New Approaches to Economic Development Strategy

Submitted by Ed Morrison on Wed, 11/21/2007 - 23:56.

Every few months, I get the opportunity to review what I learned by preparing for classes at the Economic Development Institute. For a number of years, I have taught the Advanced Strategy Lab. This class is a four-hour session in which I introduce students (economic development professionals from around the country) to some of the newer thinking in economic development strategy. We spent some of the time working in small groups, as I provide workshop exercises that simulate the strategy sessions in which I frequently participate.

The Strategy Lab serves another important purpose. Within it, I try out new concepts and tools to see if the students find these approaches useful. The class has become a very good opportunity for me to evaluate new approaches to economic development strategy.

Conducting strategy for economic development is a difficult business. Unlike the corporate world, the primary actors in economic development strategy are only loosely connected. There are no lines of authority. No one can tell anyone else what to do. Half the time, when we start, we don't even know all the "stakeholders" in a process.

At the same time, within this civic space, we are charged with tackling some of the most daunting challenges. These are not challenges our own making, but challenges created by a rapidly evolving global economy. It is difficult to figure out what is taking place and how we can respond. We are all struggling with how we can create some agility and foresight to anticipate the consequences of some very fundamental economic and demographic shifts.

Borrowing corporate strategy models

Over the years, I've become convinced that the standard approaches of strategic planning do not work very well in economic development. These models, developed some 30 or 40 years ago, were originally designed to deal with the challenges of managing growth in multidivisional corporations. Beginning about 20 years ago, economic development professionals (more accurately the consultants serving these professionals) began transporting these models to economic development. The basic notion was fairly straightforward: treat a local or regional economy as a multi-divisional corporation with a portfolio of businesses. Use some straightforward analytics and identify your growth sectors. Focus most of your attention and resources there. Sounds simple, but as many of us found, there's a big gap between understanding regional dynamics and doing something about them.

The emergence of cluster models

By nearly 1990s, Michael Porter at the Harvard Business School introduced the concept of clusters, as an extension of Porter's corporate strategy model. As Porter began to develop his concepts on regional economies, it was clear he was on to something: companies do indeed tend to cluster. The insight is not new,though. Concepts of industrial districts have been hanging around traditional economics for a long time.

Porter brought some fresh perspective to an old insight by emphasizing the dynamic nature of clusters. He emphasized that non-business organizations -- government, education, and nonprofit intermediaries -- can play a vital role in aligning resources for competitive firms and regions. Finally, he directed our attention to the ascendency of regional economies. With the growth of global integration, Porter argues correctly, I think, that we need to focus our strategic thinking on regions. To meet the challenges set by the world, we need the resources of a region to compete.

The biggest challenge in applying cluster theory, however, comes in drawing practical implications. We have learned how to identify clusters using location quotients, and new mapping technologies have enabled us to see clusters more clearly. Yet, how do you develop this strategy? Porter's policy recommendations -- both for state policy and for local and regional economic development organizations -- is frustratingly vague.

Part of the problem lies in the fact that Porter's perspective is deeply grounded in the private sector. That perspective limits his view. Like it or not, economic development takes place in a civic space outside the four walls of the firm. Or, if you like, economic development takes place on the boundaries of markets where public returns appear strong, but private returns are too weak to draw enough investment. To capitalize on these public returns, we need collaborations or partnerships -- some publicly-led, some privately-led -- to make these investments.

Why economic development is different

Economic development forms a political economy (in the meaning of that term as it was used in the late 19th century). In short, corporate models do not translate all that well into the economic development arena. For this reason, I suspect, many economic development strategy reports prepared by corporate strategy consultants are relatively weak on implementation. Getting things done in the civic space is a tricky business, and few corporate strategy consultants have those skills. (I reach this conclusion as a one-time corporate strategy consultant.)

Over the past number of years, I've been developing an alternative approach to economic development strategy which I call "strategic doing". It's clear that regional economies are open systems, in which many different outcomes are possible. There is no one optimum point, no final outcome. Instead of trying to identify one point in the future, the real challenges is building civic disciplines that simulate productive patterns of collaborative investment. In other words, we need to find ways to strengthen the ties of collaboration, to innovate in an open system. We need partnerships -- hundreds of them -- translating fresh ideas into something valuable. (By the way, "translating fresh ideas into something valuable" is a good working definition of innovation).

Moving from strategic planning to strategic doing

Strategic doing is designed to build these partnership disciplines. It encourages disparate groups of people to come together and quickly decide on a handful of strategic priorities. It pushes people to focus and translate these priorities into meaningful strategic outcomes that we can measure. Next, strategic doing encourages people to align their resources, to "link and leverage" their assets to achieve these outcomes. Finally, strategic doing focuses on using metrics, not so much to enforce accountability as to encourage learning about "what works".

Can we adopt these disciplines in the contexts of an open system in which transparency -- sharing information and insights -- is the norm? Can we adopt these disciplines in the short windows of time that we spend together in face-to-face meetings? Can we sustain these disciplines over the time needed to implement, learn and adjust? And can we focus these disciplines on really complex challenges like reducing high school dropouts or increasing the number of young people going to college? Can these disciplines of strategic doing transcend organizational boundaries so that we can routinely follow habits that build trust and collaboration? Can we teach these disciplines of strategic doing in order to bring them to scale across many regions simultaneously?

These are all questions on which I'm working right now.

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Thanks Ed

I agree about strategic doing. Where I have seen strategic doing happen in the civic space here recently, most successfully, at the largest scale, has been in defense of the Breuer, where a small number of individuals with no real connections, other than complimentary social interests, the Internet, and personal commitments to strategic doing, became dominant forces against very powerful, "corporate" interests, and won... one battle.

As for all your questions for the future of Strategic Doing, I think REALNEO has proved quite nicely the answers are yes, and that was a major factor in  the Breuer War.

I think many residents of this region will become better at strategic doing as they increasingly awaken to how awful is the world we have created for all. There is no "American Way" that works in today's failed human existence. I've thrown out all my old economics textbooks and case studies as none plan strategy for gracefully meeting the end of human life on Earth as we know it, if not completely.

As man-made catastrophic states become commonplace, and disrupt ways of life for 1,000,000,000s of people, the public becomes increasingly freaked-out,  desperate, and dead. Have NEO leaders developed long-term strategies to address such matters, besides space travel for the rich?

What I'm working on is understanding the global economic impacts of climate change, already in motion. For a world of people surfacing from lifetimes of ignorance and denial, the next few decades will see destruction of more than glaciers, as entire populations must shift, die and revolt, and prayers go unanswered. These will be very sad, rough times ahead and we are not talking nearly enough about that yet.

What economic development visionaries in NEO have the courage to sit down and model inevitable and controllable changes to the NEO economy related to global warming? Who wants to help steer NEO on the best possible course to the best possible end?

Well, strategic doing on this begins here and now. on REALNEO. I suggest we begin with understanding the long term impact of pollution on NEO... talk about it over feast or famine, today, and share your thoughts here and everywhere. Do.

Happy Thanksgiving to all.

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you know what I'd like to strategically do?

I'd like to have a gathering again of some of the brilliant minds that gathered in the PBL during REI. I'd like to revisit and recollect those ideas, hear where they are today and re-establish regular meetings. The internet is a great tool, but the energy working in the room is important too from time to time. What have the people who benefited from REI been doing strategically since its demise? What have others from Defrag and I-open done in the meantime? What formulas and suggestions can Ed impart for us all as we move forward? Can we get a meeting? Can we lay out the big issues and see who is tackling them and how? Can we see where we overlap and feed each other?

On this Breuer thing, I have been astounded that the environmental community has not yet clicked in with the energy issue. This is not just about history and culture. It is not just about our immigrant legacy, but about our energy crisis and our creative and ego crisis. When you hear Pete Van Dijk speak about regionalism in architecture, you see that this is a worldwide issue -- what is appropriate in what climates as far as buildings? What do we need to consider in terms of infrastructure and how can is be green for our time and for our region. The geography must play a part and it is changing. Climatologist’s research can help here, and this is a factor that should be considered in every project, every new business, and every homeowner's next decision from raking or not raking leaves to light bulbs. For developers, to adaptively reuse what we have and make it more earth friendly, for saving greenspace and biological and botanical habitats, for saving water resources, using gray water and getting ahead on water and energy conservation issues; for the region being on the bleeding edge of renewable energy technologies and being the suppliers not just the last adopters.

 

Can we get a meeting to connect with those who are working this agenda? There might be more of us than we know currently. We might not all agree, but a glance at the big picture might be refreshing as an interim "up for air" opportunity from time to time.

What environmentalists?

What environmentalists, besides Citizen Hauser. And, where was the supposed environmental community when he needed support. I believe we are half a generation from having a real global environmental movement...  my 14-year-old's generation will so kick our fucking E4S asses for fucking up their planet....

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well nobody is perfect but

Thank god for the Shaker 11 and for the folks who determined to add parkland to the Emerald Necklace and the CVNP, to the people who are cultivating urban gardens and retrofitting homes with green technologies like you and Bill McDermott, for Zebra Mussel who has been cleaning up after polluters since he was 14. How about Tori Mills and Jim White and the Conway brothers? Ryan McKenzie and his car sharing business? Phil Lane? Eco Village? Greater Ohio?

And I know you all like to crap on David Beach because he is soft spoken, but he has had an astonishing effect on environmental awareness in the region along with David Orr. There are a few people out there pushing this agenda. Stephanie Spear makes a dent in our conciousness with Earthwatch Ohio and Stu Greenberg with Environmental Health Watch. And Paul Alsenas who engaged Rocky Mountain Institute.

I have had a tough few months personally and I prefer not to go to the "this is all shit and we will all die shamed and alone" place. I need to rebound and so does the region. Can I get a hopeful strain going here? Anyone? How's that green mansion coming along there in EC, Norm? Are you ready to do tours for would be intown greenhome renovators? I feel the frustration, but I have to get to the otherside of it. There are people pulling for the good, even if (I agree with you) Ed is the standout.

It would be helpful to plot people's positions

Sorry Susan, but Thanksgiving and Global Warming reports put me in a very real mood and I want to talk about that... but I'll try to share the joy of flowers and puppy dogs along the way.

I didn't consider myself an environmentalists until very recently, when I started paying attention to the world and speaking out as broadly and openly as possible about environmental issues important to me, and in the process I have changed my way of living to help better the environment, and will do more as I may - this is one of my greatest priorities in life.

You, Jeff, Bill, Zebra, Laura and others on REALNEO stand out in my space as similarly-determined and outspoken on important environmental issues, and you all bring to me the most valuable dialog on the subject I know of, here.

The best hyper-local environmentalists I know of around here are focused on Mittal but they certainly don't have the level of support they deserve, and are drowned-out by industry funded media and sustainabillies at every turn.

I work with Stu and EHW on lead poisoning and they are hugely important - and active in the public space - but they are not impactful enough in the virtual space, and I will address that with them. That has been a major challenge in addressing environmental health issues in NEO, as this is such a corrupt, political region that any organization seeking money from government, industry or industial-foundations in NEO will not touch pollution. To too great an extent this is how environmentalism works in NEO, following big money. The only reason the Shaker 11 succeeded was they were of some of the biggest money in the world.

I haven't heard much from Paul since the Commissioners shut down all intellectual explorations of the North Bridge allignment... what was his position on the Breuer? What were the positions of other environmentalists on the Breuer? Whiskey Island? Where do they stand on Mittal? Lead poisoning litigation? In writing... what do they personally think? If it's out there, I'm missing something and want to work on getting a better understanding of who has what positions on what issues so we can address those issues collectively, openly and effectively.

What environmentalists or others who are not currently part of the Greater Cleveland Lead Advisory Council would like to become involved? We need your help and support.... and I need some fresh blood on my sub-committee, which is Infrastructure and Sustainability. Let me know if you are interested here or at norm [at] realneo [dot] us... this does require some commitment of time.

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Norm and Susan:

Norm and Susan:

Your comments to provoke several thoughts.  First, our group at I-Open is talking about how we might move ahead in Northeast Ohio on a regular basis.  We all miss the energy that we had at REI, and I think the approach of getting together on a regular basis makes a lot of sense.  So, we are thinking about a regular Saturday morning event in which we explore different opportunities for the region. This would also give me an oportunity to share what I am learning from other regons around the country.

A lot has been happening with the development of Open Source Economic Development and one of the key tools, the discipline of "Strategic Doing".  Next week, I will be heading out to Seattle where the Department of Labor is conducting its first transformational forum.  About 20 teams of workforce development professionals -- 200 people in all -- will be participating.  The teams represent regional workforce systems, everybody from the One Stop aministrators to the state and federal managers. 

I'll be teaching the practice of Strategic Doing to these teams.  We've been using this approach in Indiana, and the officials at the Department of Labor have seen it work.  As a result, they are adopting this approach in their internal innovation strategy which they are implementing with these transformational forums.

A week later, I will be out in Oklahoma representing the Purdue Center for Regional Development. Purdue will be proposing to the University of Oklahoma a new course in Open Source Economic Development. 

The University of Oklahoma manages the Economic Development Institute, the largest organization for training economic development professionals.  Our preliminary discussions have led us to a proposal in which Purdue and University of Oklahoma will offer a certificate course in Open Source Economic Development beginning in Spring 2008.  We expect that other colleges and universities to offer a similar course, in order to train a new generation of economic development professionals in network-based approaches to economic development. (Indeed, in our area, The University of Akron has expressed an interest.)

Then, the next week, I head for Chicago and another workforce transformational forum. I'm not sure if anyone from Ohio will be participating, but I'll report back. Another 200 professionals have singned up, and there's a waiting list of 25 teams.

In January, I'll be heading out to the National Renewable Energy Lab in Golden, Colorado.  We will be launching a  national collaboration among regions which are implementing clean energy strategies.  We're starting with about seven regions around the country. The collbboration includes representatives from the Department of Labor, the Department of Energy, and the Environmental Protection Agency. 

We are building out this community of practice and new people are showing up daily. Yesterday, representatives from the Kauffman Foundation, the Sacramento Area Regional Technology Alliance (probably the most advanced region in the country now in clean tech) and Sandia National Labs expressed interest.  The community is focused on the disciplines of strategic doing and open innovation.

In February, I-Open will hold a workshop on Open Source Economic Development. The workshop will take place at Punderson, and it will be based onthe workshop we conducted in September at the Lowe Foundation. The Lowe Foundation has been extremely supportive of our work an has helped us refine a three day workshop teaching the concepts and practices of Open Source Economic Development. Commennts from our participants in the September program were over the top. An example: "I signed up late with little knowledge of what would be actually happening -- so my expectations were not very well formed. However, what I got vs. what I was expecting was incredible." Participants rated the content 4.8 on a 5 scale.

Of course, we welcome the participation of anyone from Northeast Ohio in any of these efforts.

A lot has been happening since we left REI, and we want to keep the lines of collaboration open to civic entrepreneurs in NEO. Real NEO and BFD are the best networks to do that.

Contact:

On the Saturday forum idea here in NEO: Susan Altshuler at I-Open: susanaltshuler [at] gmail [dot] com

On the other stuff: Ed Morrison: edmorrison [at] purdue [dot] edu

Awesome update, Ed

Very cool, Ed. Keep posting insight here - you see things from some very unique perspectives.

I think a group of us should get together to discuss what has worked and not in the many collaborative networking efforts we've led and participated in over the past few dynamic years here, as it seems all physical network collaboration in the region has ground to a halt. Let's revisit the successes and weakness of Tuesdays at REI, the NEO Excellence Roundtables, the Rebecca Ryan Forums, I-Open, Catalyst Strategies, Future!, and Community of Minds, which seemed lasting and interesting to me.... would love to discuss.

Here's a bit of an update to explore other synergies...

Jeff Buster and others have really stepped up to move REALNEO forward as a platform and social network. Over the coming months we expect to be able to get much more from the powerful Drupal technology and I think that will open new doors for transformation - I do believe the technology matters. I also see taking REALNEO to print.

To print, to print... a bunch of us are starting some print newspapers, built upon hyper-local social networks, expanding the Lakewood Observer worldwide. While this has been happening quite quietly, so far, it will be big news. I see this as an important bridge of the digital divide, which will become clear over time. For now, this means messages developed on REALNEO will often reach print and a wider, different audience than on-line, in very physical ways.

A last interesting piece of the transformational package I can share is the Star Neighborhood Development project, which will take the Whitehouse intergenerational learning model to the living neighborhood level, and be repeatable. Lots on this in process and posted here and at http://7gen.us, and more to come. 

Strategic doing. Let us know how what we are doing fits with what you are doing.

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