This week’s Green Scene column in Crain’s Chicago Business: New study finds ‘cluster activity’ in green economy can accelerate success

A new study on opportunities in the local green economy offers perspective on how entrepreneurs, existing businesses and investors can target their efforts to succeed.

Using “cluster analysis,” the study’s authors demonstrate how specific sectors within the green economy can work together to achieve synergies and build momentum that’s more powerful than solo efforts by individual companies or investors. Details of the study’s findings and a broader discussion about how to boost greater activity in the business community and economic development circles will be featured tonight at the University of Chicago’s Gleacher Center downtown, says Robert Weissbourd, one of the co-authors and president of economic development consultancy RW Ventures LLC. He’s one of the scheduled panelists, along with John Cleveland, vice president of Innovation Network for Communities, another co-author of the study.

The lecture is co-sponsored by the nonprofit Delta Institute and the University of Chicago’s Graham School. Other panelists include Sabina Shaikh, an environmental economist and faculty member of the University of Chicago, and Michael Berkshire, green projects supervisor for the city of Chicago’s Department of Housing and Economic Development. The panel will be moderated by Jean Pogge, the Delta Institute’s CEO.

Mr. Weissbourd says Chicago’s current challenge is to convert existing pockets of green startup activity into development that cuts across a wider swath of the economy.

The study was commissioned by Metropolis Strategies, which was formerly Chicago Metropolis 2020, the civic leadership supporting organization of The Chicago Community Trust.

Crain’s met with Mr. Weissbourd to discuss the study’s findings and how they can be applied to stimulate the local market.

Crain’s: What’s new in this report that will surprise people already working in the local green business community or those seeking to get in on the action?


Robert Weissbourd

Mr. Weissbourd: The report reveals enormous opportunity for businesses that don’t normally even think about green. It builds from and goes well beyond the excellent Brookings Institution study (released last year), getting past raw data to firm and industry dynamics to identify particular emergent opportunities.

Crain’s: What competitive advantage does the Chicago area have over other metropolitan regions that make it a big draw for growing new green companies or expanding markets for companies already here? Is it more than O’Hare Airport?

Mr. Weissbourd: We have some competitive advantages that cut across all of the green sectors — our extraordinarily strong manufacturing base, assets in transportation and logistics, high levels of human capital, and specializations in knowledge and service industries.

But more importantly, we’ve identified a lot of business opportunities in varied sectors — from energy-efficient lighting to wind energy to water purification and treatment — and the competitive advantages are different for each. For example, in the broader building energy efficiency sector, Chicago benefits from its heritage as a center of large building design and architecture and its large commercial building management industry.

Crain’s: You refer to “cluster-based interventions” as a powerful way to identify segments of the green economy that can be nurtured to meet emerging green market demand. What’s the benefit of that type of strategy for targeting new business development and how would that work in Chicago?

Mr. Weissbourd: Particularly in emerging markets, where firms are looking at developing new products and services, they often have common needs for R&D, suppliers, production relationships and partnerships — that’s what is referred to as the “cluster”. Take for example, energy efficient lighting — it turns out that the next generation of LED lighting products will often be integrated with design features and distributed through different channels. A cluster approach understands that firms don’t act in isolation, and focuses on how to build the firms as part of building the industry.

Crain’s: The study found particularly promising opportunity for local growth in energy-efficient lighting. Why was that segment of green business singled out for the Chicago region?

Mr. Weissbourd: Energy-efficient lighting is the future of the lighting industry, with LEDs in particular expected to surge in the next decade. So this is a huge opportunity globally. The Chicago region has strong assets in traditional lighting, and a lot of them have already begun the shift to energy efficiency. As we dug further into the industry, we realized that the opportunity was actually not just in energy-efficient lighting narrowly, but in a broader cluster made up of firms in design and architecture, energy software and controls, energy integration, and commercial building management.

That said, it’s important to note that energy-efficient lighting, and the broader cluster it’s a part of, is just one of many promising opportunities for Chicago. It was chosen to illustrate the process of green cluster development, and not necessarily because it was the biggest or best opportunity.

Crain’s: Did the report identify any specific sectors of the economy that would be especially well-suited for entrepreneurs or small businesses to jump in on?

Mr. Weissbourd: While we were focused on opportunities for existing firms, the market growth creates huge opportunities for entrepreneurs as well. The Clean Energy Trust has been particularly adept at finding and promoting these. The opportunities for entrepreneurs range from smart grid to recycled content products.

Crain’s: The report suggests there aren’t any strong industry associations or business networks to support the local green economy. There are a few out there already (Chicago Clean Energy Alliance, Foresight Sustainable Business Alliance), so what kind of specific groups should be formed to address this gap you’re suggesting and what should be their top priority?

Mr. Weissbourd: There are a lot of great groups doing important work to support the Chicago region’s green economy. Our point is that we don’t have a rich set of business associations or networks matched to the scale of the opportunity, and particularly that much of the current activity focuses on more narrowly defined “green” firms or entrepreneurial opportunities, rather than the massive economic opportunities for firms that are not currently part of the green economy, but that could adapt their products and services to meet this new market demand.

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