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Two software companies may signal a shift in rural Missouri
Monday, March 31, 2003 Economic development is shifting. Listen to Don Phares, professor of economics and public policy at the University of Missouri at St. Louis: "The 21st-century business is going to be high-tech, knowledge-based, service-oriented. The new companies will be smaller, less than 50 (employees), maybe less than 25. I'm not sure the state has caught up with this." Here's an interesting article about two software companies in rural Missouri. posted by Ed | Hampton, VA positions itself as motorsports technology center In a move to establish a technology niche, Hampton, VA is postioning itself as the “one-stop location” for engineering technology and testing needs for the motorsports industry. A recent market study recommended that the region establish some additional anchors for this cluster, including a test/race track facility and a specialized research and development park targeting this industry. EDPro Ray White, Director of Hampton Economic Development, sent me along some background material on the strategy. You can trace the roots of the cluster to the Langley Full Scale Tunnel (LFST). Managed by Old Dominion University’s College of Engineering and Technology, the tunnel has been attracting NASCAR and other racing teams for aerodynamic testing, starting around the mid-1990s. NASA's Langley Research Center also provides a valuable technology base. To focus its strategy, Hampton has created the Hampton Motorsports Technology Alliance. The City of Hampton, Department of Economic Development, NASA Langley Research Center’s Office of Technology Commercialization, Old Dominion University’s Langley Full Scale Tunnel and the Peninsula Alliance for Economic Development established a partnership to promote Hampton and the region’s expertise and technology assets to the high–performance automotive industry. Finally, the region has a strong company base: Ford Motor Company, Siemens Automotive, Valeo, Schaevitz Sensors, Orbital Engine Corporation, ITW Southland and numerous other companies. Hampton's strategy represents the type of economic development strategy that will drive regions to higher levels of income. The lesson: identify your anchors, build connections, and then strengthen your anchors once again. To learn more, contact Ray White (757) 727-6060 or (757) 727-6237. posted by Ed | Iowa's governor presses for economic development fund Sunday, March 30, 2003 Before heading off to the Hanover Trade Fair, Iowa's Governor Tom Vilsack urged the state legislature to pass his proposal for a $500 million economic development fund. The governor wants to use the fund to restructure the state economy. He proposes to invest $50 million in research infrastrcuture in the life sciences, $250 million in project incentives to build businesses in life sciences, advanced manufacturing, information solutions, and insurance. Another $50 million will go to improving Internet access, $50 million will go for renewable energy production, and $50 million will go to promoting regional cooperation among the state's 225 econonic development organizations. posted by Ed | Vermont's development finance plan Friday, March 28, 2003 For EDPros interested in development finance, you can review Vermont's new development finance plan, released earlier this year. It presents information clearly and outlines how state funds can be leveraged. It's a good example of a concise report geared toward legislators and business leadership. Download a copy. When presenting ideas, we need to be mindful of our audience. No one has time for fat reports. In the future, effective EDPros will present core ideas fast. So visual information -- drawings, charts -- becomes a central way to communicate. posted by Ed | The career pathways for EDPros are shifting Here's a good profile of Dennis Yablonsky Pennsylvania's new economic development secretary. He's typical of the new breed of EDPro that is coming into the field: a successful entrepreneur, skilled at innovation and business development. Most EDPros taking leadership at the state and local level have developed their reputations with experience in business attraction. Their skill sets are related to marketing, land development, and incentive-based deal structuring. There's an important lesson in the shift. Political leaders will be valuing business development experience more highly in the future. So, if you are an ambitious EDPro on the way up, make sure you get some experience in business development...working with incubators, start-up programs, university/industry initiatives. (For another example of the shift, here's a bio of Tim Mueller, another former entrepreneur who heads Cleveland's economic development department.) posted by Ed | Kentucky's Office for the New Economy Thursday, March 27, 2003 Kentucky is building its innovation infrastructure, and the Office for the New Economy is taking the lead. Learn what they are doing here. Bill Brundage, commissioner of the Office, is trying to manage expectations. "The new economy is really: science, which is the fuel, technology is the engine and then innovation is what drives it all... "As we build R&D capacity and build up our commercialization capacity and then bring in that intellectual pool and work force, we build deal flow. It's a 10-year process. A lot will happen over that 10 years, but it's still a good decade before we can get to where we want to go... "We can take some of the best practices from different states, but we're all different. "I've laughed over the years at people saying they're creating another Silicon Valley or Research Triangle. That's foolish. There's only one of them. You're not going to recreate them..." posted by Ed | Building quality places Wednesday, March 26, 2003 "Quality of life" is an elusive concept, but "quality places" is not. EDPros who are interested in creating quality places are connecting economic development with physical planning. Think of it this way: You need to create an attractive stage set for a vibrant economy. That's the only way to keep and attract brainpower. What does this mean? It means such steps as connecting sidewalks, extending green space, using historical buildings to create anchors, establishing gateways. It also means that you need to develop a strategic plan to build out from a position of strength...where your current infrastructure and business activity is located. If you are interested in these issues, read what Raleign is doing to extend development. posted by Ed | Even "unknown" schools can compete in research and business development Ever heard of the University of Central Florida? Probably not. But it illustrates an important point for EDPros. Located in Orlando, the UCF will receive $10 million in state funding to establish a photonics center of excellence. The Florida Photonics Center of Excellence (FPCE) will focus its research activities on nanophotonics, biophotonics, ultra broadband wavelength division multiplexing, advanced imaging and 3D displays...in other words, some sophisticated stuff. And here's the point: Even small colleges and universities can establish the core assets to be a significant research anchor for business development. posted by Ed | Asia is not just low cost labor anymore Monday, March 24, 2003 If you think Asia is simply a vast pool of cheap labor, think again. Most major Asian economies -- Singapore, China, Hong Kong, India, South Korea -- have active and successful technology incubation programs. Here's a good review. As these technology economies develop, we will be facing additional competitive pressure on the higher end of the wage scale. For example, China has a well-established incubation program, and the sheer size is mind-boggling. In Beijing alone, there are 68 universities and 232 research institutes in its technology zone. Legend Computer, the largest PC producer in China, is the product of this system of business development. The Legend Group was started in 1984 by the Chinese Academy of Sciences, and it now dominates the Chinese market with a 27.7% share. Here's a profile of Legend from Wharton Business School that illustrates what we're up against. After securing its base in China, Legend is now making plans to move into global markets. posted by Ed | Is gambling economic development? The short answer is: No. I've spent a good deal of time exploring the details of gambling in Shreveport, LA. Shreveport is the largest gaming market in Louisiana, because it draws heavily from Texas. With my work, I have gotten an inside look at the financial operation of casinos. Here's a rule of thumb: unless your gaming district is relying on "tourists" (defined as people outside your regional economy) for at least 60% of total gamblers, there's no way that a gambling boat helps you. More money is flowing out of your economy than is flowing in. (That calculation includes supplier purchases and wages paid for the new jobs.) Even with a high proportion of tourists, I vote against gambling. There are a lot of other costs that are difficult to calculate. In Shreveport's case, for example, organized crime has a heavy influence on local politics. Here's one side of the debate going on in Milwaukee. Here's another from Minnesota. And another from Massachusetts. posted by Ed | Charlotte adjusts to global competition Here's a good article exploring how the Charlotte region is trying to adjust to global competition. The underlying message: building brainpower is the only way to prepare for the uncertainties ahead. That includes building up research universities, as well as promoting education among displaced workers. posted by Ed | How do you revitalize a downtown? Saturday, March 22, 2003 How do you revitalize a downtown? Mixed-use buildings, with a mix of apartments and retail, represent the trend spreading across Southern California downtowns. The candidates for downtown living include young people born in the suburbs after the early 1980s, empty-nesters and seniors. Families are far less inclined to move downtown. Here's a good article that discusses these trends. posted by Ed | Missouri releases its "Blueprint" Last week, Missouri's Department for Economic Development posted the state's new "Blueprint for Prosperity and Jobs''. Governor Holden released the report earlier in the month. Developing the "Blueprint" started with Governor Holden's Economic Prosperity Summit in April 2001. The report tries to move Missouri's economic development efforts away from traditional recrtuitment efforts..."[W]hat's tried and true today may not be successful in the world of tomorrow." The report bluntly concludes, "Missouri is not equipped to compete effectively in a global economy." The report is short on specifics, but it does include some valuable insights. It says that Missouri's economic development programs have grown to become too unfocused and diluted: "[T]he 'tried and true' programs have been supplemented -- but not replaced -- with new efforts." In addition, the competitive climate has changed, so an incentive-driven economic development policy is no longer adequate. "Business success is not a factor of low costs...anymore -- it is about increasing productivity.." The report redirects the discussion about economic development in Missouri, but it does not include any action plan to translate this new direction into specific policies. Download a copy. posted by Ed | A charter school on entrepreneurship? Friday, March 21, 2003 Here's an interesting idea. A local politician in Florida has proposed to establish a charter school on entrepreneurship. The school would loan graduates financing to start their own businesses. Learn more. posted by Ed | Dayton positions itself in jet engine inspection Dayton has launched an initiative for technology-based economic development that is focused and promising. The goal: establish the regional economy as a leader in jet engine inspection. The capability is built around assets in military research and businesses with strong capabilities in engineering and manufacturing. This is the type of clear, focused initiative that makes sense. The regional economies that will succeed in the years ahead will grow their businesses around "knowledge anchors" in their economy. These knowledge anchors can be anything from sophisticated research facilities to community colleges and downtown libraries. posted by Ed | The arts and economic development The arts can play an important role in your economic develkopment strategy. To compete in today's world, commounities have to be places where people want to visit and live. Brainpower is mobile. Brain drain happens. So, smart communities pay attention to creating quality places as part of their economic development strategy. The arts help define who you are. Your uniqueness. (The exact opposite of sprawl.) Some good lessons were passed along in a recent conference for arts leaders in Phoenix. Leaders in Phoenix see that the arts can play an important role in attracting high powered talent for emerging biosciences and other knowledge-intensive businesses. Here is another plan to recruit artists to smaller communities. posted by Ed | Ft. Wayne launches new strategy Thursday, March 20, 2003 Earlier this week, Ft. Wayne's business community launched its new economic development strategy. Price tag: $20 million. The plan calls for investments in advanced manufacturing, life sciences and aviation and intermodal logistics. In a separate initiative, Creative Fort Wayne, the city is promoting Fort Wayne's "creative economy". posted by Ed | Building an economic future with new types of infrastructure Wednesday, March 19, 2003 One of the ways to figure out new economic development strategies is to observe what others are doing. Michigan and Pittsburgh, for example. Michigan's Department of Economic Development understands that the key to growing technology-based companies is attracting high powered brainpower: top researchers capable of bringing in big research projects and producing good science. To get top researchers, you need a high quality research infrastructure. Michigan has launched the Core Technology Alliance (CTA), a consortium of five Michigan universities and research facility laboratories that provide cutting-edge technology services to the state's life sciences community. The CTA has established five technology service centers in genomics, proteomics, bioinformatics, animal models and structural biology. These facilities are accessible to all Michigan-based researchers. The latest Michigan technology lab is not in Michigan at all, but at the Argonne National Laboratory in Argonne, Illinois. The new lab uses high intensity x-rays to enable Michigan-based researchers to determine biological structures. By providing access to this technology in an innovative, entrepreneurial way, Michigan is recruiting brainpower. In Pittsburgh, Pittsburgh Life Sciences Greenhouse is creating a different type of infrastructure: funding networks to meet the needs of the region's life sciences industries. In 2002, the PLSG created the University Development Fund and the Industry/University Collaborative Research Fund to support the development of new ideas originating from universities and companies. Now the Greenhousse is teaming up with PA Early Stage which provides expertise in managing early stage investments. PA Early Stage is a family of venture funds that makes investments in emerging companies. PA Early Stage invests in companies that are primarily based in the Mid-Atlantic region, with a focus on Pennsylvania. You can learn more from their web site. Pittsburgh Life Sciences Green has partnered with PA Early Stage to manage the Greenhouse's $15 million commitment to pre-seed and seed investments. posted by Ed | Colorado's biotech plan released Colorado is the latest state to come up with a plan to promote biosciences. The plan calls for tax incentives, better technology transfer programs and a privately managed bioscience seed fund. Learn more. Here are the six major recommendations: • Enact a package of tax incentives, to be triggered as the state economy improves, to support the growth of Colorado's bioscience companies. • Review and ensure that state Medicaid policies relating to pharmaceuticals do not discourage building the bioscience industry in Colorado. • Use the Colorado Institute of Technology to work with industry to identify and address emerging bioscience work force needs at all levels. • Create a privately managed Colorado Bioscience Seed Fund and encourage a bioscience focus for angel investor networks. • Enact legislation that would use state tax credits to guarantee investments in a "fund of funds" that would invest in private venture capital companies willing to invest in Colorado companies. • Explore opportunities to establish plant- and animal-based pharmaceutical and neutraceutical production within Colorado. posted by Ed | Simple ideas that work Sometimes we forget the simple ideas that work. A competitive economy needs quality places...places where people want to be. That's why development of commercial districts, downtown development initiatives and Main Street programs are so important. If you are an EDPro involved with downtown or neighborhood development, remember the effectiveness of voluntary business associations. Here's a good example from Milwaukee. Voluntary associations can evolve into business improvement districts, in which businesses assess a tax on themselves to fund improvements. posted by Ed | Why is Indiana slow to grow? Monday, March 17, 2003 The Indianapolis Star has a good series exploring why Indiana's cautious culture has slowed growth. Local culture has a big impact on how easily leaders understand opportunities and accept change. The series includes a good, simple comparative database for Indiana's counties. EDPros can use the public awareness that comes from a series like this to support continued investment in ED programs. posted by Ed | Broadband survey underway in Central Maine EDPros in Central Maine are undertaking a research project on the availability of broadband service. If you are thinking about a similar project in your area, you might contact them and find out what they're doing. posted by Ed | Sounds reasonable to me Saturday, March 15, 2003 Life is never dull for EDPros. We deal with the fringes of the market. A city councilman in Shreveport once asked me to support a "developer's" proposal to construct an entertainment complex in the Red River using pontoons. (The same technology, I was told, that the Army Corps of Engineers uses.) How about a pet cemetery for an industrial park? Sounds reasonable. posted by Ed | Web Watch: Web-based business mentors Here's an innovative pilot program to watch: Called MicroMentor, the initiative connects owners of very small businesses - called microentrepreneurs - to individuals who have successfully navigated business ownership in the same industry. An initiative of the Aspen Institute, MicroMentor is funded through grants and relies on volunteer mentors so participation in the program is free. posted by Ed | Iowa's Chambers propose a comprehensive 10 year ED strategy Earlier this week, Iowa Chambers proposed a 10 year, $830 million economic development program for the state. Entitled, "A Balanced Approach", the plan calls for major league tax reform, a mix of ED investments, improved marketing, and a focus on three clusters: life sciences, advanced manufacturing and "information solutions". One interesting idea is the creation of a statewide network of commercialization centers. In this regard, Pennsylvania -- with its Ben Franklin partnerships -- would be a good model to follow. Read more details. posted by Ed | Tricky politics of regional economic development within a state Friday, March 14, 2003 Tennessee, South Carolina, Pennsylvania and Massachusetts all have new governors, and all of them have launched initiatives to define regional objectives for economic development within their state. Governor Bredesen in Tennessee is looking to his newly created Jobs Cabinet to define regional approaches. In Pennsyvania, Governor Rendell started holding regional summits shortly after he got elected. He called on regional leaders to submit a "wish list" for state action. In South Carolina, Governor Sanford is launching a regional cluster analysis with Michael Porter (due to be completed, I'm told, in the summer). Massachusetts' Governor Mitt Romney is the only one who appears to have tripped on a few political wires. His regional economic councils are being criticized for rounding up the usual suspects ignoring some key constituencies. (That's not his only headache. Gov. Romney's proposal to restructure the Univeristiy of Massachusetts -- in order, in part, to make it more flexible for regional economic development agendas -- is being trashed as a "dismantling" of UMass. Welcome to the brass-knuckle world of Massachusetts politics.) My bet goes on Bredesen and Rendell. They are both former mayors of big cities. They understand the complexities of identifying and integrating political agendas. For this reason, they are most likely to be successful in defining regional approaches that work. posted by Ed | Kentucky's enterprise zone program is fading In another sign that old approaches to economic development are fading away, Kentucky's program of enterprise zones is running into legislative troubles. The trend toward performance-based ED -- keeping score -- is gaining momentum. posted by Ed | Northwest Pennsylvania moving on e-business EDPros in Northwest Pennsylvania are shifting gears to a more entrepreneurial approach to economic development. A new Center for eBusiness will focus on improving the absorption of information technology by area companies, as well as encourage the development of new technology-based clusters. Read more here with some additional background on Gov. Rendell's approach here. You can explore the e-Business center through its web site. Although the site is unpolished for an e-business initiative, it does focus on a critical, emerging dimension of economic development: e-business. The Europeans have been far out in front of EDPros in the U.S. in focusing on e-business opportunities. But this will be changing, as EDPros develop more focused business expansion and retention programs. (Over time, we'll even lose the term "business retention and expansion" and instead focus on the underlying processes of innovation and entrepreneurship.) posted by Ed | What not to do department Thursday, March 13, 2003 So I'm in the middle of surfing the web, looking for interesting stuff. I come across an article announcing a new site for promoting investment in Puerto Rico. "Hmmm. Looks interesting..." So I click. Up pops a web site with a news feed. Here are some of the headlines: "McClintock accuses Calderon of extorting mega stores" (That's Calderon, as in Governor Calderon) "Senate approves report on statistics manipulation" "More charges filed against Cruz Mercado" "Calderon defends taking private plane for trip to Panama" "Police arrest 1,317 in mega raid" "Justice files charges against Freddy Valentin" True. posted by Ed | Web Watch: New site for New Market Tax Credits The Department of Treasury is announcing the first round of New Market Tax Credits tomorrow. In anticipation of the event, a coalition of development finance organizations has launched a new web site to explain the benefits to investors. (Basically, the credits enable investors to receive 39% of the amount invested, plus any return from the underlying investment...a pretty sweet deal.) If you would like to learn more about this program, start here with this news release. It provides a good overview. But don't expect to get in at this late date. The web site is really designed for investors. It will help the community-based financial services organizations that get the tax credits market to these investors. posted by Ed | Entertainment clusters and downtowns A number of you have asked me to keep an eye on economic development issues facing downtowns. One of the ways to build a downtown is by focusing on entertainment. Austin is a good example of a city that has capitalized on building an "entertainment cluster". Here are three good articles. At the same time, not every city is Austin. What then? Well, a new group of young people in Cincinnati, Cincinnati Tomorrow, has some suggestions. Visit their web site to learn more. You can also download their recent report...although, fair warning, it's a whopping download at 12+ MB. posted by Ed | Early childhood education as an economic development issue At long last, early childhood education is emerging as an economic development issue. I first encountered the importance of early childhood education as author of the 1998 Commission on the Future of the South report. Despite wide political differences on the Commission, the chair, former Kentucky Governor Martha Layne Collins, fashioned unanimous agreement around some basic propositions: "Workforce development starts with a pregnant mother"; "Every state should offer full day, everyday kindergarten"; and "Every child should read and comprehend well by the 4th grade". You can download a summary here. The Commission report touched off new interest throughout the South on the role of early education as an economic development issue. So, for example, North Carolina, Kentucky, South Carolina and Georgia have all taken steps to upgrade early childhood education. Then, last year, the Washington-based Committee for Economic Development recommended pre-school education for all children. You can download their report here. Today, the economics writer for the Toronto Star concludes, "...possibly the most effective economic development tool is to invest in early childhood development, when the trajectories for learning and health are being set." Read more. He draws attention to a report in the latest issue of fedgazette, a publication of the Federal Reserve Bank of Minneapolis. This research underlines the economic returns from early childhood education. The researchers calculate the public real (after-inflation) rate of return at 12 per cent and the combined public-private real rate of return at 16 per cent. And in Kansas City, proponents of early childhod education are drawing attention to the importance of this cluster as an industry. Today, they are releasing a report, ""Investing in the Child Care Industry: An Economic Development Strategy for Kansas". This focus on early childhood education is grounded in the tremendous explosion of research on brain function. An important conclusion of this research is that a infant's brain develops connections at a furious rate. As we age, the rate of formation slows (which is one reason why adults have more difficulty learning languages than children.) At the same time, the the brain is remarkably "plastic", continuously changing throughout our lifetimes. It is the ultimate "use it or lose it" machine. If you want to keep up with developments in this field, bookmark this site or spend some time exploring this PBS site. We are in a Brainpower Economy, so it makes good sense for EDPros to learn something about how our remarkable brains develop. posted by Ed | Kentucky's twisted history with Coldstream Research Campus A good story on the University of Kentucky's Coldstream Research Campus underscores how difficult it is to translate univeristy research into business development. Lesson #1 of Coldstream: Your project has to be someone's Number One priority to pull it off. You need strong political and business leadship over a number of years. Your leaders need to be capable of providing long term vision and short term focus. Lesson #2: You need a dedicated team of professionals (and an adequate budget) for a project this complex. Pick-up teams don't cut it. Your team should include professionals with backgrounds in technology transfer, business development and real estate development. Lesson #3: Manage expectations (and cut the gibberish about Research Triangle Park). Even the oldest university-based technology transfer organization, Wisconsin Alumni Research Foundation, has demonstrated modest success: 92 companies based on technologies developed at UW-Madison are currently in operation; they employ an estimated 1,735 people. Lesson #4: Build the university's research base before you worry about bricks and mortar. The only reason Coldstream has a chance now is that Kentucky has gotten serious about building its research base by recruiting top talent. You've got to be capable of producing good science before you can develop solid businesses. That requires a critical mass of researchers, a focused research plan, and "state of the practice" technology transfer policies. posted by Ed | Pittsburgh launches global initiative Wednesday, March 12, 2003 Pittsburgh's Regional Alliance is taking important steps to build its global connections. When you compare U.S. economic development organizations with those in Europe or Asia, one feature stands out. In the U.S., export promotion is not highly valued. In the U.S., good trade promotion programs are few and far between. Pittsburgh's start makes sense. It is modest and low cost. They have a new newsletter (GlobalPittsburgh News) a new networking group (GlobalPittsburgh Network) and a new web site (www.globalpittsburgh.org). If you are interested in moving ahead in this area, explore the U.S. government export portal (where you can get slightly dated metro export statistics), a basic guide to exporting (where you can learn the lingo), or, better yet, a good foreign trade promotion portal. If you are involved in global business, or just starting, this book should be on your shelf. Cultural sensitivity matters a lot, and you should appreciate that people view just about everything from different vantage points. (EDPros in Kentucky got one at their recent annual meeting.) posted by Ed | Practical steps to building an entrepreneurial economy Littleton, CO stands apart in economic development. Following a strategy of "economic gardening", the city nurtures existing firms and start-ups. It turns its back on offering incentives. Littleton's approach offers sophisticated information services to local firms in a way that encourages them to expand. In this way, it builds an entrepreneurial climate. (I don't like the term "economic gardening". To me, it belittles an important strategy.) Thanks to the work of people like Anna Lee Saxenian, we have long known that economies based on networks show more resilience and potential for growth. Sexanian reached her conclusion by being one of the first researchers to examine what was really going on in Silicon Valley...how the Valley's economy depended on a climate of entrepreneurship to grow. But Silicon Valley is unique, and it leaves EDPros with little guidance about how to build an entrepreneurial economy. That's where Chris Gibbons, head of Littleton's Business/Industry Affairs Department fits in. He's the EDPro who has taken a broad concept -- "entrepreneurial economy" -- and translated it into practical steps. His critical contribution, in my opinion, is a focus on valuable market information as a key element of an economic development infrastructure. By stimulating information flows, Gibbons created an environment in which economic networks grow. (Gibbons has deeper insights into the connections between economic development and chaos theory, but I'm not smart enough to figure all that stuff out. You don't need to understand that to pick up on what Littleton is doing.) Most EDPros flop around with "business retention and expansion" programs (another inadequate term...too stale). Littleton's approach shows us that rather than being the "back water", BR&E strategies really form the core of community competitiveness and economic prosperity. Today's Rocky Mountain Times provides a good background on what Chris has accomplished. And the Littleton web site provides even more detail on the New Economy Project. Not every community can follow Littleton's recipe. That's not the point. Take some insights and adapt them. Maybe you don't need all the information power that Littleton has assembled. But you do need to think about improving flows of valuable information, you need to understand what type of information is valuable in your high growth companies, and you do need to think about how to identify and focus on these faster growing firms. Most important, you need to adopt Littleton's attitude of innovation and experimentation. If you are interested keeping up with what Littleton is doing, subscribe to their Econ Dev mailing list. posted by Ed | Michigan moves on "small tech"...but it's not alone Tuesday, March 11, 2003 Michigan is moving aggressively to establish a competititve position in "small tech" -- micro and nano technologies that are emerging as a new industry. "Small tech" involves devices so small that you cannot see them. The technologies range from "molecular machines" to MEMS (Micro-Electro-Mechanical Systems). Read a summary. Explore the field in more depth. Or, look a molecular pump. Yesterday, the Department of Economic development announced the launch of a new web site, Michigan Small Tech. It is produced in cooperation with Small Times. Explore this web site to see what the state is doing to build this cluster, beyond building a very high quality web site. For example, the the state has promoted the development of an industry association. The association, in turn, offers a Professional Service Provider Program (MPSPP) that connects small tech industry members with qualified vendors that are committed to small tech growth in Michigan. The vendors are encouraged to provide low, or no cost services. Michigan is not alone. Other regions are also moving in small tech. In addition to Michigan, Texas (Houston, Austin, San Antonio) and New York (Albany) are quick "out of the box". New Jersey is trying to leverage a Nanotech Consortium off Bell Labs. Traditional centers of electornics development -- California and Massachusetts -- are also involved. Here's an article on developments in Houston. In New England, the Massachusetts Technology Collaborative (MTC), a state-funded agency that supports technology industries, is working on the Massachusetts Nanotech Initiative. And, as I noted in an earlier post, Greater Austin-San Antonio Corridor Council announced a major economic development initiative: a technology summit that will link together the mushrooming nanotech and infotech, and biomedical and biosciences sectors of the Greater Austin-San Antonio Corridor. In addition to a research base and business development networks, nanotechnology business development needs specially trained workers. At the end of the day, nanotechnology will happen where the work force is available. (That will include places like Singapore, as well as locations in the U.S.) posted by Ed | Is Startup Florida Inc. a new model? Monday, March 10, 2003 Here's another interesting model to watch. Startup Florida Inc. represents a privately-driven approach to developing early-stage companies and accelerating established businesses. Twenty investors have each put $100,000 in a pool to provide early stage investment to start-up technology and other companies seeking funding. Investment is only part of the puzzle. The company also manages a consulting branch, Startup Florida Partners LLC, to look for, evaluate and nurture companies. In addition, the cmpany manages an incubator. Learn more. posted by Ed | What are the options for Oregon? Oregon is facing a tight budget crisis, and that limits what the new governor can do to accelerate economic development. Oregon's struggling economy depends on big box electronics factories, and these companies have been moving overseas for lower labor costs. Here's a good review of the constraints facing Governor Kulongoski's strategy, Governor's Recovery Plan for Oregon Workers (GROW). posted by Ed | Rural entrepreneurship in Western North Carolina To survive and grow, rural economies need stronger entrepreneurial networks. Luckily, there are a lot of good examples of regions working in this direction. Let's start out by looking at what is happening in Western North Carolina, where business leaders are making some big strides in building entrepreneurial networks. AdvantageWest, the western North Carolina public/private economic development partnership, has launched the Mountain Council for Entrepreneurial Development. AdvantageWest modeled the Mountain Council after the successful Council for Entrepreneurial Development, a Research Triangle group that has received national recognition for nurturing entrepreneurs. MCEC is headed by Jim Roberts, a veteran of several previous entrepreneurial networking efforts in North Carolina. Roberts believes the western part of North Carolina is very attractive to Generation X workers, the creators of the tech revolution, because it offers a laid-back, hip mountain culture. "I want to explain the potential of western North Carolina to people who just think it's a tourist destination," he says. MCED works closely with the Blue Ridge Angels Investor Network, or BRAIN, (www.blueridgeangels.org), the region's universities and colleges, private firms and local entrepreneurs. MCED also partners with the Small Business and Technology Development Center (www.sbtdc.org), the Mountain Microenterprise Fund (www.mtnmicro.org), and local chambers of commerce to enhance entrepreneurial efforts already underway. posted by Ed | Universities are starting to define "innovating regions" Universities are beginning to define "innovating regions" -- they are starting to forge collaborations that are beyond the scope of what EDPros can manage on their own. The message to EDPros is simple: We need to start thinking and acting regionally...if we do not, we will become increasingly irrelevant. Take the case of Ohio Valley Affiliates for Life Sciences (OVALS). Four universities -- University of Cincinnati, University of Kentucky, University of Louisville, and Wright State University -- have joined together in a collaboration to build life sciences in a region that stretches on both sides of the Ohio River. It ties together four metro areas: Lexington, Louisville, Cincinnati and Dayton. This approach makes sense. The first step in biotech development is to build a research base capable of producing good science. None of the universities involved are tier one research universitites, like Johns Hopkins or Yale. By establishing on-going collaborations, each university can focus and develop its research programs while opening the door to larger scale research projects. Learn more. Building the research base is only a first step. A more complex challenge involves building leading edge technology transfer policies and business development networks. That's where the real work of business development begins. University research collaborations are clearly one important trend in regional economic development. In New England, Northeastern University, the University of New Hampshire and the University of Massachusetts Lowell have pooled their resources to try to convince NSF officials that they should be the site of the agency’s next Nanoscale Science and Engineering Center. But let's not obscure an important point. In a brainpower economy, post-secondary institutions are critical to our success. For their own survival, postsecondary schools are becoming more entrepreneurial and regionally focused. EDPros need to recognize this profound shift and take advantage of the new opportunities. posted by Ed | Building rural entrepreneurship Rural entrepreneurship and innovation represents another major trend EDPros should be watching. A good article from Oregon points out that rural innovation is alive and well. An important point: Rural innovation provides fundamentally different challenges and opportunities to EDPros than innovation in more dense metro economies. The National Governors Association recently issued a report on best practices for state policies to promote rural economic development. This report emphasizes the importance of rural entrepreneurship, and it cites innovative practices in Kansas, Nebraska, Kentucky and Wisconsin. The Missouri Center on Rural Entrepreneurship provides some good resources on rural entrepreneurship. Look over the News section. Here's an overview from a presentation to the National Governors Association and a more recent report from the Center. Another important approach to innovation relies heavily on community colleges. The Rural Community College Initiative focuses on building networks based on community colleges. Here's an article from last week on Big Spring, Texas. You might also check out the presentations of the Southern Rural Development Center. This field is still young and largely unexplored, and it still needs both focus and practical tools for EDPros. posted by Ed | Indiana's plan moves a step closer Sunday, March 09, 2003 If you are intersted in keeping up with Indian's new economic strategy as it passes throough the legislature, here is the latest article. A key feature of the plan involves "securitizing" tobacco payments and investing them in a series of economic development initiatives. posted by Ed | What is the impact of information technology on economic development? Friday, March 07, 2003 A new report from the Brookings Institution tries to answer that question. The answers are surprising, but understandable. The best way to think about regional clusters is not clusters of companies, but clusters of functions (like data processing or distribution, for example). Different functions can be gloabally connected easily. That opens the door for regions to focus on key niches and to build global networks based on these functional niches. Perhaps most significantly, the report signals that the old formulas of recruitment -- target relatively broad industry groupings -- are running out of steam. The researchers interviewed the CIOs and information architects of 28 companies in five metropolitan areas and found that even "old" manufacturing industries were accelerating their use of information technology to automate tasks and scatter operations around the world. posted by Ed | Tennessee forms a Jobs Cabinet Governor Bredesen has established a Jobs Cabinet. The Cabinet connects seven state departments and several private organizations to brainstorm new approaches to create jobs in the state. Jobs Cabinet will put together regional job-creation strategies, undertake county-specific reviews of economic development, re-assess state work force training programs, and create an “economic relief strike force” to help communities which experience mass layoffs. posted by Ed | Here's a summary of North Carolina's ED strategy North Carolina's Secretary of Economic Development provides a concise outline of the state's economic development strategy. posted by Ed | "Innovating regions" is an emerging growth strategy in the U.S. As EDPros, we are going to be hearing more and more about "innovating regions" in the years ahead. A popular term in Europe and Canada, "innovating regions" are places that support faster growth, innovating companies. (See, for example, the European Union's web site on Innovating Regions or Canada's Innovation Strategy, launched last year.) You can see elements of this strategy emerging in the U.S. Just this week, Greater Austin-San Antonio Corridor Council announced a major economic development initiative: a technology summit that will link together the mushrooming nanotech and infotech, and biomedical and biosciences sectors of the Greater Austin-San Antonio Corridor. One of the first elements of defining an innovating region is to frame the opportunities. You start with an audit of the available resources. By building networks around these resources -- relationships among businesses, universities and government agencies -- you next define opportunities for business development. That's what this summit seeks to do. Explore the Summit web site to learn more about how to define an "innovating region". posted by Ed | Web watch: Women Entrepreneurship in the 21st Century Thursday, March 06, 2003 "...a new Web site to help businesswomen effectively and efficiently access federal government resources." Include it in your business resource guide. Learn more. posted by Ed | Bredesen outlines the map of economic development in Tennessee Governor Phil Bredesen of Tennessee this week addressed a technology conference in Nashville, and he pointed out the new directions he hopes to take Tennessee economic development. Among his messages: technology-led growth will form a key component of his strategy. He will focus on regional strategies ("It's such a big state, and one size definitely doesn't fit all" ), and he will emphasize education ("I'm a firm believer that all roads in economic development certainly go back to education.") Bredesen, a physicist by training, made his fortune as an entrepreneur, launching HealthAmerica Corp. More recently he founded an educational software company called Bredex Corp., which McGraw-Hill Digital Learning bought last summer. Another good quote: "I guess I believe that all successful businesses have something in common: a long-term vision and a short-term focus." Bredesen will be an interesting governor to watch. In his inaugural address he proposed following a third way to govern: "One way is the expansive view: More revenue, more responsibilities for government. The second is a more restricted view: Cut expenses, fewer services." The third way focuses on the politics of the possible: "Let’s leave behind the predictable and stale debate between liberals and conservatives. Let’s take the resources that we have, and prioritize, and manage, and focus our energy on just doing things that count—on real results." This third way is very much in line with what effective EDPros do. posted by Ed | North Carolina: Education is Economic Development Amid tight budget times, North Carrolina is setting the right priorities. In a brainpower economy, education is economic development. Here are some excerpts from Governor Easley's State of the State address. He articulates messages that every EDPro should know: "...the most important ingredient to attracting new jobs is a prepared workforce. Those businesses that look here -- who want to invest hundreds of millions in North Carolina -- demand a skilled workforce. "The North Carolina workforce of today, tomorrow, and the next decade will be highly skilled. They know the investments we are making, and they know they are paying off. "Now, contrast that with the majority of other states that are cutting education -- 29 are cutting higher education and 23 are cutting K-12, while we are investing more in education. "Our strategy is simple: In the future, the most skilled workforce in America will be found within the borders of this state." The Governor cites the state's commiment to both pre-school and character education as evidence that North Carolina is expanding its commitment to education while other states are cutting back. posted by Ed | Florida will put more emphasis on rention and expansion In one sentence his State of the State address, Governor Jeb Bush of Florida indicated an important shift in focus for Enterprise Florida, the state's economic development entity: "We must also shift our economic development efforts -- including through Enterprise Florida -- to focus more aggressively on business retention and expansion." posted by Ed | Investing in a new type of infrastructure Wednesday, March 05, 2003 Maine now leads the country in investing in a new type of economic development infrastructure: computers and software in schools. The New York Times (free registration required) reports on the success of former Governor Angus King's initiative to bring iBooks to every seventh and eighth grader in Maine. "Attendance is up. Detentions are down. Just six months after Maine began a controversial program to provide laptop computers to every seventh grader in the state, educators are impressed by how quickly students and teachers have adapted to laptop technology." The state's ambitious program triggered another windfall. In November, representatives of EDS announced a $400 million gift of state-of the-art software tools to Maine’s 7th 12th graders, their teachers, to the Maine Technical College, and the University of Maine Systems. To understand the economic development implications of this gift, the Economic Development Council of Maine devoted a portion of its mid-winter meeting to learning about the scope and impact of the EDA initiative. As EDPros, we need to start thinking through the new types of infrastructure that we need for our economies. Broadband is just part of the picture. As Maine's program shows, a good case can be made that our economic development infrastructure should extend to providing laptops to students. The payback comes in improved lifetime earnings. Here's an example of how that works. posted by Ed | Learn more about broadband Broadband access is becoming an economic development necessity. If you do not know enough about broadband, here is a site that can explain it to you. posted by Ed | Listen to that sucking sound Remember Ross Perot's famous line that the "sucking sound" you hear is the jobs moving South because of NAFTA? Well, that higher pitched sucking sound you now hear are jobs being transferred to India over fiber optic cable. This article gives you a good background on the emerging role of India as a back office to financial institutions. But it's not just the big companies -- American Express, Citigroup -- that are in this game. Two weeks ago, I talked with a partner in a mid-sized CPA firm in Charleston. That firm is now using an Indian company to key tax returns overnight at about 10% of the cost of doing returns in Charleston. And it's not just back office operations. Call centers are also transferring jobs to India. Here's an Internet site for one of these centers. As the site notes: "In a call center operation, manpower typically accounts for 55 to 60 percent of the total cost. In India, the manpower cost is approximately one-tenth of what it is overseas. Per agent cost in USA is approximately $40,000 while in India it is only $5,000." And call centers...often thought of in this country as low wage service jobs...are shifting to higher end centers in India that manage all aspects of customer relations. (U.S. call centers, faced with the competition, are trying to react.) It's no time to panic...but India's emergence does underscore one important point. In the global economy, brainpower is what matters. As EDPros we have largely stood on the sidelines in the education reform debate. We can no longer afford to sit around. We need to start delivering clear and concise messages. Every child needs to read by the fourth grade. Dropping out of high school is unacceptable. A high school education is no longer a ticket to the middle class. Every one needs a K through 14 education. posted by Ed | Expand collaboration (hold the tax breaks) Tuesday, March 04, 2003 What does it take to stimulate technology-led economic development? Wisconsin is finding out what doesn't work -- technology zones that offer tax breaks to start-ups. (Major flaw: start-ups don't pay taxes.) This mistake is about to be repeated in Pennsylvania, where Governor Rendell proposes tax free "innovation zones" around universities. In fact, the best approach states can take is to ease the restrictions on university-industry collaboration. That's what proponents of South Carolina's reforms are doing. These obstacles (inadequate release time for faculty, limits on outside income, cumbersome licensing policies, inflexible procurement regulations) appear arcane, but they are real...and they matter a lot. In Oklahoma, the Board of Regents has weighed in on improving connections to business, although they have yet to propose anything specific. Major organizational reforms (like those proposed in Massachusetts and New Jersey) can also work to make colleges and universities more flexible and adaptable to the demands of economic development. Kentucky is good evidence of that. But these efforts are politically costly and take a lot of time. On the local level, Indianapolis is off to a promising start with a life sciences initiative that focuses on building habits of collaboration. And in Pittsburgh, Carnegie Mellon and the University of Pittsburgh formed the CUBE initiative (Connecting Universities with Business Enterprises) to accelerate technology commercialization. This article gives you a good idea of the "nuts and bolts" of technology-led economic development. posted by Ed | Managing collaboration among economic development organizations Monday, March 03, 2003 Economic development organizations (EDO's) are no different than the rest of business or government...over time, they fragment and bloat. Improving how EDO's operate and collaborate will be one of our biggest challenges as a profession over the next decade. EDO's arise for all sorts of reasons. Some are designed to manage real estate. Others form inside chambers. Still others are based in city or county governments and are very sensititve to political agendas. The motivations and competence of the EDPros in these organizations vary widely. Fragmentation carries heavy risks. EDO's cost money to run, and if they are not managed effectively, money gets wasted, progress slows, and infighting breaks out. If these EDO's are not carefully harmonized, everything can start to break apart. (This is what is happening in Wichita now.) So, it makes sense to pull out a clean sheet of paper, map the different organizations in your region and what they do, and figure out if there is a better way to manage. That's what Erie County, Pennsylvania is doing. Cost savings can be significant. You might find also find that big chunks of your economic development agenda (typically business retention) is falling off the table. (That's what's happening in Charleston, SC, for example.) Most likely, you'll find that through tighter collaboration you can do a better job. As EDPros, our core challenge is changing our mindset. If we continue to think that our main rivalry comes from the next county over, or across the river, or even in the next state, we're cooked. We are competing globally now, and we need to start thinking this way. Managing collaboration is tricky and a continuous challenge. We'll need to get used to it. If we are going to move forward, EDPros need to develop these skills of negotiation, consultation, and communication. One of the leading regional economic development organizations in the country, Greater Phoenix Economic Council is confronting the loss of one of its communities. But Rick Weddle, head of GPEC, has it right: ""We think it's entirely fitting . . . that all our communities are looking at the value we add...We don't shirk from that at all. When those questions are asked, it makes us better." If you would like to start thinking about regional alliances, here's a place to start. It's a proposal in Massachusetts to establish a regional alliance in the Worchester area. The proposal gives you a good structure for outlining a case for a reginal alliance. posted by Ed | South Carolina could push universities to the center of economic development Sunday, March 02, 2003 As EDPros, we are going to have to explore the connections between higher education and economic development. In a brainpower economy, colleges and universities are our factories of the future. More states are focusing on the economic development potential of higher education. Kentucky and Arizona have undertaken reforms. New Jersey, Tennessee, Massachusetts all have major reforms in the talking stage. Governor O'Bannon's economic development program in Indiana puts universities in the middle. (Although last week, the Indiana House, in a dumb move, severely cut his proposal to securitize tobacco settlement funds.) In the months ahead, my bet will be on South Carolina as the state to watch when it comes to connecting higher education and economic development. The proposals under consideration are targeted enough that they may not touch off a political fire storm (unlike New Jersey and Massachusetts), but they are big enough to make a difference. Proponents of an ambitious plan propose to loosen regulation of the state's research universities: the University of South Carolina, Clemson University and the Medical University of South Carolina. If they are successful, they will break the political straightjacket that keeps these universities from creating dynamic technology-led innovations. The most significant proposals include: * Removing the three institutions from governance by the Commission on Higher Education, while creating a research coordinating council controlled by the boards of the three institutions. * Authorizing about $250 million of state bonded indebtedness to be shared by the three research universities, to be matched by private contributions. * Removing a $1,000 cap on bonuses allowed for research faculty. * Allowing private companies to conduct research on university property. Learn more about the South Carolina reforms. These reforms are squarely positioned as economic development initiatives. The Palmetto Institute, a private nonprofit, is pushing these reforms based on a recent report on the competitive position of the state economy by DRI. In addition, the new state economic development director has asked Michael Porter to develop a state-wide cluster analysis. Scheduled completion: mid-summer. Porter's work should provide another push to these reforms. If you feel uncomfortable venturing into this area, get some grounding by looking at your state's report card in higher education. posted by Ed | Figuring out the costs of administering a cluster Saturday, March 01, 2003 Here's one aspect of cluster-based development that rarely gets discussed: the expense of managing the cluster. Four years ago, Ottawa identified seven clusters that powered their metro economy. Industry groups formed and identified initiatives to pursue within each cluster. But without a full time cluster coordinator, progress has been slow. Now, the City is stepping forward to fund positions for three of the clusters. At $60,000 a piece, the expense is not small. (If you figure in other soft costs, like office rent and web site management, the total is more like $85,000 to $90,000 per year for each cluster.) Ideally, this administrative cost should be shared between the public and private sectors to start. In the beginning, the public sector can take on the majority of the costs. But this should shift as the cluster matures and gains credibility. Eventually, the private sector should take over most of the costs of managing the cluster. (From 80/20 public/private to something like 40/60 public/private.) That's the only way to tie the cluster to the market and make sure that the coordinator is creating value for the cluster. From an organizational standpoint, the cluster can start out being incubated inside the public sector, but there should be a plan to spin-out a non-profit corporation. In Youngstown, we are experimenting with a different model. Incubate the cluster management at an Institute at Youngstown State, then solicit industry sponsors to support the activity. Learn more about what's going on in Ottawa. posted by Ed | |
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