From Circular Economy Networks to Circular Economy Clusters – a Way Forward?

Circular economy, networks and good practices

When we wrote the GRUDE application back in the days, we already then realised that circularity and circular economy would play a major role in achieving the overall Sustainability Development Goals, as well as other parallel targets set up to reduce the effects of climate change. We understood that to succeed, both in delivering the message in an ‘easy-to-understand-and-accept’-format and in kicking off some relevant action, we would have to connect to a wide range of stakeholders and actors.

Saving the planet is not a spectator sport – it is not something that ‘someone else’ should be doing. We all share that responsibility. And now, some five years since the GRUDE application was developed by the joint partnership, this message is even more accurate – and in many ways, even more acute. The need for innovative, constructive cross-sector collaboration is vital, and inclusive networks addressing circularity and circular economy as their main priority is one way to manage the need.

And perhaps now is the time to be at least a bit bold. As we are just about to finalise the GRUDE project, we would really like to add ourselves to the list of good practices. We have been successful both in developing new circular economy networks and in connecting to many of those already existing, both in and between organisations and companies in Sweden, Finland and Norway.

The project has, through its transformative actions (proving high levels of innovation and resilience as many had to be transformed to digital and/ or hybrid actions and events due to the pandemic and existing regulations), promoted both capacity building, networking and collaboration possibilities. Even if the pandemic has been a challenge to most development projects, GRUDE has managed its double binding networking assignment; both at the partnership level and at the level of stakeholders and target groups.

Adding a new dimension to circular networking – the cluster approach

But seriously, is this it – or is there a way to walk the extra mile, to raise the stake? Can networks and networking be transformed to another level? Would it be possible to speed up the transition process to reach the next level of collaboration and co-innovation in circularity and circular economy by moving from a network to a cluster approach? And if so, what does it really mean? Let us first try to explain what clusters and clustering is about – and how it all started.

In 1998, in the November / December issue of the Harvard Business Review, one could read the now world-famous article Clusters and the New Economics of Competition. The article was written by Michael E. Porter, a professor at Harvard with a special interest in growth, business and business issues. In the article, he wonders why a certain development can take place in a certain area while the development in another area, with seemingly similar conditions, is not as successful. Porter himself answers the question by emphasizing the importance of the existence of clusters.

Under the heading ‘What is a cluster?’, Porter explains that clusters are ‘geographical concentrations of interconnected companies and institutions within a specific area’. Clusters include a number of linked companies, industries and other entities that are important to competition. They include, for example, suppliers of assets such as components, machinery and services, as well as suppliers of specialized infrastructure.

Clusters also often extend downstream to customers and sideways to manufacturers of complementary products and to companies in industries related to expertise, technology or joint ventures. Finally, many clusters include government and other institutions, such as universities, standardisation bodies, think tanks, vocational training providers and industry organisations, which provide specialist skills, education, information, research and technical support.

In the article, Porter lists a number of other ‘characteristics’ and advantages of clusters, not least those related to productivity, competitiveness and competence. At last, Porter reminds, however, that there is always competition – but in the case of clusters, competition goes hand in hand with cooperation. Porter’s models, theories and examples grew strong during the early 2000s, and is still used in many contexts both to explain the phenomenon and to instruct establishment and development of clusters. Porter is seen as one of the masters of describing the functionality of the industrial and innovation cluster, focusing on companies and actors in a given geographical area creating constructive collaboration.

Today, Porter’s model has been supplemented with descriptions that are characterized by partly modernised mechanisms which, in a somewhat different way than in Porter’s models, are based on strategic choices, support from authorities, policies and special financing initiatives. The progress can be exemplified by the implementation of cluster strategies, cluster initiatives and cluster development programs.

Another good example of the shift is the EU’s investment in regional smart specialisation (focusing on regional strengths, assets and skills) and industrial / innovation clusters (as engines for delivering growth, jobs and innovations based on these regional strengths). Today, the equation is seen as the main means of continuing to position the EU as a successful, digital and sustainable region in the world – and European clusters are clearly pinpointed as ‘machines’ to deliver on the implementation of green transition, digitalisation and resilience strategies.

All in all, the shift has made it clear that we need to develop joint innovation platforms, both within and between industries, businesses, regional and local administration, to support the process. Nowadays, both the cluster approach and the need for cross-sector innovation platforms are highlighted in many regional smart specialisation and innovation strategies and regional growth programs.

In addition, other issues interfering with – or developing – Porter’s original cluster theory is the shift to a more sustainable growth perspective rather than the traditional (aggregated supply and demand, GDP etc.), as well as the recent ecosystems approach, now often being used to describe a system of less structured interdependence and collaboration.

Possibilities with a Nordic circular cluster approach

There is no doubt circularity and circular economy is a gamechanger in how societies – as in municipalities, organisations, businesses and citizens – manage resources, waste, residues and side streams. We simply have no choice. And as the world turns to more circular approaches and behaviors, the need for new competences, business models and cross-cutting partnerships will increase exponentially.

The GRUDE project has brought together actors from a wide range of stakeholders and target groups to explore, disseminate and share knowledge about circularity and circular economy. By design, the project has actually done what is now said to be the only way to reach the Sustainable Development Goals – cross-sector learning, collaboration and action. Exchange has taken place on many levels, both partner and actors / stakeholders, and at least some innovative ideas have been developed and tested within the project framework.

So far so good; networking and exchange have been established and lots of learning and capacity building have taken place, furthermore, delivered in innovative ways due to the consequences caused by the pandemic. So, the question is whether we should be proud of what we have done and just close the door – or continue our dialogue on what more we could do, in a second step, to push circularity forward in the Interreg Nord (Aurora) region.

As GRUDE has been both a very important and successful project, the only reasonable answer would be to go for the second option. And then, one very interesting idea could be to develop a circularity CLUSTER – inviting and involving all types of industries, public sector actors, organisations, NGO’s, academia / research, innovation platforms, decision-makers and not the least, societies and locals.

The project could focus on building circular resilience in a number of places in northern Sweden, Norway and Finland – developing places as good practices, piloting for circular societies – that jointly collaborate and challenge each other to become world leading circular living labs. Such a cluster process / initiative, based on Arctic knowledge, conditions and smart innovation, could very well qualify as a game changer of its own in how societies deliver smart, sustainable and circular solutions for the future.

Ulf Hägglund, co-developer of the GRUDE project

Samuli Valkama, FrostBit Software Lab, Lapland UAS