The End of Clusters?

If you work in economic or workforce development, a good part of your life is spent talking about clusters or sectors, i.e. industry groups that we target in our various programs and initiatives.   Rapid technological change has meant that many traditional industry groupings matter less.  In fact, we may be reaching a point where we are at “The End of Conventional Industry Sectors.”   That’s the message that comes out of a new PwC Report called The Future of Industries:  Bringing Down the Walls.  This study looks at the contours of what they call “the new industrial order.”  According to this view, we are in or soon entering a new industrial revolution where the barriers between industries disappear.

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Let’s look at two examples.  In the automotive sector, the rise of autonomous vehicles and other factors means that car makers are now software firms as well.  They are now in the business of mobility solutions, which may require making cars or other solutions too.  What about additive manufacturing?  Once 3D printing becomes ubiquitous, manufacturers can conceivably make everything and no longer need to specialize in making cars or appliances or medical devices or whatever.  The market sector becomes less important.

The PwC report focuses on how business should respond to this coming shockwave, but economic developers need to rethink as well.   Clearly, our past focus on clusters and sectors needs to evolve.  We’ll need to build companies and people with something like a “plug and play” capability. They will need the talent and capacities to work with different kinds of platforms, technologies, and markets.   These are not necessarily new insights—concepts like 21st Century Learning and Skills seek to train people to operate in this kind of fluid environment.  But, the pace of change is increasing and the relevance of many of our old models is eroding at a more rapid pace.   Economic and workforce development will need to evolve as well—and much quicker!