Porter recently applied his work in industry clusters and economic analysis to the community that includes the carpet cluster. His data is available at the county level and organizes businesses into some 50 industry clusters producing non-local goods and services. Many familiar businesses are excluded. Fastfood restaurants, automobile dealers, and newspapers, for instance, are spread rather evenly across the country, for they serve basically local customers.
Porter also helped the city of Chattanooga, Tennessee, to perform a cluster analysis. To implement a regional growth initiative, the city appointed two groups: a steering committee of 25 members, including prominent business and government leaders, to provide guidance and policy direction; and a core team of business and academic leaders to research local conditions and manage cluster team meetings. The region for study was based on geographic features, political boundaries, local sentiments, economic strengths, and even commuting patterns. For each cluster, a "location quotient" was developed and defined as the cluster's strength here compared to what might be expected if that industry were spread evenly across the country.
The "Textiles and Floor Coverings Cluster," centered in Dalton but with related businesses elsewhere in the region, was by far the strongest cluster. The carpeting businesses also accounted for most of the strength in the second strongest cluster, "Construction Materials." Three additional clusters emerged: "Confectionery and Baked Goods," "Tourism and Hospitality," and "Medical Devices and Health Services."
Leaders in each field, and others from lists generated by Standard Industry Classification code numbers, were invited to become part of the cluster team and attend a series of meetings over four weeks. The agenda for the teams included a discussion of conditions in the cluster; issues holding the cluster back; opportunities for creating better inputs, sharper demand, and high-quality related institutions; and problems with regulation, the labor pool, and the physical infrastructure. The meetings also included a discussion of what cluster team members could do about these issues; what types of legislation or change in processes could make the cluster better; cooperative efforts toward applied research; and ways to attract complementary businesses to the region.
The immediate goal was a plan for action that went well beyond analysis. The ultimate goal was to accomplish change. The core or "diamond" of the cluster included: factor input conditions (labor, capital, resources, etc.); demand conditions (nature of the home market, including any special conditions or expertise locally); related and supporting industries (from service industries to trade associations); and context for firm strategy and rivalry (the level of entrepreneurship, and tradition of united actions). The team in Chattanooga learned that concentrated competition leads to greater prosperity, and the best strategy means not trying to do all things but focusing on your cluster. There was also a more general appreciation that the cluster process could, indeed, lead to more and better-paying jobs and that a strong cluster would enhance the general economic situation for its members. In the end, the Chattanooga region should see a shift in its own business culture. It should move away form traditional reliance on fixed endowments, and move toward real competition, true productivity, effective collaboration and greater prosperity.