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

Businesses and How They Get
Ready for War

I would urge you to read a recent article in Wharton's Knowledge@Wharton journal about how businesses are getting ready for war. It contains a powerful set of stories on what executives are really thinking at this time. Much of the news is sobering--to say the least.

What is the real issue here? It is about hedging our bets against risk--that eternal warrior against certainty. As economic developers in the United States, we have been very lucky to do our jobs in a relatively low-risk environment. Look around the world. Would you want to be an economic developer in India or Bahrain right now? I know some in both places. It's a lot harder.

Let's talk for a moment about how we think about world risk problems. The first question is "how do we deal with what we don't know?"

First, focus on the "questions" you are asking. This is another instance where asking the right questions is most important. As an economic developer working in the Southern Tier of NY or Tupelo, Mississippi, what are the right questions you should be asking regarding the war situation, our national and global economic problems and related matters? Many of the questions that I hear right now relate to a root question: "How does this affect me?" Maybe we should ask the question of how it affects others as well, which would give us additional insights into how it might impact us.

Then, work at defining what we do know. Chances are good that you know some things that can help to cope with the situation at hand. My only advice here is be careful what you believe. Put your beliefs to a knowledge-test. It is very easy to fall prey to "belief-lock," which causes us to believe what we have always believed because we have always believed it.

My other advice is to look carefully at what you take to be "knowledge." All of us are susceptible to accepting only knowledge that conforms to what we believe or want to believe. Ask critical questions about what the news media reports to us. All stories evolve over time, and we have to patch together the truth in dribs and drabs. News reports are very helpful. We need them. But they are no substitute for knowing what the underlying issues are. If we don't understand the underlying issues, the news reports are just a jumble of information streams bombarding us.

People believe some amazing things when they feel afraid. Fear usually drives us back to our native instinct to self-protect. When in doubt, shut down and withdraw. That's a big mistake, especially in looking at the Middle East situation and our chances of fighting a successful war with a nation (group of nations) that sees "fear" as its single biggest weapon. Fight your fear with your knowledge.

Then, you swallow your pride and admit what you don't know. Actually, it's important to work at defining what you don't know and how you might develop some reasonable answers. Again, prepare thoughtful questions. We will never gain ground on risk by pretending that it doesn't exist. I talk to people everyday who ask me in a fatalistic tone, "but what can we do?" My response is: start thinking, and think in scenarios.

What can local economic developers do? While many are wringing their hands about not having enough investment deals right now, there are other things you can be doing now. I've said this before: Stay in communication with local companies. Ask them how they are thinking about and preparing for the war. Help them gather the information they need to make better decisions about their business operations during this time of uncertainty. They just might need your help.

Learning From Indianapolis'
Bioscience Development Efforts

Most things in life offer us both intended and unintended learning consequences. That is the case in looking at Indianapolis' efforts to strengthen its position in the bioscience field.

A recent Indianapolis Business Journal article told the story of how both Indianapolis and San Diego have developed as bioscience centers. San Diego, which is one of the top three such centers nationally, may be in part thankful to Indianapolis-based Eli Lilly. Indianapolis's role in the field is clearly owed to Eli Lilly.

Here is the essence of the story. Nearly two decades ago, Eli Lilly and Co. bought Hybritech Inc., then a San Diego-based medical device maker. Lilly spent $300 million to buy Hybritech. In 1994, Lilly spun off several of its medical device subsidiaries and formed Guidant Corp. Then, in 1996, it unloaded Hybritech on California-based Beckman Instruments Inc. for less than $10 million. In the meantime, Hybritech’s founders reinvested their $300 million in new San Diego-based life science firms. Those investments begat other investments. That money found a way of recycling itself. People saw both the financial returns and the product progresses made there, and tended to do it over and over again. The rest is history.

Ok, the intended lesson here is that it is really the businesses, and the decisions and investments they make, that drive industry growth. Pay closest attention to what companies and investors are doing, not to just what the brilliant research centers are saying. Yes, we need to work on the research part of the equation, but it is the business part of the equation that will make the bioscience dream real.

As the race really heats up across the U.S. and the world, it is important to know how developments like this actually happen. Too often, communities approach economic development with stars in their eyes and their leaders forget the realities of not only getting into the race, but growing your role in the industry. Success is predicated on sustainability.

Unless your area has major concentrated "business" strength in an industry, such as bioscience, it is really hard to grow your cluster. All the research and technology in the world will not grow your cluster unless strong commercial momentum exists. Here is another important point. All firms, including YOUR local firms, belong more to their customers than they belong to your local bioscience club (association or consortium.) Why? Because they must to survive and grow. That is the unintended lesson here--and one all economic developers should pay closer attention to.

You may sit back and say, yes, I know that. Know it you may, but you need to do something about it. What can your area do? It can begin working together with other bioscience centers nationally and internationally to knit global networks around your bioscience center. If you do it right, the companies in your local or regional cluster will help you do it. These networks will ensure that your cluster is "connected" to the right people, businesses, money, technology and markets.

Despite several smart studies, all done by the same 2 or 3 consulting firms, that say the biosciences are knowledge and technology-driven, to be successful, ultimately they must be "business-driven." Then, you have a successful cluster.

By the way, it is important for your area to keep some notes on how it develops its new clusters. You may feel as though you are too busy growing the cluster to write about it, but please work on that case study. It will teach you and others some valuable lessons that will benefit you in the future. I'll help you. That is in part what this web journal is all about.

Foreign Direct Investment Trend Data:
U.S. Bureau of Economic Analysis (BEA) Has It

Doing a research project to assess your future foreign business investment prospects? Go here if you need longitudinal data on foreign direct investment in the U.S.

Globaphobia: Does that Term
Mean Anything to You?

In short, the term means the fear of being engaged with the rest of the world. While we are about to step-up the military campaign in the Middle East, on other fronts we appear to be seriously withdrawing from the world. Is that good or bad? I suppose that depends upon your perspective. I, for one, believe it is a mistake to get any more out of circulation. Unfortunately, the promise of a very serious war could drive even the bravest business men and women back into their home market.

Some have argued that Americans have grown increasingly out of touch with the rest of the world over the past decade or more. Maybe that is another reason why I started this web journal.

What's your opinion? Are we headed back to extreme isolationism?

More on the Economic Costs
of a Negative-Case War with Iraq

I wrote an earlier article on the costs and benefits of a war with Iraq. During our later research, we discovered two additional studies that are quite thought-provoking. The first is a negative-case war scenario analysis by William Nordhaus at Yale University and the second is by the Center for Economic and Public Policy CEPR). The CEPR study builds on Nordhaus' earlier study and includes an assessment of potential costs of a protracted, worst-case scenario war.

William Nordhaus' November 2002 study can be found here.

You may find this December 2002 Center for Economic and Public Policy analysis of the economic cost of a war with Iraq to be of interest.

In sum, the Nordhaus study concludes that in 2003-2004, a 2.4 percent decline in GDP could occur causing the loss of 1.6 million U.S. jobs. Then, if a major oil crisis is triggered and it takes the U.S a long time to recover, we could see another 0.5 percent decline in GDP coupled with the loss of another 300,000 jobs in 2005-2007 period.

The CEPR builds upon the Nordhaus study and works at pinpointing economic costs to different industries and states. For one, CEPR estimates that domestic security spending would increase if the Iraq drags on and terrorism remains a major threat. For example, if every retail establishment in the United States were to post a full-time security person the cost would be more than $100 billion a year.

Both studies drive home the point that Bush Administration officials may be under-estimating the full costs of various war scenarios at this point for political reasons. One thing to be sure, while economics can inform on a subject such as this, it remains more of an art form than a science.

Update on the State Biotech Race

The bioscience race is red hot, and expensive. That is the word from many corners. My friend Mike Ammann from Michigan passed along a couple interesting biotech stories, which I will share with you. Thanks Mike.

From the Boston Globe: "In the race to latch onto what could be the biggest growth industry of the new century, states across the country are putting together big-money programs to nurture biotechnology. Iowa Governor Tom Vilsack, for instance, has proposed a $50 million program to make the state a leader in bioengineered proteins. Don't look for Massachusetts to match it. With a $3 billion budget deficit looming next year, the administration of Governor Mitt Romney is looking at low-cost ways to help the state keep its lead in biotech."

Want to read more? Go here.

And from California: "With unfriendly financial markets forcing many biotechnology companies to shelve promising early stage projects, a program through the University of California is offering a means to help fund such work. UC Discovery Grants leverage funds from UC and the state of California with funds from private industry to conduct basic research. The program is accepting proposals for research from the biotechnology industry. In the past year the program, which proponents say is unique among examples of university-industry cooperation because of the way it directly ties university researchers to industry, funded $60 million in research in areas including telecommunications, digital media, electronics, information technology and life sciences."

Read more.

For-Profit Colleges and Universities

How are the for-profit higher education institutions faring in this weak economy? According to the Chronicle of Higher Education's latest index, they are holding their own. Apollo Group, the largest, registered sales of $1.0 billion in the last year, which is up 31 percent. The University of Phoenix saw an 81 percent gain to increase its revenues to $328 million. The University of Phoenix also saw the largest enrollment gain in the past year, increasing by 84 percent.

Click here to learn more. (Note: You must be a Chronicle of Higher Education subscriber.)

Got Any Manufacturing Jobs Available?:
Latest Survey Says Pittsburgh Does

Despite the economic slowdown, there are still nearly 1,300 local manufacturing jobs open according to the latest Job Vacancy Survey Report released yesterday by the Center for Competitive Workforce Development (CCWD) at Duquesne University. Among these openings, the greatest demand is for skilled production workers.

Go here to get the report. This center is doing some interesting work you may want to look at.

National Inventors Hall of Fame
Names New Inductees

This is one to check out. The National Inventors Hall of Fame is based in Akron, Ohio. It's a valuable resource to economic developers because it reminds us of all the great inventions that have made the products and services that we use possible. Who are your technological heroes? Have any inventors from your area been inducted? Visit the Inventors Hall website located here.

Need MEMS?

Maybe, but please tell me first what is a MEMS. It stands for: MicroElectroMechanical Systems. This is one of the hottest technologies out there. Take note of it.

According to the MEMS Industry Association's latest report: "Profound technological advances are being developed by the United States' MicroElectroMechanical Systems (MEMS) industry that will accelerate the creation of new businesses, new jobs and new applications." Is this technology ready? Many industry observers say that despite its major potential, the MEMS industry faces significant near-term fabrication challenges in moving these small, powerful devices from laboratories to commercial products.

How big is this emerging industry? The MEMS Industry Group's second annual State of the Industry Report, which details the survey results of 250 MEMS companies and 60 foundries worldwide, offers an intense examination of MEMS fabrication issues and their impact on commercialization, and contains new recommendations for facilitating the industry's continued growth. Downside is it costs $495.00, but not bad if this is something you must know about.

Revenues for MEMS are forecasted to grow from just under $4 billion in 2001 to more than $9 billion in 2006. MEMS employment has increased 30% since 2001. 54% of MEMS companies surveyed are either selling or developing actuators

You can download the 2001 industry report here for free.

This is one to watch. It tells us that despite what some may claim: Manufacturing is not dead.

Perceptions of the Job Situation:
Who and What are We to Believe?

The Gallup Organization has just released the results of a new poll that finds people are not very optimistic about their job situation, despite what the U.S. Department of Labor had to say about increased job growth in January.

According to Gallup: "On Feb. 7, the U.S. Department of Labor announced that the nation's unemployment rate declined from 6.0% in December to 5.7% in January. According to the report, retail businesses (many of which did not hire as many employees as usual over the holidays because of slower-than-normal sales) did a complete turnaround in January, adding 101,000 new positions during a traditionally slow sales period. Does this mean that the jobs recession of the past couple of years is over? Is now a good time to look for a quality job? Most Americans do not think so!"

Nearly eighty percent of those surveyed said that this is a bad time to find a good job in America. Go here for more details.

What are we to believe? That's an important question for all of us to ask at this time. Moreover, who are you to believe? My advice is to triangulate views, opinions, data and information from various sources. That is precisely why I started this web journal--people need better information and knowledge at this time.

I will add that the polls change over time, so it's important to follow them regularly. I do find them useful in my work however as one source of input.

As a rule of thumb, the greater the uncertainty about an issue or situation, different points of view become more important. It's human nature to try to dispel uncertainty by discounting information that conflicts with what you believe. By the way, our beliefs reflect our values, even more so than the information and knowledge we possess.

I think we should be doing just the opposite at this time. This is a time for empathetic knowledge and fair-minded thinking. We are very susceptible to our usual biases and new ones at this time. As they say, check out your assumptions. Listen. Compare your thoughts with others. Work at understanding other points of view.

How can economic developers help? Expectations matter at a time like this. We feel fragile and vulnerable as we look at the uncertainties before us. Hopefully economic developers are doing what they can to restore people's confidence that they can succeed in their work lives. I believe this is an important role that the economic development community can play during this time of uncertainty. We should be providing more and better information and knowledge to our businesses, community leaders and citizens. Your communication role has just tripled in importance.

New American Initiatives

New American initiatives have sprung up all over the U.S. What do they do? They help cities attract and improve the integration of new immigrants into the community. Why is this important? Many cities want to grow their population base and this is a way to do it. Also, more and more areas have committed themselves to attracting international technical talent.

Stumped in finding information and research related to the role of new Americans in urban and regional development? Here are some places you might start your search:

GlobalPittsburgh

State of Iowa/New Iowan Centers

Workforce Investment Board of Louisville and Jefferson County

Building the New American Community (Nashville, Portland OR, and Lowell MA)

Colorado Trust: Supporting Immigrant and Refugee Families Initiative

City of Boston: Office of New Bostonians

New York City: Mayor’s Office of Immigrant Affairs

City of Louisville: Office for International and Cultural Affairs

City of Albuquerque: “Immigrant-Friendly City” Resolution

Source: New Americans and the Future of Pittsburgh: International Communities and Regional Economic Development, by John F. Donahue, Duquesne University, 2002.

E-Government and E-Competitiveness:
Is There a Connection?

According to a recent report by the National Electronic Commerce Coordinating Council (NECCC), there is a way to use electronic government to bolster area economic competitiveness for both e-business and non-e-business development. It's all about the functionality of the local information and communications infrastructure to support knowledge economy development.

The NECCC report speaks to strategy, best practice, funding and a variety of other practical concerns in fostering e-competitiveness through e-government. Want to learn more? Click here to download the full report.

Man Behind Domino's
Funds New Catholic U.

Here is a prime example why you should pay attention to your parishioners. The founder of the new Ave Maria University, Tom Monaghan, who is better known as the founder of Domino's Pizza, has committed $200 million to start the school near Naples, Florida.

According to a recent New York Times article, Monaghan has grand plans for the university: majors as varied as theology and hotel management; a Division I football team; three golf courses, including one for donors only; and a new town, Ave Maria, with a commercial center joining the campus.

Not everybody is happy about the gift to start the new school, according to the New York Times: "Many Catholic educators are uneasy about Ave Maria, irritated that Mr. Monaghan would start his own university rather than support an existing Catholic college and annoyed at his broad criticism of Catholic education."

Competition for endowment funds has grown increasingly intense among both public and private colleges and universities.

This is yet another example of why we should condition ourselves to expect the unexpected in the world today.

Insights into Native Business
Development in Alaska

Economic development is gaining momentum in Native America. I worked with several Indian tribes in the U.S. over a 3-year time period. The first lesson we had to learn is that culture comes first and economics second. Concern about the natural environment is also given great consideration, making sustainable economic development a priority in Indian Country.

If you are interested in tribal economic development issues and trends, click here and read about what the Arctic Slope Regional Corp. (ASRC) in Alaska is doing.

Finding a Path to the Future:
Four Possible Scenarios

Finding a path to the future is on everybody's mind. While the main thrust of this article is aimed at businesses, much of the content is applicable to economic development. I have been a fan of scenario planning for some time so I find the work described below to be particularly interesting. Bottomline: We need to evolve a series of scenarios regarding economic development over the next 2-3 years.

Dr. Yoram Wind, professor of marketing at the Wharton Business School, has teamed with his colleagues to anticipate possible economic scenarios for the upcoming year. The professors identified four possible scenarios, ranging from global recession to explosive global growth.

The Wharton group has identified two factors that are likely to drive the economic environment in the near future:

1. The extent to which “external events" that have the potential to affect economic activities are known and understood, or whether they are unknown and surprising.

2. Whether businesses have the culture, history and ability to be opportunistic in the face of rapidly changing conditions.

We might ask ourselves these same two questions regarding economic development.

Based on these two drivers of growth, the Wharton team identified four scenarios:

Paralysis/Survival: In this scenario unexpected and disruptive events will increase over the next three years, and companies (and/or countries) will react by pulling into a protective shell. Consumers compound the problem by reducing spending dramatically. The bottom line: "a long, global recession."

Slow Growth: Under this scenario, disruptive events with moderate impact continue, and while seen as normal, they result in an economic malaise. This scenario is marked by debt and currency problems in key global economies, though a recession is avoided. Companies accept the risks of terrorism and learn to cope with their losses, making only modest investments. The professors quip: “Life becomes an overpowering shade of gray.”

Thriving with Chaos: Here we find unpredictable external events continue, but corporate and national resolve to be successful in the face of adversity provides some momentum for modest prosperity. Companies search for opportunities amid the disruption and make increasing investments in areas that are potentially profitable. The bottom line: “Life could be better, but there’s money to be made if you know where to look.”

Global Growth: In the final scenario, countries recognize common goals and focus on economic development and peace as the route to permanent stability. The recession here is short-lived and the business cycle quickly returns to normal. Investments in new energy management technology reduce the role of oil in Middle Eastern politics. Through lowered trade barriers, developing economies would grow along with developed ones. Don't we wish!

Where are we today? To me, it sounds like we are somewhere between Paralysis/Survival and and Slow Growth. What's your take?

Lots to think about here, but my basic point is we need scenario-thinking in economic development.

How Can Cleveland and NE Ohio
Really Accomplish Something Through
Improved Town-Gown Relations?

Cities and their universities need to work together to reach their individual and shared goals. They can do this. That was the central message of the Great Cities/Great Universities conference held in Cleveland recently. The City of Cleveland and its leading research university, Case Western Reserve University, want to strengthen their ties. Why? Because both need it, and because they have a great deal to offer each other.

Cleveland leaders heard about how Richmond, VA, New Haven, CT., Chicago, IL, and several other cities have "innovated" in this area. This was a useful first step.

Why do we really need to strengthen the town-gown relationship here in Cleveland? Here are some reasons that have not been mentioned yet:

1. Higher education, despite all of its budget woes at this time, is a vital actor in the economic development process directly and indirectly through its various research, educational and public service activities. CWRU, KSU, CSU, University of Akron, Lakeland Community College, Tri-C, Lorain County Community College and the other area colleges and universities provide several thousand jobs to regional residents, including a very large number of "knowledge jobs." These institutions spend a large part of their budgets each year in the local/regional economy. This is the subject of a much-needed upcoming study by the Northeast Ohio Council on Higher Education (NOCHE).

2. The real "new" economy across the world is the "knowledge economy." Where does a large part of our knowledge base exist? It exists in and around our colleges and universities. The knowledge economy already exists in Greater Cleveland and Northeast Ohio. It has roots in our academic institutions, in our large and still very important manufacturing sector, biosciences and medicine, and a number of other industries. Higher education is a strategic knowledge supplier and developer for all these industries. And these industries are markets and sources of funds for area colleges and universities.

3. The higher education industry is rapidly globalizing, despite the attempts by some Luddites to impose formal and informal controls on the boundaries of knowledge, including the geographic markets that public universities serve. Knowledge is highly mobile now, and through the Internet, will become even more mobile in the future. Distance education, or online learning, is a growing reality for all higher education institutions--both public and private. Private for-profit universities are also a well-known reality. Can they survive and grow in the long haul? I think they can if they follow the right strategy and focus on delivery of a reasonably-priced and high-quality product.

Cleveland and Northeast Ohio must compete to hold onto and greater utilize the knowledge resources it currently has, and they must compete for new resources. Attracting new knowledge talent is essential because we will experience some losses in the years ahead. As they say, you win some and you lose some. The best strategy in this case is to win more than you lose. The accelerated mobility of knowledge and the talent associated with it is inevitable. The answer is not "protectionism," and trying to control the flow of knowledge and its supporting infrastructure of institutions, people and intellectual property. Instead, the solution lies in building stronger knowledge-producing and knowledge-using "networks."

4. This leads me to my final point for now. Cleveland and Northeast Ohio need to help their colleges and universities to develop more national and global relationships and partnerships, and then use those relationships to grow the region's knowledge economy.

How do we do that? Here is an example. The bioscience cluster is an important one for the NE Ohio economy. We have significant academic and institutional strength, and some business strength, in the biosciences, but we cannot get very much further in the biosciences by simply following a "go-it-alone" strategy. How do I know this? It doesn't take a rocket scientist to see that nearly every major metro area in America and many cities worldwide are trying to grab a bigger piece of this pie. Moreover, many are far ahead of us. Plus read the recent Brookings Institute report on metropolitan rankings of bioscience centers. The study on biotech in the U.S. says that 51 metro areas lay claim to being "biotech meccas." The Brookings study finds, however, that 9 metros control 3/4 of the nation's largest biotech companies and they accounted for 3/4 of all new biotech startups in the past decade. Greater Cleveland is not one of the top nine, nor is it even close to the top list. Do not dispair.

What's the alternative? It is a "partnering" strategy that links NE Ohio's academic, medical institutional and business bioscience resources with appropriate national and international bioscience resources. The answer is to weave a national and global network around our bioscience resources--part of it already exists.

Is this possible? Yes, I believe it is, especially if we are successful in identifying the right opportunities for national and international collaboration and can build the right relationships to make it happen. Who is in the best position to do that here in Greater Cleveland? It is The Cleveland Clinic, CWRU, University Hospitals, area philanthropic institutions, and a handful of our finest bioscience and medical product manufacturing companies.These leaders already have valuable national and international relationships that can be built upon. New ones will need to be built in the future.

Now that we have had the first round of interactions to learn how other cities and their universities are making a difference, let's organize the second round that focuses on building strategic development partnerships between our knowledge infrastructure and those found in other U.S. and world cities that have something to offer us.