2: Natural Advantage a Business Imperative
this chapter CEO Michael Fairbanks and Andrew
Smith, of On the Frontier (OTF), share their
considerable experience in discussing their
recent work in bringing greater prosperity
to developing nations such as Rwanda and Macedonia
. The OTF Group consists of leading strategy
experts who have decades of experience on
competitiveness in emerging markets. It advises
developing companies, regions, and nations
on how to be more innovative, increase productivity
and create competitive advantage.
on Cluster Development
Reference : Fairbanks , M. and Lindsey,
S. (1997) Plowing the Sea: Nurturing the
Hidden Sources of Growth in the Developing World,
Boston: Harvard Business School Press.
interest in industry clustering goes back to
Harvard Business School Professor Michael E.
Porter's classic work, The Competitive Advantage
of Nations . Using cases from around the
world, Porter argues that in today's advanced
economies regional clusters of related industries
(rather than individual companies or single
industries) are the source of jobs, income and
export growth. Clustering is now almost universally
used around the world. We can only benefit if
the trend is from clustering to eco-clustering.
The South Australian Environment Industry Cluster
was initiated in August, 2000 by the South Australian
Business Vision 2010, and is an interesting
example of this. It has the support of the Commonwealth
Department of Industry, Science and Resources
as well as the Environment Protection Agency
in South Australia.
from the Book
Australian companies can join the Buy Recycled
Business Alliance network that already represents
over AU$30 billion worth of purchasing power.
Porter, M. (1990) The Competitive Advantage of
Nations, The Free Press, New
(reprinted in 1998).
Forde, H. (2003) Building an Entrepreneurial Economy
Through a Systematically Managed Process of Cluster
Driven Innovation, Industry Cluster Project, Business
OTF Group is a strategy consulting firm based
with project offices worldwide. The firm has led
cluster competitiveness for the last 12 years
in more than 25 countries and dozens of industries.
Clusters consist of all stakeholders in a given
industry, including but not limited to private
sector enterprises, suppliers, customers, labour,
government, research institutes, training institutions,
professional associations and other groups. Clusters
promote firm-level competitiveness by increasing
both the cooperation and competition among firms.
The relationships developed within clusters accelerate
product development and improve access to specialized
inputs, market information and a skilled workforce.
Developing strong clusters helps regions position
themselves to respond to the challenges of the
knowledge-based global economy.
E. (1995) Diffusion of Innovations, The Free Press,
See description of the Seven Forms of Capital
(Cultural, Human, Knowledge, Institutional, Financial,
Infrastructure, Raw Materials) in Fairbanks, M.
(2000) Changing The Mind of a Nation: Elements
in a Process for Creating Prosperity, in Harrison,
L. and Huntington, S. (eds), Culture Matters:
How Values Shape Human Progress, Basic Books,
Rwandan economic objectives and coffee sector
data is from the forthcoming article by Rudasingwa,
T. and Donahue, N. (2004) 'Context and Prospects
of Nation Building: How Business Strategy is Transforming
Rwanda', Fletcher Forum of World Affairs, vol
28, no 1.
Other stakeholders may include 'future generations'.
Figures from On The Frontier (OTF) Group Presentation
(2002) Rwanda Coffee Strategy and Action Priorities,
developed as part of the Rwanda Competitiveness
and Innovation Program, 15 July.
Concept relates to the third principle of Natural
Capitalism outlined in Hawken, P., Lovins, A.
and Lovins, L. H. (1999) Natural Capitalism: Creating
the Next Industrial Revolution, Earthscan, London.
The Jamaican energy sector example is based on
preliminary meetings between the Natural Capitalism
Group lead by Hunter Lovins, the OTF Group and
Jamaican energy sector players in April 2003.
The cost figures estimated for efficiency technology
are based on research conducted for the book,
Small is Profitable (Lovins, A., Datta, K., Feiler,
T., Rábago, K., Swisher, J., Lehmann, A.
and Wicker, K. (2002) Small Is Profitable: The
Hidden Economic Benefits of Making Electrical
Resources the Right Size, Rocky Mountain Institute
There are over 2.5 million smallholding cocoa
farmers (under 5 hectares) supplying 90% of the
worldwide cocoa production according to the International