What Motivates Civic Entrepreneurs?
By Alec L. Hansen, Ph.D.
President, Economic Competitiveness Group, Inc.
GUEST AUTHOR

Around the world, the phenomenon of cluster-based economic development is gaining recognition. From Silicon Valley and Connecticut, to Mexico and Morocco, economic development professionals are finding that the competitiveness framework can revitalize regions and accelerate growth. However, many accounts of cluster development and regional competitiveness skirt around the fundamental driver of successful clusters: the role of the civic entrepreneur. These are the private-sector business owners and managers who bring their vision and commitment into the arena of regional cluster development.

How can we find them if we are not looking for them?

Development planners and government officials who find themselves poised to launch a cluster process often approach the prospect with some trepidation. They read about private sector involvement, even private sector leadership, but then find themselves organizing meetings in which only a handful of participants are actually from the private sector, but which are nevertheless called “cluster meetings.” Often private sector leaders are propped up as chairpersons of committees that they are not really leading, and they founder in that role, ineffectual and frustrated.

When one questions the organizers, one discovers that many of these well-intentioned officials think the notion of a private sector-led process is essentially rhetoric, and that clusters are driven by the usual cast of characters in most economic development programs – planners, officials, politicians, consultants and association executives – with a few business leaders included to lend legitimacy to the process. Perhaps unconsciously, they don’t believe that a busy, profit-oriented business owner would choose to spearhead an economic development initiative in his or her region.

Many accounts of clusters around the world gloss over the role of these private sector leaders. This article will attempt to rectify this omission, by focusing on the role of the civic entrepreneur, and considering the motivations of these remarkable individuals. With insights into what can bring out the best in potential cluster leaders, planners hoping to facilitate lasting change in their regions will be better able to support these civic entrepreneurs – the individuals whose actions are ultimately most likely to result in a transformation of a region’s economy.

Civic Entrepreneurs are generally CEOs and business owners, but can also be government officials, educators, union officials, or non-profit leaders. “When others see problems and gridlock, civic entrepreneurs see opportunity and mobilize their communities on a path forward.” Source: Henton, Melville and Walesh, Grassroots Leaders for a New Economy: Civic Entrepreneurs are Building Prosperous Communities, Josse Bass Public Administration Series, 1997.

The story of the rise of wine industry in California exemplifies the classic role of a civic entrepreneur.

How a Civic Entrepreneur Transformed a Region and an Industry

Robert Mondavi is the founder of the Napa Valley wine cluster in California, just north of San Francisco Bay. The Mondavi family was a well-established wine-making family in Northern California, owning thousands of acres. Their wines were what could best be described as “jug wines,” as were the other wines produced across the United States at that time. In 1962, Robert Mondavi took a trip to Europe where he was inspired by the European process of making wine. He felt that the Napa Valley region, with its intense sunlight tempered with fog near the harvest season, could also be a premier wine-making region, but that the approach to making wine would need to be completely transformed.

Mondavi’s older brother Peter did not share his vision, and in 1966 the two split. Peter kept the estates and wineries, while Robert bought 160 acres in Napa Valley – a tiny plot in a commodity business where quantity, not quality, was the traditional route to profits. Robert’s goal, however, was to combine European craft and tradition with the latest American technology, management, and marketing know-how.

To establish himself in the first year, he worked closely with top grape growers in the area. In doing this, he began to change the relation between growers and producers, opening up and transforming the grape growing industry. He introduced educational programs for the growers that would allow them to understand the “correlation between the quality of the grapes and the quality of the wine.”

He was also devoted to research and development, and wanted the winery to become a pioneer in research and a gathering place for the greatest minds in the industry. Mondavi’s vision was not just to produce the best wine in the world, but to ensure that wineries all over Napa Valley were operating at that level. Because a single winery has a difficult time making a name for itself, wines, like so many products, are known by their regions. Mondavi’s open and inclusive style was not a charitable activity, but motivated by his self-interest: how could he produce and market a premier product unless growers of grapes, suppliers of barrels, label producers, agronomists – in short the entire cluster surrounding him, were operating at his level?

Over the next decade, his techniques spread to other winemakers, and by 1976, Mondavi and his colleagues were ready. On May 24 of that year, a few bottles from Napa reached the legendary blind wine tasting competition in Paris, organized by the famed wine merchant Steven Spurrier. When the results were tallied, Napa wines had swept the top rankings. Among the white wines, Chateau Montelena’s Chardonnay captured 1st place, with other Napa wines capturing 3rd and 4th places as well. Among the reds, Stag’s Leap Wine Cellars’ Cabernet captured first, placing ahead of Chateau Mouton-Rothschild. Such a strong showing from a previously unknown region was a phenomenal surprise. “The French monopoly [on fine wines] was crushed permanently.”

In an ironic twist of fate, the shipment of crates from the Mondavi winery were delayed en route, and arrived too late to be judged.

However, Mondavi had achieved his goal – the recognition of Napa Valley as a premier wine-making region. Robert Mondavi wines won numerous awards in subsequent years, and his Special Reserve now sells for $200 a bottle. More importantly, the economy of the entire region has been transformed, with a quality of life unsurpassed among agricultural regions in the world.

Mondavi’s vision, combined with the opportunity afforded by his dispute with his brother, was responsible for a revolution in an agricultural region. Are other industries similarly susceptible to the actions of a few individuals?

The Interaction between Visionary and Catalyst

The arrival of a leading researcher in 1956 to Palo Alto, California was another “random” catalytic event, one that helped tip the region around Stanford University from a panorama of apricot orchards to a landscape dotted with Apple Computers, silicon chip fabricators and software powerhouses: Silicon Valley. The visionary in this story was Fred Terman, Dean of Stanford University's Department of Electrical Engineering. His vision of close industry-university partnerships had already encouraged several spin-offs, including William Packard and David Hewlett, but the Valley had not yet taken off.

The big break came when Terman convinced Dr. William Shockley, the inventor of the electronic transistor, to come to Palo Alto, rather than MIT, where the leading electronics researchers at that time were based. In 1956, Shockley Transistor Laboratory was established in the new Stanford Industrial Park, with a brain trust of young engineers from MIT and other East Coast universities. Their work was set to revolutionize the electronics industry, allowing the shift from bulky vacuum tubes to tiny circuits embedded in silicon.

However, frustrated and alienated by Shockley’s caustic personality, eight of the bright-est of these electronics specialists left Shockley to form Fairchild Semiconductor Corporation. It became the first firm to manufacture exclusively in silicon, and rapidly developed into one of the largest firms in the California electronics industry. More than 70 high-tech companies, such as Intel and Motorola, are direct or indirect descendants of Fairchild.

Again, it was a combination of vision (Terman’s), and a catalyst (the arrival of Shockley and the fact that he couldn’t hold on to his talented colleagues) that spawned the economic miracle known as Silicon Valley.

Is it possible to replicate Mondavi’s success in other regions?

Robert Mondavi and Fred Terman were probably not familiar with the term “cluster” – they simply implemented a vision for their regions. The proposition behind cluster-based economic development is that there are potentially dozens of Robert Mondavis and Fred Termans in a given region – leaders who have vision and access to resources that can transform their region, but who lack a catalyst to get them started. Where a natural catalyst is absent, a cluster-based approach, mobilized by the economic development community, can act as the catalyst, propelling these civic entrepreneurs to implement their dreams.

Want to launch a cluster process? Give civic entrepreneurs a genuine role

For every account of cluster development processes supporting private sector leaders as they transform their regions, there are an equal number of well-intentioned efforts that started off with similar enthusiasm, but led nowhere. The difference often lies in the role in which private business leaders have been cast. If cluster organizers see private sector leaders as symbolically important, but too busy to get deeply involved, or only motivated by charity, cluster initiatives will be run by administrative organizers – not a bad outcome if the organizers are talented, but seldom transformational.

What if cluster organizers push the envelope, and genuinely trust that a handful of private sector leaders in their region are potential Robert Mondavis? The organizers become a catalyst for action, using cluster facilitation methods to craft events and structures that will convince industry leaders to take the plunge. Essentially, the cluster framework allows entrepreneurs to commit to realizing their economic vision – sometimes a vision they have held close to the vest for many years, but had always been reluctant to implement for fear that the risks were too great.

Industry leaders will commit to the process when they are convinced that their time will not be wasted, and that their leadership will be acknowledged rather than subverted by a state-driven, political agenda. By respecting the true motivation of these civic entrepreneurs, their sustained participation (and hence the successful transformation of the region) is more likely.

Ultimately, most private sector leaders are willing to invest their time in cluster development because of two intertwined motivations: a drive to make the region, and hence their company, an industry leader (the profit motive), and a desire to make the region sufficiently prosperous and economically diverse that his or her children will have desirable opportunities to return to after college.

Cluster organizers need to be willing to make room for local business leaders, and trust the vision and initiative of these civic entrepreneurs. When private sector leaders learn about the concepts and sense tangible support from cluster organizers, the vision will unfold – organically and powerfully, from the ground up.

Alec Hansen can be reached by email at this address: ahansen@ecgroup.com. Visit the Economic Competitiveness Group on the Web by clicking here.

Endnotes

1. This article was written Alec L. Hansen, Ph.D., President of the Economic Competitiveness Group, Inc., with research assistance from Kelly Cronen. Printed in March-April 2002 edition of Industry Focus Magazine.