The shift in market forces has led to major organisations looking at the benefits of working with clusters of small and medium sized companies, says Fiona Tatton.

The way organisations are doing business is changing. Leading companies recognise they can get better value from contracting with a single entity offering multiple skill sets. When small and medium sized firms join forces they are able to share skills and resources and deliver a service or product to customers that would normally be out of their reach.

This new way of thinking has led to the popularity of working in a 'cluster' environment. A significant number of enterprising businesses now realise that working in clusters brings them financial success and an ideal environment for networking, innovation and investment.

It is not just businesses that benefit from working in a cluster environment. Today research institutions, universities and professional communities are joining up with small and medium sized business to form networks in a variety of market sectors. This means the academic community can harness the latest developments through collaboration with the commercial world.

Also, as many research institutions receive significant investment in the research and development arena, the small and medium sized business is able to tap into this to deliver innovative products and processes to the customer.

Ultimately the customer gets a practical, cost-effective route to market for the latest in technological areas.

Working in a cluster environment is the future for small and medium sized organisations. Although many businesses have heard about the opportunities of working this way, most are not quite sure how it works in practical terms.

In the Yorkshire and Humber region

Virtual Enterprise Networks

(VENs) are being created in advanced engineering and materials, chemicals, construction, digital, environmental technologies, food and drink, healthcare, recycling, and sport. VENs are bespoke supply networks that offer a lower risk, lower cost alternative to supply chains.

They take the supply chain process to a new level by carefully selecting member companies and integrating them into a ready-made network. These are characterised by genuine co-operation and enforced with clear ground rules about obligations and rewards.

VEN Group is a leading collaboration company based in Sheffield, South Yorkshire and established by Regional Development Agency

Yorkshire Forward

, which first developed the network. It has taken the concept of working within a cluster one step further.

It has developed online tools and processes that support collaborative working. These include a common IT platform and legal, commercial and governance frameworks that help organisations that work in clusters increase their efficiency and reduce risks.

Many organisations that are considering joining a cluster fear they will lose their independent status as a company and will have to conform to the work ethics or standards of other companies within the cluster. This is not the case.

Within VEN Group, for example, when an opportunity has been identified, organisations are selected and matched to meet the requirements of the customer. The opportunity is pursued through a 'Virtual Factory', made up of VEN Group members from small to medium sized organisations and, where appropriate, professional communities, universities and research institutions.

The Virtual Factory is given its own legal identity and the core business of each organisation within the cluster continues as usual. VEN virtual factory members benefit from protection of background IP through licensing. Those that develop foreground IP through collaboration are able to share the benefits of this through royalty-free usage, which protects intellectual property rights and ensures return of investment for members of the collaboration.

Cluster, collaborative working, networking, virtual networks — you can call it what you like — but the survival of the small to medium sized organisation now relies on the ability of different organisations to work together, share skills and resources.

If they can do this successfully they break down traditional business boundaries to give their competitors a run for their money by delivering top-quality services and innovative products, on time and within budget to customers at the top end of the market around the world.

Fiona Tatton is marketing manager of the

VEN Group