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The Creative Enterprise Cluster:
A Montana Business Case Study

Where Creative Class and Business Cluster Dynamics Meet
Inspiring Analysis and Insights from Stuart Rosenfeld, RTS Inc.

[ Introduction - Business Clusters In The Small ] [ Montana's Creative Enterprise Cluster Input/Output Diagram ] [ Montana's Creative Enterprise Cluster ] [ Digging Deeper ]

Related page:  [ This article at NARFI ]

Two of the hot topics today among regional and local economic developers are creative class and business cluster dynamics. In his award-winning book, The Rise of the Creative Class, Carnegie Mellon distinguished professor of regional economic development, Richard Florida, makes a compelling case for the counter-intuitive source of success factors in regional and local economies. Stuart Rosenfeld of Regional Technology Strategies (RTS), among others, champions the importance of recognizing business clusters, community ecosystems of associated businesses, as a dynamic source of regional and local economic well-being.

In both these important areas, creative class and business clusters, the collective power of the small is validated and encouraged. And in both these domains of new economic development thinking, the power and importance of networking is recognized. We are, indeed, in a new era of the Network Society and its associated Network Economy.

Many who have read Dr. Florida's book are left with a feeling of, "Great, that is fascinating... and very urban. What about folks like me that live in small towns and rural areas? How do creative class dynamics affect me?"

These are important and timely questions. At Sohodojo and NARFI, we've already written a few pieces describing tROCCits, or the Rise Of Creative Class in the small. For more on the implications of creative class dynamics in rural and distressed urban communities, see our Iowa Creative Economy Unconference presentation, and more recently, Nanocorps in Micropolis.

Adding Business Cluster Spice to Creative Class Chili

While Florida's theory can open our eyes to social and personal dynamics that affect regional economies, we need to turn to the emerging domain of business clusters to reveal additional insights about how creative class folks like to do business. Sure, some creative classers do work and enjoy working for large megacorps doing creative work 'in the large'. But more and more we find creative individuals in small business, including creative self-employment.

Many 'creatives' have been rugged individualists all along. But modern communication technologies and modern transportation systems make it increasingly possible for more folks to make their living in creative enterprises wherever they choose to be.

	RTS Cluster Guru Stuart Rosenfeld

Recognizing that the geographic isolation and rural nature of much of the state had a significant impact on the health of Montana's economy, Chief Business Officer Dave Gibson of the Montana Governor's Office of Economic Opportunity turned to business cluster guru Stuart Rosenfeld and RTS Inc. to conduct a significant study of Montana's existing and potential business clusters. The result of this exhaustive study was The Montana Business Clusters Study document. A 52-page summary of the Montana Business Cluster Study is available in MS-Word (.doc) format.

Rosenfeld's RTS study identified six clusters in Montana: the Wood-Based Product Cluster, Agri-Food Cluster, Experience Enterprise and Tourism Cluster, Life Sciences Cluster, Information Technology Cluster, and Creative Enterprise Cluster. The first five clusters are relatively conventional and expected given Montana's resource-based industries, agriculture, tourism and the ubiquitious reach of technology industries. It is the sixth cluster, the Creative Enterprise Cluster, that is especially interesting as an emerging 'new kid on the block' in cluster business analyses.

While geographic concentration is a primary feature of most business clusters, the Creative Enterprise Cluster transcends space – Who, What and Why are more important than Where and How Much. Shared interests defines the bond of community of the creative individuals and small businesses that comprise the Creative Enterprise Cluster. Once overlooked and dismissed as marginal contributors to local and regional economic vitality, creative researchers such as Richard Florida and Stuart Rosenfeld are shining a bright and constructive light on the self-employed and very small businesses that make up the Creative Enterprise Cluster.

The following is the chapter on the Creative Enterprise Cluster excerpted from the Summary of the Montana Business Cluster Study by Stuart Rosenfeld and the staff of RTS. While this analysis is specific to Montana, the concepts and insights are applicable to Creative Enterprises everywhere. Does your state have a Creative Enterprise Cluster analysis and action agenda?

Source: Summary of the Montana Business Clusters Study Primary Author: Stuart Rosenfeld, RTS Inc.

Source: Summary of the Montana Business Clusters Study Primary Author: Stuart Rosenfeld, RTS Inc.
Sub-sections: [ Description ] [ Geographic Concentrations ] [ Competitiveness Profile ] [ Challenges and Possibilities ] [ Suggested Actions ]

In Montana, the companies and individuals that produce and use creativity of form, design, sound, and language are the basis for the creative enterprise cluster. This cluster consists of all enterprises in the state whose principal competitive advantages are derived from distinctive appearance, form, or content.

The cluster accounts for more than four percent of the state's establishments with employees, more than five percent of all establishments, and about four percent of the state's workforce. It provides additional economic benefit in the form of inputs to manufactured goods and services, contribution to a quality of life that attracts talent, encouragement of innovation, positive impact on education, and production of ancillary income that allows families to remain in some other business or lifestyle of choice.

The success of the creative enterprise cluster will be characterized by slow and steady growth and will depend heavily upon maintaining a high quality of life, a supportive and accepting environment, social infrastructure, and tailored support services.

Southwest Montana has the highest number and greatest concentration of creative enterprises. Although talent is dispersed across the entire state, there is a tendency for companies with employees-particularly creative services-to be concentrated in and around Missoula, Bozeman, Kalispell, Livingston, and Billings.

Some individual artists, crafters, and writers are clustered in these places because they initially were drawn to Montana or supported in their efforts by universities, creative arts schools and workshops, or residencies in these cities. Others-especially those whose work is inspired by the scenic beauty of the forests, mountains, lakes, rivers, waterfalls, and other wilderness areas-might live almost anywhere in the state.

Art also flourishes on the reservations, in the products that are part of the cultural heritage of the tribes and in historically accurate clothing and household products. Each tribe builds on its traditions to make products that are sold to tourists and contribute to local economies. Most businesses are family run. As their children pursue educational paths that lead to careers off the reservations, owners pass on their skills to apprentices.

Skills and labor: The creative enterprise cluster relies heavily on people with creative minds and highly developed skills gained through formal or informal learning. Approximately 18,436 Montanans work in the creative enterprise cluster. In 2000 - 2001, Montana two-year institutions of higher education awarded 43 certificates, and Montana four-year institutions awarded 512 degrees related to this cluster.

Montana institutions of higher education offer some sequenced programs that prepare people for careers in fields where art, aesthetics, and creativity are essential, but few required courses within occupational career fields. One of the state's best-known and largest programs is the film/video program at Montana State University. With approximately 600 students (about 55 percent from out of state), it is one of the largest in the western states.

Many creative and innovative people who apply their talents to products and services do not have degrees in art or design. Know-how is highly valued within the creative enterprise cluster, and people of all ages and backgrounds come to Montana to learn directly from working artists and artisans. Other creative people develop skills while earning a living in another field or learn skills at home and turn them into products that can replace or supplement family income.

Relationships and social capital: The fact that this cluster is dominated by people who work alone or in very small enterprises much of the time contributes to a strong culture of association and collective activities. To keep up with trends, market opportunities, and new techniques and technologies, creative workers depend on networks, associations and guilds, and friends and acquaintances. The associative structure of the cluster focuses on shared interests within the cluster-symphonies, weavers, potters, and web designers have their own networks and organizations where they associate for marketing and promotion, learning, cost sharing, and accessing services.

A wide range of nonprofit associations works to facilitate these relationships. In the arts sector in particular, nonprofit organizations provide a social infrastructure and source of services. Furthermore, these associations themselves are important sources of employment and income, and contribute to the sector's productive capacity.

Suppliers and services: Because the key ingredient in this cluster is knowledge, the most important input is human capital. Suppliers of goods do not need to be nearby since most materials and supplies are easily purchased from distributors. Close access to knowledgeable supply and equipment distributors and support services are far more important than proximity to the companies that actually manufacture the supplies or equipment.

Marketing and delivering products and services: Marketing outside the region is generally difficult for individual artists, writers, and crafts people, many of whom lack business acumen and interests. They tend to rely on intermediaries-galleries, shops, agents, publishers, advertisers, and state promotional efforts-to find customers.  Some artisans and artists turn to their associations and nonprofit organizations for help with marketing. Despite the efforts of the associations and the State, creative enterprises interested in growth and expansion find it difficult to efficiently market their products. The World Trade Center in Missoula has helped a few creative enterprises find overseas markets, but the scale is miniscule compared to the potential.

Transportation of goods is not a problem. Packaging, shipping, and insurance for goods are available through standard chain-mailing houses, Federal Express, UPS, and other multinational services. Content, of course, is easily transmitted over the Internet. The larger transportation problem is personal travel. Getting customers to come to fairs and shows is made difficult by the cost and time to get to Montana, especially from the eastern U.S.

Technology and innovation: Innovation is at the core of this cluster and represents its strongest competitive advantage. Technology and the creative arts are increasingly intertwined through computer-based design, drafting, and graphic arts programs; filming, digital photography, art, and music; optics and imaging; and web-based marketing. Firms with products that incorporate art into products and creative content into services also use a variety of industrial and information technologies to meet market demand. Access to the experts who keep abreast of new market technologies is more important than proximity to the developers and producers of the technologies.

Despite the use of technology in some parts of the cluster, businesses in this cluster are not typically associated with highly advanced technology. Technologies associated with handicrafts are often developed by an individual and shared informally. Technologies used by architects and designers are most often products of the information technology sectors and used as they become commercially available.

Entrepreneurship and capital: The creative enterprise cluster is made up largely of entrepreneurs and small companies. The capital investment needed to start many of the enterprises based on art and design is relatively low. Creative enterprises tend not to attract significant capital because they are unable to promise the rapid growth most investors seek. Enterprises that move into larger scale production may need equipment and technology, but often can share it.

Equity and opportunity: Creativity spans all classes, races, and genders. People who have the resources to develop their skills or make marketing connections may benefit most from creativity, but talent is found in all cultures and all communities. This cluster, which depends less than most other clusters upon infrastructure and high levels of formal education, can reach all parts of Montana. It is particularly important to Native Americans, who have well established art and craft traditions. This cluster also has an influence on youth, especially in rural communities, by engaging them in the arts to spur educational aspirations and attainment.

	From Trent Williams' Clusters of Creativity: Innovation and Growth in Montana

In light of its intrinsic value and potential impacts on other clusters, the creative enterprise cluster has not reached its full potential. Perhaps because it is dominated by entrepreneurs and micro-enterprises, it lacks recognition as a job and wealth generator.

Despite some outstanding and well connected talent, support crews, and an outstanding university program, Montana's film industry has not been able to compete with states and countries that offer tax incentives or subsidies to major production companies.

The universities offer good programs for this cluster, but support below the university level is weak and not commensurate with the cluster's impacts on the economy. Even though they derive most of their incomes from out of state, creative enterprises lack outlets for marketing, especially outside the U.S. Cluster growth could also be slowed by significant change in the ecology and population. The state's attractive-ness as a place to live, work, and create is based on the scale of life and access to natural diversity and beauty.

The creative enterprise cluster offers three important opportunities with substantial potential for Montana that go beyond the growth of the cluster itself:

1. Transferring creative art to products in other industries. Industrial design is an undervalued asset in the U.S., and Montana has a chance to take advantage of it.
2. Attracting growth industries and potential entrepreneurs. People in many growth industries choose to do business in Montana because of its amenities, not because of the conventional factors of production. 
3. Using local art to establish Montana as a recognized brand name for products.

1.  Establish a Creative Enterprise Cluster Leadership Council.

A Creative Enterprise Cluster Leadership Council can communicate industry issues and opportunities to government; provide feedback on effectiveness of state-sponsored programs and actions to support the creative enterprise cluster; foster creative enterprise cluster awareness throughout the state and within the legislature; transmit information from state government back to the creative enterprise community; sponsor networking functions; and link to other clusters through leadership councils.

Action: State government should take the lead in forming and staffing a Creative Enterprise Cluster Leadership Council.

2.  Recognize and develop measures for the economic impacts of creative enterprises.

The arts are too often viewed as a "frill" in economic analysis and not as a major source of growth and advantage, in part because they are dominated by individuals and very small enterprises. Creativity is a primary competitive advantage of many Montana companies in other clusters as well as the core of a cluster itself.

Action: The State should treat this as an area for potential growth, promoting its products and encouraging talented people and small companies to move to the state.

3.  Expand emphasis on design competencies in secondary and higher education.

The aesthetics of design are vastly underappreciated in most American industries. One way to change that is to integrate art, creativity, and design into the educational system. A small number of colleges in different parts of the state should be designated as Design Colleges. These colleges would build different types of expertise, take responsibility for benchmarking exemplary practices at other colleges, and develop curricula to be shared with other institutions.

Action: Increase the emphasis on art and design in high school and college programs, offer concentrations in design, and investigate the possibility of establishing a full-scale design center at a college/university in the state.  

4.  Recruit technical talent.

The creative enterprise cluster could become a major marketing tool for the state, complementing the draw of the state's natural resources. The state should develop a state "brand" for artists and for its creative environment and support structure. Branding the state as a "creative" place can be used to recruit talented university faculty members, professionals, researchers, small and mid-sized companies, teleworkers, and independent contractors who can expand the economy, blend into it, and enhance the creative impulse.

Action:  Offer incentives to entrepreneurs and individuals with demonstrated creative talents who have the potential to produce goods or attract tourists and entrepreneurs, and who choose to live in less prosperous parts of state.

5.  Establish a statewide one-stop resource center.

The center would serve as a broker for existing resources and services and develop support to fill gaps in services. This center should have a broad focus on all creative enterprises and be staffed by people who understand the arts. It could also match artists/designers with companies that make goods or services anywhere, branding Montana as a major source of creative content for industry.

Action: The state should establish and staff a cluster one-stop resource center that develops a single point of contact for information, works with existing associations and nonprofit organizations to provide missing services, and points individuals to existing resources and associations.

6.  Link creative enterprises with companies making products that depend on appearance and content.

Although some Montana artists and writers provide product and content to manufacturers and service providers, there is room for growth through structured networking opportunities and brokers who can guide Montana companies to creative enterprises that will make their products and services more attractive, unique, and competitive.

Action: The state should organize a series of workshops bringing together artists and writers interested in commercial applications, companies that make final products, and associations that represent them with the intent to form an ad hoc task force to recommend ways to more effectively integrate art and industry. 

7.  Promote Montana's galleries, studios, and workshops as tourist destinations.

The element of this cluster that makes original work is a natural attraction for tourists that appreciate and purchase local goods. Places with concentrations of creative people also draw tourists. The attraction of arts and crafts should be merged with cultural heritage and nature to motivate more tourism and provide opportunities to purchase goods. 

Action: Strengthen links between creative enterprises and tourism to enhance both.  Integrate nonprofit arts organizations into state tourism and marketing efforts.

8.  Promote and support classes and workshops operated by nonprofit organizations and intermediaries.

Educational programs taught by expert artists and artisans attract people who spend money in the state, return, and spread the word about the state's creative environment. The state should support programs that attract resident artists and artisans and pass on the skills of Montana.

Action:  Make workshops and classes in creative arts eligible for state workforce development and training funds.

9.  Connect Montana artisans to distant artisans and markets.

Matching Montana's creativity cluster to other regions that depend on creative enterprise-Denmark, northern Italy, or the South Island of New Zealand-is one approach to share ideas and markets. Innovation and creativity require stimuli. Connections to different cultures and experiences can catalyze creativity, improve production techniques, and help locate new markets. The state could begin transforming existing sister city relationships to regional economic partnerships and defining collaborative activities.

Action: Through the cluster one-stop, help artisan networks make the necessary connections to establish partnering relationships with peer groups in other countries, leading to shared marketing activities.

-- End of Creative Enterprise Cluster excerpt --

Want to know more about Montana's business clusters? Check out the following:

• The Montana Business Clusters Study Summary (MS-Word format) - five more business cluster analyses just as thorough and insightful as the Creative Enterprise Cluster chapter presented here. A must-read for Montanans and anyone interested in cluster business analysis.
• Clusters as Economic Development Strategies - Stuart Rosenfeld's keynote presentation at the Montana Economic Development Summit 2003. Montana's clusters are used are the focus of examples and recommendations, but this PowerPoint presentation is the definitive Cram Course on business clusters. Recommended for all, but especially valuable for regional and local economic developers and legislators wanting to understand how to support existing and nurture emerging business clusters.
• Clusters of Creativity: Innovation and Growth in Montana - RTS' Trent Williams presentation at Montana Economic Development Summit 2003. This PowerPoint presentation is an excellent 'summary of the summary' of the Montana Business Clusters Study Summary cited above.

Stuart Rosenfeld and Regional Technology Strategies are leading experts in cluster business analysis and development. Fortunately, their excellent work is often done for public sector clients. This results in their excellent publications being available on-line and free of charge. Among the best of the best, we recommend the following:

• Just Clusters: Economic Development Strategies that Reach More People and Places - The result of a Ford Foundation grant that brought together 23 practitioners, policy makers, and researches to share best practices and case examples to refocuses cluster strategy on equitable participation for those too often without access to funding and infrastructure support to evolve cluster businesses.
• A Governor's Guide to Cluster-Based Economic Development - Stuart Rosenfeld's How-To guide for public sector support of existing and emerging business clusters. Targetted for state governors, this document is nonetheless valuable for anyone interested in cluster business dynamics.

And here are two RTS publications that are especially of interest to us at Sohodojo given these documents' focus on 'less favored regions' (our interest in distressed urban and rural communities fits here) and rural communities:

• Creating Smart Systems: A guide to cluster strategies in less favoured regions - Stuart Rosenfeld's report to the European Union - Regional Innovation Strategies group contains an excellent primer on cluster concepts followed by practical advice on business cluster dynamics and action recommendations to support existing and nurture emerging business clusters..
• Networks and Clusters: The Yin and Yang of Rural Development - Stuart Rosenfeld's report to the Federal Reserve Bank of Kansas City, in addition to its focus on the unique demands of the rural context, this publication makes the connection between network concepts and cluster business dynamics. A double-barrel winner! (Tip: Read this along with Barabási's Linked: The New Science of Networks.)

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