Dealing with Our Growing Uneasiness and Restlessness

The world has grown increasingly uncertain. This uncertainty has an impact on our work in economic development, both directly and indirectly. All of us know this. In many places, economic development organizations are taking the heat for poor economic results, which are caused by our stinky national and global economies.

Quite a few heads are rolling, as I assess the situation nationally. I talk about some of these situations in this article. There are many more that you and I both know about, but we cannot talk about right now. Many communities are not sure what to do at this time. A convenient way for them to cope is to look for another CEO and reorganize operations. Many are still looking for silver bullets in strategies like industry clusters and regionalism. These are valuable tools, but that's all they are. We need something more fundamental. I think we need to do a better job of working through these problems, rather than just changing the people at the top.

Some of you may say, "this too shall pass." I hope you are correct. I see a deeper problem, which relates to the need to organize ourselves in a way that prepares us to function within a more risky and uncertain environment. That is the main point of this article. I don't claim to have all the answers--I offer one to start others thinking.

With the economy still in the dumper, a war with Iraq moving closer, declining business investment, continued low confidence in the stock market, diminished confidence in our corporate and government leaders, slipping consumer spending, huge state government fiscal shortfalls and more, is it little wonder that cities, regions and states across America are concerned about their economic development prospects?

No, this is not a surprise to any of us who work in this business. Yet, many economic development leaders fail to account for these influences when they judge the performance of their economic development programs over the past couple of years. The other issue is that the 90's were awfully darn good to us. Don't expect those kinds of roses on your doorstep in the near future. The role of external events has grown in importance as key determinants of local and state economic health. You are steering a tiny boat on a very large and angry sea right now. That's the picture.

The troops are restless in the economic development world. Nobody is happy with the economic hand they have been dealt over the past couple years, and now the threat of war is exacerbating the problem. Many are blaming their top ED executives for not getting enough results. Organizational re-alignments, executive staff changes, budget cuts, board chair resignations and other related developments are increasingly common during this turbulent and uncertain time.

I know more than I can really say on this subject. So do you. Here are some examples that I can talk about because they have made their way into the news. Northeast Ohio is reorganizing its economic development efforts and is searching for a new regional economic development CEO. Pittsburgh is looking for a replacement to head its longstanding Allegheny Conference. Pittsburgh, Memphis and lots of other places are in the hunt for new image improvement strategies. Columbus, Ohio is searching for a new Chamber president; it just named a new economic development executive last month. The Denver Metro Chamber of Commerce just named a new ED chief.

There's more. A panel headed by Ross Perot, Jr. has recommended that the Texas Department of Economic Development be scrapped and reinvented. Arizona is making major changes to its ED strategy. The Maryland Department of Business & Economic Development just named two new deputies for tourism promotion and economic development. In Minnesota, its state chamber has a proposal on the table to takeover some of state government's ED functions. The Hawaii Department of Economic Development has just named a new deputy director. The ED Partnership of Alabama just decided to offer its top job to its interim chief.

There are lots of development personnel changes at the state level as new governors took office this January. Ed Rendell, the Governor-elect in Pennsylvania just hired a new ED chief for the state development agency. Wisconsin just named a new state development agency head. New York State just named a new head for its Western Regional Office in Buffalo.

Greater Louisville, Inc. has just made some staff realignments affecting economic development. Baltimore County, Maryland has recently named a new economic development chief. The Memphis Regional Chamber has recently hired a new senior VP for economic development. The SW Pennsylvania Commission recently hired a new planning and development director. The list is even longer, but I will stop here for now.

Don't get me wrong. Some of these changes are good news because people are being given an opportunity to grow their careers. Different factors drive these changes in different situations, not all are bad. On the other hand, many of these changes reflect the growing uneasiness and restlessness that exists in the economic development world today--by both the economic developer and his or her board. We must find a better way to address this problem. Yes, the current state of world affairs is a big factor now, but there's more to it. I think we are searching for a better practice model that helps us get better results--even in a risk-filled economy.

Those of us who have been in the business for some time know there are cyclical factors that explain some of the changes in organizations, leadership and management. I do not believe the current shifts and changes are explained by our "business cycle." We need deeper and more powerful organizations, networks and tools to do our job in a global environment. Culture, values, technology, different political and legal systems and many other factors are shaping our ability to do business in this new environment. I don't think we are as ready as we need to be.

I'd like to offer a word of encouragement and a bit of advice to all my friends out there in economic development land. First, a word of encouragement. It isn't your fault that your community, region or state cannot get its economy to turn cartwheels at this point!

Communication and understanding are very important right now. Our leaders need to understand how easily local and state economies are rocked by national and global changes. As I study economies across the country, I estimate that 80-85 percent of what happens in any regional economy is explained by the national and global economic trends. That is what shift-share analysis, among other analytic techniques, can help us see. That leaves maybe 15-20 percent that EDO's can influence on some level. How are we going to deal with the 80-85 percent factor in the future? That is my central concern.

Pointing the finger of blame is easy at a time like this. Finding a workable solution is much more difficult. I'd like to help you find that solution.

Now, here is my advice to economic development executives and their leaders. Learn from the current situation. Welcome to the "age of discontinuity." The future will not be like the past. This has been the buzz in business strategy circles since the dot.com crash of 2000. The idea has relevance to economic development. We need a new "business model." The new model is the network-based organization that has national and global reach. Economic development has grown too local and insular in how it does its job. Our EDO's need to build ties with their counterparts, and even competitors in some cases, to cope with the fall-out from our current domestic and international economic problems. We will need a more powerful organizational model to navigate the change-filled waters that lie ahead. That is how we increase more of that 80-85 percent that I just mentioned.

What am I proposing? We need a global confederation of local economies. Yes, IEDC and other national ED associations can help, but the real work gets done at the community, regional and state levels where the real economies exist. These economic units must build stronger networks around themselves to survive and thrive in the future.

I get paid to look down the road a bit. What I see is continued turbulence and even more twists and turns in the road ahead, even after we figure out this war thing. Most economic development organizations (EDO's) are not even close to being ready to absorb the risk out there today. Your sponge just isn't big enough. Supported by a tighter-bound national and international network, our communities stand a better chance of surviving in the short run and returning to a growth trajectory after things settle down a bit. This is not the time to shut down and go into hibernation. Raise those antennae even higher. Put legs on your ideas.

This is not a time to put your economy on hold. This is the time to prepare our areas and their businesses and industries to weather change, cope with uncertainty and manage risk. We can do those jobs better if we move to the national and global network model. Yes, it is a big step, but what's the alternative?

The national and global network model can improve our communications and intelligence capabilities in a changing and uncertain environment. We will need to share more information with others to get the information we don't have in the future. The network strategy will also help us to act more quickly and more effectively by acting together with others.

As I look at the long list of ED executive changes that have occurred in just the past several months, I cannot help but think that a better strategy is to help people change rather then simply changing people who do the job. Yes, there are some cases where you definitely need to bring in someone new. But my overall assessment is that we are not doing a good enough job of growing people and building "real" teams to get the job done. Teams are an effective counter to risk and uncertainty. They allow different perspectives to be brought to the table. They allow for people and organizations to re-synch on a regular basis by staying connected.

I look at board-CEO relations in economic development in many places and I see a set of relationships that were born in economic development's heyday of the 1950's. The world has changed in some very fundamental ways. It's time to rebuild our relationships, grow new ones and truly work together. This shift can help all of us to better deal with its current restlessness and uneasiness. Form that global confederation of local economies.

What do you think?

You can contact Don Iannone by phone at 440.449.073, or send us at email at: dtia@ix.netcom.com