Clusters

A strange phenomenon you find in most towns and cities, is how similar businesses co-locate. There might be a single street which contains several estate agents.

This is a simple example of a cluster.

Clusters happen all over the place, at various scales. Here are some of the largest and best known:

1. The City of London - financial services.
2. Silicon Valley - innovation and technology.
3. Guangdong - manufacturing.

It seems like clusters are getting more and more important. Where you are is an increasingly large factor in whether or not you’ll be successful.

It’s literally only possible to achieve certain goals from inside certain clusters. If you’re a software company, you’re unlikely to find enough good engineers outside of a major city.

The rise of clusters is driving more and more people into cities, which leads to a polarising effect - clusters get stronger, which other areas get weaker. But clusters themselves can contain strange distortions. In certain clusters, the wages, and subsequently the house prices, have been driven up so high that many people can’t afford to live in them.

It might be that clustering becomes one of the core drivers of economic and social change in the coming years.

Resources

1. Who’s Your City? by Richard Florida.
2. An article on clusters by Paul Graham.