTI).
It is a federal organization supporting knowledge and technology transfer between companies and universities, innovation development and start-up companies (Federal Department for Education and Technology) as well as business parks like the Technopark Zurich, which helps to connect diverse companies and provide those services like consulting and networkig. Alliance ICTswitzerland is a national organization that helps to represent the interest of the industry. Banks play a role in the financing of this highly investment-intensive industry.
Switzerland’s banking system sets high standards and provides the industries around Zurich with needed cash flow. An OECD study from 2006 shows that the public sector and banking and financing industry belong to the most important drivers in terms of investments in the ICT industry (European Information Technology Observatory 2006). 2. 4 Demand Conditions Demand conditions in Switzerland are high. A study by the Federal Department for Statistics in 2002 shows that companies in Switzerland belong to the most frequent users of IT, compared to other European countries (Hollenstein et al. 003). This is a significant indicator for the strong domestic demand for IT. One of the most important industries with a high demand for IT is the banking sector, which is mostly situated in Zurich. Switzerland’s banking industry comprises an estimated 11. 6% of the country’s GDP (Federal Department for Finance 2009a). Banking IT is crucial for their operation in international banking networks; therefore there is a need for highly sophisticated technology (Federal Department for Finance 2009b). M. Kaar, C. Sax & D. Strebel 31 January 2010 9
MOC Paper WinLink In 2007, the Federal Council started a strategy to connect the whole public body on an electronic system (Neue Zurcher Zeitung AG 2007a). In addition, there is a similar plan in the Swiss health system that aims to digitize the patient’s medical report, which will also result in a higher demand for ICT technology. Switzerland is host for many international companies like IBM, Google and Disney, because of its preferable conditions, the sophisticated market demand with high purchasing power and the high standard of living.
These companies need to connect themselves with their subsidiaries and they have to ensure a fluent communication with them. Moreover, they need suppliers and they attract other companies. Further drivers of demand are the international companies located in the Zurich area like ABB, Oerlikon and Alstom. Switzerland, with its high purchasing power, is an ideal market to sell sophisticated technology on a high-price level. Labor costs in Switzerland have long been among the highest in the world.
A study by the Institute of German Business (Institut der deutschen Wirtschaft) in 2007 found that Switzerland was third behind Denmark and Norway (Husse and Kampf 2009). Therefore, it is difficult to compete in price with other countries. This disadvantage can partly be compensated by high-tech ICT and it can be seen as a reason for the high Swiss productivity in comparison with other countries. The productivity in Switzerland is behind France, ranking sixth in a rating in the International Institute for Management Development (IMD) study in 2006. M. Kaar, C. Sax & D. Strebel 31 January 2010 10 MOC Paper WinLink Identifying the Cluster 3. 1 Identifying the Existence of the Cluster Looking at the overall distribution of companies and institutions that are associated with the ICT industry in Switzerland, it can be stated that the geographical concentration of ICT firms and research centers in the Zurich area suggests the existence of a local cluster. With over 23,600 employees in the ICT industries in 2003, the Zurich area is also clearly recognized as a cluster by the European Cluster Observatory. As can be seen in figure 2, the Observatory assigns the cluster an excellent overall rating of three out of three stars.
Figure 2: Evaluation of regional clusters in Switzerland (all industries) As discussed in chapter 1. 2, the Statistical Office Canton Zurich identifies over 35,000 employees in the ICT industry in the canton of Zurich in 2005, more than in any other region in Switzerland. These are figures from two different sources. Therefore, the data cannot be compared directly. It could be that the two sources M. Kaar, C. Sax & D. Strebel 31 January 2010 11 MOC Paper WinLink used different criteria for their statistics e. g. for the definition of the industry.
However, the figures still can be used to analyze an overall trend in the industry. It can be concluded that the cluster has experienced significant growth between 2003 and 2005, especially as the latter figures only relate to the canton Zurich itself, while the data from the Observatory also takes into account employees from the greater Zurich area including other cantons. In part this development can be attributed to the fact that after 2003 the worst effects of the global dot-com crisis were beginning to level off and the ICT industries began to pick up again worldwide.
Besides, it can also be argued that the strong overall growth of Zurich’s local economy in 2003 and 2004 has spurred domestic demand for ICT products and services, and has thus contributed to the cluster’s rapid growth during this time (The Greater Zurich Area 2009, p. 24). The European Cluster Observatory even defines the Zurich area as the only ICT cluster in Switzerland in 2003 (see figure 3), despite the existence of other geographic concentrations of ICT firms in Switzerland, as for instance around the cities of Geneva or Berne.
This is particularly surprising given the fact that the Telematik Cluster Berne (TCBE), the umbrella organization that promotes the ICT industry in the Berne area, sees itself as managing an existing and fully working cluster (Beer 2008), whereas its counterpart in Zurich, the WinLink organization, still sees itself managing only an emerging cluster in 2009 (Noser 2009), although this cluster is larger in terms of number of companies and employees. M. Kaar, C. Sax & D. Strebel 31 January 2010 12 MOC Paper WinLink
Figure 3: Geographical distribution of IT clusters in Switzerland and its neighboring countries This discrepancy in the views of the different stakeholders, as well as the existence of a very large number of small industry associations instead of one or two large institutions, indicates that at present there appears to be a lack of centrality in the organization of Switzerland’s ICT industry. 3. 2 Life Cycle of the Cluster It is commonly accepted that clusters pass through different stages of evolution during their life cycle which are similar to a typical product or industry life cycle (see figure 4).
Furthermore, it is tempting to believe that cluster life cycles follow the same pattern as the life cycle of the respective industry. However, literature suggests that various clusters within the same industry can develop in very different ways that frequently show little similarities with the industry’s overall development cycle. This phenomenon can be explained by the fact that the development of any cluster typically depends on many different factors and conditions that are unique to the cluster’s location (Menzel and Fornahl 2007, p. ). M. Kaar, C. Sax & D. Strebel 31 January 2010 13 MOC Paper WinLink Figure 4: Quantitative and Qualitative Dimensions of the Cluster Life Cycle Using the above mentioned concept of cluster life cycles, presently the ICT cluster Zurich can be classified as being in the state of crossing over from the Emergence to the Growth phase, with a steadily increasing number of employees and start-ups as well as a strong recent influx of major companies and research institutions into the area (see chapter 3. 3).
However, it deserves mentioning that at the moment the management of the cluster is limited to the efforts of the industry association WinLink, which has the goal to bring together the different stakeholders of the area by promoting the exchange of information and the collaboration between firms. Thus, it can be said that presently the ICT cluster Zurich lacks a proper cluster management that fully concentrates its resources on enhancing and furthering the development of the cluster, as it is the case with other clusters in Switzerland.
An example of such a well-managed cluster is Toolpoint, an initiative that specifically focuses on fostering the progress of the vertical Life-Science-Cluster in the “Pipetting Valley”, as the Lake Zurich area has been termed (Palm 2007). M. Kaar, C. Sax & D. Strebel 31 January 2010 14 MOC Paper WinLink This argument is also supported by WinLink’s current managing director Hans Noser, who suggests that the ICT cluster Zurich, although already strong in itself, is still in the emerging phase.
According to Mr Noser even more attention from all stakeholders will be necessary in the future in order to turn the huge potential of this important geographical concentration of industry participants around Zurich into a fully functioning cluster with all its typical characteristics (Noser 2009). Another approach to the classification of clusters has been brought forward by Enright (2003, p. 104), who distinguishes between Working Clusters, Latent Clusters, Potential Clusters, Policy Driven Clusters, and “Wishful Thinking Clusters”.
According to Enright’s classification, the ICT cluster Zurich can be described as a Latent Cluster, displaying a major agglomeration of firms of the same industry and a growing, but insufficient level of interaction and information flows between these companies. It will therefore be critical for the further development of the cluster to successfully master the transition from a Latent Cluster to a Working Cluster, where being inside the cluster represents a significant competitive advantage over companies that are not part of the cluster. . 3 Key Events in the Evolution of the Cluster The following is a presentation of selected events that were critical for the development of the cluster. The list is not meant to be exhaustive. M. Kaar, C. Sax & D. Strebel 31 January 2010 15 MOC Paper WinLink Date 1855 1874 1940s 1956 Event Founding of the ETH Zurich. ETH Zurich is ranked among the top universities in the world. Founding of today’s School of Engineering of the Zurich University of Applied Sciences as the Technikum Winterthur, Switzerland’s largest engineering school.
Founding of Sulzer AG’s Sulzer Innotec research center in Winterthur with a focus on contract research and specialized technical services. Creation of IBM’s Switzerland research laboratory, located on its own campus in Ruschlikon near Zurich since 1962. Over the years several important inventions and industry standards have been developed at this research center. Founding of ABB’s research center in Baden-Dattwil with the main focus on electronics, information technologies, and automatization products. Founding of the Department of Informatics at the University of Zurich.
The department is recognized as one of the best institutions in its field. Opening of the Technopark Zurich, one of the region’s most important business centers which today accommodates over 230 companies in the field of ICT. Founding of the Economic Promotion Department of the region of Winterthur with the goal to foster more business activity and cluster development in the area. Founding of the Zurich Information Security Center (ZISC), which brings together academia and industry to carry out research and education in information security. Opening of Cisco System’s Central and Eastern Europe headquarters in Zurich.
Founding of Siemens’ Business Innovation Center (BIC) in Zurich, with the main focus on the development of both software and hardware solutions. Founding of the cluster initiative WinLink with the goal to promote the ICT industries in the regions of Zurich and Eastern Switzerland. Opening of the SAP Engineering Center (CEC) St. Gallen, located at the campus of the University St. Gallen (HSG). Opening of the Google European Engineering Center Zurich, Google’s largest engineering center outside the U. S. Opening of Microsoft’s Development Center Zurich which focuses on advancing the Microsoft Office System.
Start of The Walt Disney Company’s research center in Zurich in cooperation with the ETH Zurich. The laboratory is the company’s only research center outside the U. S. that is run together with a university. Start of the planning phase for the new Swiss Innovation Park in Dubendorf near Zurich which is scheduled to open in 2015. The new research center is intended to become a vital hub of knowledge creation and transfer for all stakeholders of the Swiss ICT industry. 1967 1970 1993 1994 2003 2003 2004 2004 2006 2008 2008 2008 2009 M. Kaar, C. Sax & D. Strebel 31 January 2010 16
MOC Paper WinLink 3. 4 The Role of Educational Institutions in the Cluster As mentioned above, the Zurich area boasts a broad range of both privately run research institutions and public universities that are specifically related to the ICT industry and which rank among the world’s best. This physical proximity of highquality educational institutions and important industry players can be regarded as a vital factor for the successful development of the cluster, creating synergies and mutually beneficial relationships from which both academia and industry profit (Neumann 2009, p. 4).
Yet, several experts claim that despite the outstanding achievements of Zurich’s learning institutions, so far the cluster did not succeed in turning the good academic results into exceptional commercial benefits, as it happened for instance in Silicon Valley. Some commentators see a risk-averse attitude of investors as well as a certain lack of entrepreneurial spirit on the part of companies as the main reasons for this development (Neue Zurcher Zeitung AG 2007b). However, it can be argued that this statement might not hold true in the near future given the recent boom of ICT start-ups in the Zurich area (Neumann 2009, p. ). 3. 5 The Role of Government Agencies in the Cluster As of 2009 the three major government agencies that specifically express their interest in developing the ICT cluster Zurich are: The Economic Promotion Departments of the city of Zurich (Wirtschaftsforderung Stadt Zurich), of the canton of Zurich and of the region of Winterthur. These three government agencies are involved in initializing, funding and supporting the development of various regional clusters and their related initiatives. However, at M. Kaar, C. Sax & D. Strebel 31 January 2010 17
MOC Paper WinLink present there are no government agencies that are explicitly related to the ICT cluster Zurich. 3. 6 Cluster Map Figure 5: Cluster Map ICT Cluster Zurich Figure 5 maps the overall structure of the ICT cluster Zurich. Switzerland’s ICT industry, and thus also the core of the ICT cluster Zurich, can be classified in several different ways. One approach is proposed by Amrein and Bader (2009, p. 38-44), who distinguish between ICT Hardware, ICT Software, and ICT Services. The ICT cluster Zurich features companies in all of these three areas.
The following is a list of examples of companies that are part of the ICT cluster Zurich, organized according to the above mentioned categories: Category ICT Hardware ICT Software ICT Services Examples of companies IBM, Hewlett-Packard, EMC Computer Systems, Apple Microsoft, SAP, IBM, Elca Informatik AG Swisscom, Accenture, Cablecom, AdNovum Informatik M. Kaar, C. Sax & D. Strebel 31 January 2010 18 MOC Paper WinLink Furthermore, several important research centers like Sulzer Innotec’s research center, IBM’s Switzerland research laboratory and Google’s European Engineering Center are part of the ICT cluster Zurich.
These privately run research centers frequently collaborate with public research institutions, both on a temporary basis for individual projects or in the form of a long-term cooperation. Moreover, government agencies, educational institutions, and industry associations also play a critical role for the development of the cluster. The following is a list of the most important stakeholders that are directly involved and/or have a positive interest in promoting the ICT cluster Zurich: Category Government Agencies Examples of stakeholders The Economic Promotion Departments of the city of Zurich, of he canton of Zurich and of the region of Winterthur. On a national level: KTI The Department of Informatics at University of Zurich, School of Engineering at Zurich University of Applied Sciences, ETH Zurich. WinLink, Greater Zurich Area AG. On a national level: ICTswitzerland, SwissICT. Educational Institutions Industry Associations In addition, the strong performance of the ICT cluster Zurich is supported by a large pool of local industry suppliers and buyers, as for instance in the areas of finance, construction, logistics, manufacturing, or real estate. M. Kaar, C. Sax & D. Strebel 31 January 2010 19 MOC Paper WinLink Identifying the Cluster Initiative WinLink A Cluster Initiative (CI) is expected to improve the competitiveness of the cluster to justify its existence. Solvell et al. (2003) identify three key challenges CIs face: setting objectives and monitoring performance, organizing the CI process over time and integrating the CI in a broad microeconomic policy agenda. A further important factor for CI’s are the social, political and economic settings which lay the foundation for a CI. Due to certain structural changes on the organizational level of the initiative, it was not desirable to contact companies for the purpose of this study.
Therefore, the focus was on information provided by Mr Noser, which has been compared with a cluster initiative study by Solvell et al (2003). In this study, the objectives were separated into six main segments based on statistical analysis. Therefore most of the following information is based on the interview with Mr Noser (2009). 4. 1 The Social, Political and Economic Settings According to the findings in chapter 2. 1 and to the interview with Mr Noser the conditions for ICT companies in Switzerland are favourable.
Mr Noser thinks in terms of political support the cluster needs no direct financial aid, because the main objective of a CI should be to be self-supporting. The only aim would be to have a more focused support by the government to avoid spreading loss. 4. 2 4. 2. 1 Setting Objectives and Monitoring Performance Research and Network WinLink is a CI in its initial years and therefore the actions are still limited. The organization currently offers around five to ten events a year, but they plan to increase this number and to organize more events for different interest groups or on M. Kaar, C. Sax & D. Strebel 1 January 2010 20 MOC Paper WinLink special topics to make them more attractive through offering spezialized topics for different target groups. These events, at the same time, are networking platforms for their members. The aim is to increase the economic value of WinLink and its events. The CI itself does not publish cluster reports; however, it started recently with a quarterly report. 4. 2. 2 Commercial Cooperation Commercial cooperation has been relatively weak so far. The cluster initiative does not support their members in their operational businesses; they only are able to arrange an external consultant.
Furthermore, there is no market intelligence system in place to monitor trends, and no joint purchasing or organized export promotion efforts. 4. 2. 3 Education and Training WinLink works together with different training and educational institutions, especially those in the field of professional education. WinLink is trying to influence the training curriculums according to the needs of their members and the industry, so it can ensure a flow of appropriate human resources for the cluster. 4. 2. 4 Innovation and Technology
To increase innovation, WinLink started to develop a balance scorecard, which aims to support companies in their innovation processes. Further, WinLink organizes different events on defined topics. Members have the opportunity to join these events according to their interests. In addition, WinLink organizes ad hoc groups on topics as needed. At the moment, the organization possesses no official benchmarking, but it is working on it. M. Kaar, C. Sax & D. Strebel 31 January 2010 21 MOC Paper WinLink 4. 2. 5 Cluster Expansion WinLink will only expand geographically within the region, i. . the canton of Zurich and its closest neighborhoods. The CI has some active promotions with their partners to attract new companies to the region and to WinLink. Furthermore, they support start-up companies with preferential treatment. At the moment, WinLink does no active promotion for foreign direct investment (FDI), nor does it actively support companies’ expansion or export efforts. 4. 2. 6 Benchmarking At the moment, there is no formal benchmarking among WinLink and its partner clusters Toolpoint, Createx, and TCBE. Nevertheless, there exists a valuable informal exchange.
Also, the cluster manager of WinLink will soon take over the leadership at Toolpoint. WinLink itself sees potential in several disciplines and already started to take action to develop the CI because it could not fulfil all of its objectives in the last two years. 4. 3 Organizing the CI Process over Time WinLink was founded in 2004, and according to Sovell et al. (2003) it takes three years or more to build up momentum for a CI. The cluster organization had respectable growth, especially in the first two years, but it stagnated in the past three years. As already mentioned, at the moment the cluster initiative is in a transition phase.
After being founded as a “Verein” (a special form of organization) the cluster is likely to grow more mature and win more members among the 70,000 potentials. M. Kaar, C. Sax & D. Strebel 31 January 2010 22 MOC Paper WinLink WinLink is financed by the sponsorship of different organizations and its members. The goal is to finance itself to one-third through membership fees, location promotion and the canton of Zurich, respectively. 4. 4 Integrating the CI in a Microeconomic Policy Agenda WinLink was most successful in the education sector. The organization has Switzerland’s all-important universities as partners.
Furthermore, they work with the professional education of IT specialists to develop a sound education, which is adjusted to the current needs of the IT industry. There are already some influences on national policy. In Zurich, at a WinLink ICT convention, the Federal Council announced their strategy to develop Switzerland’s egovernment and the electronic signature. Another effort was to implement the Information Technology Infrastructure Library (ITIL) Standard within the cluster. This standard should ensure the quality of IT performance by standardized, guided and best-practice processes.
WinLink has already established partnerships to expand the cluster and develop a stronger position. Together with the Greater Zurich Area AG and Zurich’s location promotion agency, WinLink promotes the greater Zurich area as a business location for ICT companies. Further efforts to expand the cluster include special treatment of start-up companies in the form of discounts, promotion for education and cooperation with schools. A further method of influence is the business organization ICTswitzerland – it helps to represent the ICT industry’s interests and acts as an umbrella organization.
It is seen M. Kaar, C. Sax & D. Strebel 31 January 2010 23 MOC Paper WinLink as the most important alliance and organization in the information and communication sector in Switzerland (ICTswitzerland 2007b). In the CI survey of the Solvell study only 4% of the clusters have been disappointing and not led to much change. This would indicate that if a strong cluster is established, the CI would add value in almost every way. The ICT cluster in Zurich is still seen as developing according to Mr Noser. Therefore, WinLink is important to help establish a strong cluster.
For this reason, WinLink needs to continue to strengthen itself and bring companies together to cooperate. A further finding was that CIs limited to domestic companies perform worse, which is not applicable in the case of WinLink, as numerous international companies are located in Zurich. This demonstrates a huge potential for WinLink and the ICT companies to strengthen their cluster. 5 SWOT-Analysis WinLink In general, it can be concluded that the main strengths of WinLink are its manager who is highly involved in the ICT industry and therefore has a deep knowledge of it and also that it is only limited to a certain region (see table 5).
Weaknesses of WinLink are that the ICT cluster Zurich is not yet a fully functioning cluster and also that the association has only very limited resources available for its tasks. Several opportunities can be identified, among them that the associations of the ICT industry are in a time of change in which they are consolidated. This offers a chance to WinLink to become more important for the industry. However, this is only possible if the members of WinLink further support the association which poses a threat. M. Kaar, C. Sax & D. Strebel 31 January 2010 24 MOC Paper WinLink Strengths 1. Knowledgable manager from within cluster 2.
Regionally restricted 3. Supported by Economic Development Region Winterthur and Economic Promotion Departments (Winterturs and Zurich) 4. Some big international companies as members 5. Several years of experience Opportunities 1. Consolidation of ICT organizations in Switzerland 2. Growth of ICT market and further growth of the association in terms of member organizations and their number of employees 3. Strong economic environment in Switzerland 4. Transition from a pure industry association to a fully functioning cluster management organization Weaknesses 1. Cluster not yet fully developed 2.
Mixed members, no specialization 3. Limited resources 4. Bylaws not optimal according to cluster structure 5. Great dependence on one manager 6. Not a fully functioning clustermanagement organization yet but rather an industry promoting assocation Threats 1. Members if they would not support WinLink anymore 2. Financial crisis which weakens ICT industry as a whole 3. No further interest in WinLink which leads to no new members 4. Decline of cluster in general due to a decrease in the attractiveness of the location Zurich for ICT companies Table 5: SWOT Analysis WinLink 6 Conclusion 6. 1 Recommendations WinLink
According to the points that were illustrated in the paper, it can be concluded that the initiative WinLink has played a highly important role in the development of the ICT cluster Zurich over the last years. However, although WinLink’s management has done an excellent job in promoting communication and cooperation among its member organizations and has succeeded in significantly growing the initiative by various measures, it can be said that at the present stage there still remains some work to do in order to turn the geographical concentration of ICT firms around Zurich into a fully functioning cluster with all its typical characteristics.
M. Kaar, C. Sax & D. Strebel 31 January 2010 25 MOC Paper WinLink To this end, it will be vital for WinLink to follow some important steps. First of all, WinLink will have to secure future financial support by finding new sources of income. Having more resources will be critical in order to further grow the initiative and ultimately also to achieve the transition from a mere cluster initiative to a cluster management organization that fully concentrates its resources on enhancing and furthering the development of the cluster.
At the same time, it will be crucial to pursue WinLink’s current specialization efforts as envisaged by its managing director Hans Noser. Focusing on the promotion of a small number of selected key segments of the cluster will enable WinLink to support the most promising sectors rather than trying to cover all aspects of the cluster. This specialization includes going ahead with Mr Noser’s changes as planned in order to make them operational as quickly and efficiently as possible, as well as closely collaborating with WinLink’s members in the process in order to have their support from the very beginning on.
Increasing the number of special events for the chosen segments can be recommended as one tool to achieve the desired specialization. Finally, it is also advisable to focus more resources on both initiating new as well as strengthening existing liaisons with industry associations, cluster initiatives, and cluster management organizations both in Switzerland and abroad. One of the benefits of doing so will be to encourage domestic and international benchmarking processes, which can be described as fundamental for the successful development of any cluster. M. Kaar, C. Sax & D. Strebel 31 January 2010 6 MOC Paper WinLink 6. 2 Further Research The content of this paper can be regarded as a reference guide for the research and business communities as it contributes to understanding the issues and challenges a cluster initiative can be confronted with when fostering the development of an evolving cluster. When WinLink has implemented its structural changes, further research could include interviewing member companies in order to get views from outside the initiative. In this way, the cluster initiative can be evaluated holistically. M. Kaar, C. Sax & D. Strebel 31 January 2010 27 MOC Paper WinLink
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