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Open Source Economic Development: A Disruptive Innovation in Cleveland
Monday, June 27, 2005 This week, I'm departing from the normal format of EDPro Weblog. Read on and you'll learn why. For the past seven years, I have been developing a new model of economic development: Open Source Economic Development. This approach takes the most innovative concept (open source) from one of our most innovative industries (information technology) and applies it to the task of transforming regional economies. Open Source Economic Development encourages the formation of open networks of innovation: clusters. Years ago, Michael Porter from Harvard began moving our focus toward clusters. He showed us what clusters were, and how to identify them in our economy. But he didn't really provide the practical tools that economic developers need to actually build clusters. I developed Open Source Economic Development to provide economic developers with the practical frameworks and tools we need to build clusters. We have been applying it in Northeast Ohio with some remarkable success. We are forming new clusters in preventive health care, biodiesel production and distribution, electric commuter vehicles. This model of economic development is more open and inclusive than other approaches. It requires both open participation and leadership direction. The results are impressive. Here are some comments from our partners that echo our success. In Indiana, Open Source Economic Development is transforming the way regional leaders think about their economies. I've spent the last six months conducting regional forums throughout the state. Two weeks ago, I made a presentation on this approach to the 2005 Indiana Leadership Summit. We are moving from old style industrial economic development -- with a focus on recruitment of big industrial facilities -- to a new type of strategy in which recruitment plays a relatively small part. We are focusing instead on the new and expanded role of colleges and universities. Making this transition comes with some costs. Open Source Economic Development is disruptive to old patterns of thinking, old patterns of behavior, old patterns of control. It can be very threatening to established leaders. That's OK. Good economic development is inherently disruptive. Places like Cleveland face a difficult transition away from hierarchies and toward open networks. That requires us to open ourselves to new possibilities and move away from "command and control" industrial mindsets. Failing to make these transitions is one reason why Cleveland -- and Ohio -- lag in employment and income growth. We cannot "command and control" our way to prosperity. This is a difficult lesson for the Greater Cleveland Partnership and our local foundations to learn. Through applying Open Source Economic Development, we have pulled together a remarkable, diverse, energized, crazy network of entrepreneurial thinkers who, like all true entrepreneurs, are driven by their ideas, vision and passion. They have little patience with the wet blanket approach taken by the traditional business organizations. During the 1980s and into the early 1990s Cleveland bristled with a sense of civic entrepreneurship that allowed many new and crazy ideas--from the Rock Hall to Playhouse Square to building new housing and shopping centers in the city. The fact that the City was bankrupt swept away the plodding and unproductive approaches to economic development that characterized the Perk administration and opened the way to much broader and more aggressive thinking. My brother, Hunter, was the planning director at the time, and he guided the translation of many of these big ideas into reality. His work literally remade the skyline of the city. This period of innovation began to die about twelve years ago. In part, the change was the result of the then mayor's personality and management style: He was a closed and controlling person, not open to new ideas that were not his own. It part, complacency set in with the business community after Cleveland returned to the bond market and accomplished the major projects that they set out to build. Partly it can be attributed to a changing of the guard to a more cautious, managerial leadership. The Greater Cleveland Partnership (the chamber) has been trying to remake the region's economy with a closed loop, and largely unproductive strategy. Since I arrived in Cleveland, I have been focused on developing a new approach to regional economic development. This strategy requires changing the attitudes of the business and foundation community toward our area colleges and universities. So, for example, our business leadership has a hard time understanding, in my view, the role of colleges and universities in building knowledge-based clusters. Read more. Enter a new dean for our business school. In my opinion, he quickly aligned himself, not surprisingly, with the downtown business leaders, dominated by older retail real estate interests. He and I clashed, and last week, in a rather clumsy move, the dean fired me from the Center for Regional Economic Issues. You can read more about my termination in these three articles: Download the articles. (I leave it to you to characterize the dean's position.) The deeper question is why all this has happened. We are seeing an old industrial region trying to come to grips with the competitive challenges of a global economy. Old industrial strategies focus on a tight top-down civic culture. Secretive and controlling. "Getting to scale" means consolidating, building bigger organizations. I call these strategies Curve 1 strategies. Cleveland is dominated by people thinking in terms of Curve 1 strategies. Curve 2 strategies focus on building open networks of collaboration -- clusters. In this thinking, "getting to scale" focuses on building networks with tight cores and porous boundaries. Some regions are moving successfully toward Curve 2 strategies. These are the regions I am highlighting with stories in EDPro: Places like Albany, Eastern Tennessee, Western North Carolina. Older industrial regions have a harder time making the transition. They have some tough, entrenched interests: Civic leaders who do not want to open the agenda. They fail to realize that the issue is not "top down" v. "bottom up". Curve 2 strategies are based on open networks that require both open participation and leadership direction to build. The problem in Cleveland comes in trying to build Curve 2 strategies with a Curve 1 mindset. This approach involves industrial policy. You cannot command and control innovation. You must treat your colleges and universities as full partners in the innovation process, not simply vendors. You cannot create effective Curve 2 strategies by bolting a public process on to an otherwise closed deliberation. And, most important, civic leaders need to adopt a new leadership style of openness, service, transparency and accessibility. We are still struggling in Cleveland with all these issues. (To give you an example, our foundations recently sent out a Request for Information to solicit the opinions of economic development "experts" on the future of the regional economy. The RFI restated the foundationns' commitment to a "transparent process", but asked us not to share the RFI with anyone.) Meanwhile, I have moved to set up I-Open, the Institute for Open Economic Networks. You can read more about it here. Join the I-Open network to learn more about these new strategies of economic development. You can join by clicking here. In the weeks ahead, I will be remaking EDPro to provide you with more insights into Open Source Economic Development. Next week, I'll be asking your opinion of how we can -- together -- make EDPro more helpful to you. I'll be returning to the regular format of sharing stories. But you may want more opportunity to share ideas and build our national community of economic development professionals. For example, I'll be asking whether you would like to learn about Open Source Economic Development, and how we might be able to give you the training you need to transform your economy. Meanwhile, I'll keep you up on what is happening in Cleveland. It's a fascinating story of a region in transition. posted by Ed Morrison | |
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