Florida's Innovation Economy

Last year, Enterprise Florida released a very insight report on the state's innovation economy, which was prepared as part of the state's recent strategic planning process. Click here to download the report.

Russia and Its Spatial Development Patterns

Economic developers have a natural interest in "where" develop takes place. Click here and find out how the Russians are thinking about the problem of their social and economic development in a spatial sense. Interesting insights here.

Massachusetts Nanotechnology Initiative

Here is one example to learn from about how to cultivate nanotechnology growth.

In order to harness and expand upon the critical mass of activity in nanotechnology in the Commonwealth, the Massachusetts Nanotechnology Initiative is focused on creating strategic alliances and facilitating dialogue and collaboration among the state’s industry leaders, world class research centers, venture capital community and corps of seasoned entrepreneurs in an effort to continue the growth of Massachusetts as the global center for research, development and commercialization in nanotechnology.

This initiative has four major objectives:

* Promoting Massachusetts based companies
* Strengthening industry/university relationships
* Educating the public and state and federal government officials
* Creating opportunities for new and early stage companies to
network with venture capitalists and established industry players.

Go here to learn more.

PeopleSoft to Triple Staff in India

Another offshore outsourcing story to add to your growing collection.

PeopleSoft intends to add 1,000 workers to its staff in Bangalore, India, by the end of the year, accelerating the software maker's plan to tap the country's low-cost labor force.

The Pleasanton, Calif., company, which discussed the Bangalore expansion this week, is among a growing number of high-technology outfits that are increasing the size of development and support staffs in India, China and other "offshore" locations. PeopleSoft, which employs more than 12,000 people worldwide, has about 400 workers in two Bangalore development centers, according to a PeopleSoft spokesman.

"The centers have played a significant role in enabling PeopleSoft to lead the way in lowering cost and improving our customers' total ownership experience," Ram Gupta, PeopleSoft executive vice president of products and technology, said in a statement. "Our accelerated ramp-up plan is a natural progression for us, in direct response to the high-quality, rapid output we are seeing from our centers in India and customer demand for high-quality, offshore implementation services."

PeopleSoft announced the opening of its Bangalore software lab last May. J.D. Edwards, the software maker PeopleSoft acquired last year, also had development centers in Bangalore. The groups focus primarily on software development, service and customer support, the company said.

Read the full story.

What Are CEOs Most Concerned About?

According to The Conference Board and the Gallup Organization, it's existing customer retention. Does that surprise you? It shouldn't surprise any of us. After all, no customers, no businesses!

What is the starting point in retaining companies? According to Gallup, it's finding out why you lose customers. Click here to read more about customer retention. I think you will discover some interesting parallels to existing industry retention in the economic development field.

New Biotech Venture Capital Directories Released

Want to get connected with the venture capitalists most interested in biotech? Click here to learn more about the new biotech VC directories that just went on sale. This is very good intelligence for your business development work.

BIO CEO & Investor Conference

If you can get in, this is one you may want to look into. If not, follow the media trail after the conference.

Executives representing more than 400 biotechnology and pharmaceutical companies from around the world will gather Feb. 23 - 25 in New York to network with the financial and venture capital communities.

The occasion is the BIO CEO & Investor Conference, the largest biotechnology industry-run investor event in the world. Details are posted at www.bio.org/ceo.

More than 200 attending companies will give presentations, either in a standard corporate presentation or by participating in one of the 30 new Focus Session panels that bring together industry and clinical experts to discuss major therapeutic and business strategy topics.

Mergers and Acquisitions in the Insurance Industry

The insurance industry is a large and complex industry from many standpoints. There are lots of changes in the industry impacting insurers of all shapes and sizes. Click here to find out who is acquiring whom in the industry.

Spat Between India and US Likely to Continue

That is the message in a recent article citing that upcoming elections in the two countries are likely to give the two nations from agreeing on economic and trade issues, including business outsourcing. Go here to read more.

Michigan Creates Small Venture Kitty

Michigan will set aside $1 million to provide venture capital to some fledgling high-tech businesses for research, Gov. Jennifer Granholm announced Thursday. The so-called “Emerging Business Fund” can be used to leverage about $25 million in federal money to develop new products, the governor said.

Read more here.

Maybe We Should Outsource Some Business Writers

For starters, how about outsourcing David Kirkpatrick at Fortune Magazine for making statements like this about outsourcing: "Or is it just real stupidity? The fact is, we can't stop offshoring?and we shouldn't try. For all the handwringing, offshoring is inevitable, frequently makes business sense, and might even be beneficial. "

I say: "Wake up and smell the rose, man. Even though outsourcing produces a siginicant cost savings to US companies, we cannot afford to send 3.3 million jobs offshore and expect to preserve the standard of living we are accustomed to in American communities."

Yes, outsourcing is inevitable, but we must be very careful not to create even greater economic problems for ourselves by heaving huge chunks of American industries offshore without any plan on how we are going to replace these jobs in American communities. That is just plain stupid.

Are my economic developer friends speaking up and out on these issues? Please do.

Fortune 500 Forecast: 50% Fewer Jobs in U.S.

Offshore outsourcing of traditional IT work will grow 20 to 25 percent each year in the next few years, from its current market value of roughly $20 billion, according to Atul Vashistha, CEO of San Ramon, California-based offshore advisory firm NeoIT. TPI, a Houston-based global sourcing advisory firm that has worked on 550 large outsourcing contracts since 1998, says that nearly half of its 2003 deals had an offshoring component.

What will this mean in the next two to five years? First, the good news: global sourcing is causing downward price pressure on all service providers, domestic and foreign, which means customers will have the upper hand in negotiating deals, analysts predict. To compete on price with Indian providers like Infosys Technologies and Wipro Technologies, U.S. providers will need to open centers in India and elsewhere; IBM, EDS, Accenture, Hewlett-Packard, and Hewitt Associates have led the charge.

Now for the troubling news: experts say that growth in global sourcing will transform the U.S. workforce. "In 5 to 10 years, a majority of Fortune 100 companies could have 50 percent fewer employees," predicts McGuire. Forrester Research forecasts that 3.3 million U.S. service-industry jobs will go offshore in the next 15 years.

And business-process outsourcing (BPO), in which companies contract for services ranging from HR record-keeping to basic accounting to airline reservations services, will explode—from $110 billion in 2002 to $173 billion in 2007, according to Gartner. In June, an Accenture/Economist Intelligence Unit survey of senior executives at 236 global companies revealed that 30 percent outsourced finance and accounting functions. Indeed, those jobs are now among the most common to be moved offshore. In the future, the focus will be less on offshoring discrete processes within a department and more on moving the entire function (all of HR, for example) offshore.

Here to read more.

Latest on IT Offshoring

The outsourcing of America is shaping up as a seemingly inexorable trend, with various consultants estimating that the number of U.S. jobs shipped overseas will climb from the hundreds of thousands we have seen over the last few years to several million in 10 years. While many executives will continue to view sending American jobs overseas with distaste, smaller outfits keen to remain competitive will increasingly be joining major corporations in seeking cheaper foreign options for completing computer programming, call-center work, assembly, and a myriad other tasks.

For a run down of the strengths and weaknesses of five (India, Philippines, Russia, China, Panama) offshore sourcing centers, click here. This is useful information.

Banking Mergers and Acquisitions Update

I have been writing about the increase in M&A activity expected this year. Here is more evidence to support that forecast in the banking field.

North American banks, brace yourselves: The Europeans are coming. Eurobanks last went on a big U.S. commercial-bank buying binge back in the 1980s. Now they're back, driven by the cheap dollar and the fact that mergers in Europe remain difficult. France's BNP Paribas, the Netherlands' ABN Amro (ABN ), and Spain's BBVA are three of the Continental banks said to be seeking purchases stateside.

Mergers-and-acquisitions advisers confirm the growing European appetite for U.S. banks. "Neither British nor Continental bankers have shown this much interest in North America for five years," says the corporate finance chief in the London office of a Wall Street investment bank. "We're at the beginning of a powerful new transatlantic takeover trend."

Here to read more.

Wind Farms in Scotland

Green energy seems to be gathering steam worldwide. Click here to read about new developments in the wind energy area in Scotland.

More on NE Ohio Foundations New ED Effort

This is one to take note of. NE Ohio's philanthropies are going to invest $30 million in strategic economic development projects within the region. Go here to visit the new joint website they have just created.

Eastern Europe Gets With Outsourcing Wave

Click on this link and get some insight into how the Eastern Europeans are ramping up as an offshore outsourcung center. Who said that India and China had a monopoly on this new opportunity wave?

Groups like Impaq may be the "economic developers of the future." Where does this leave your organization in the scheme of things?

Jobs Lost Abroad: Host of New Causes for an Old Problem

The chairman of President Bush's Council of Economic Advisers, N. Gregory Mankiw, had this to say about offshoring. The movement, known as offshore outsourcing, is growing, Mr. Mankiw acknowledged. But he said it was "just a new way of doing international trade" and "a good thing" that would make the American economy more efficient and would free American workers to eventually get better jobs.

Many industry executives, analysts and academics say the nature of the economic challenge appears to be fundamentally different than we ahve faced in the past. I agree! The differences, they say, include the kinds of jobs affected by outsourcing, the number of jobs potentially at risk and the politics of developing an effective policy response.

Globalization and technology are amplifying the impact of outsourcing. For decades, American foreign policy has been to urge developing nations and Communist countries to join the global economy in earnest. Now they have, and vast numbers of skilled workers have joined the world labor force, seemingly overnight. Countries like China, India and Russia educate large numbers of engineers. Add the low-cost, nearly instantaneous communication afforded by the Internet, and an Indian computer programmer making $20,000 a year or less can replace an American programmer making $80,000 a year or more.

More here.

Amex on the Defensive about Offshore Plans

The financial services firm may move up to 70% of its development work offshore, sources say

Despite a denial by American Express Co., sources familiar with the company's IT planning insist that it has an internally stated goal to shift a major portion of its software development to offshore locations.

The sources said that New York-based Amex plans to move as much as 70% of development work offshore. That shift is an ongoing business objective, they said.

An Amex spokesman this week dismissed the 70% figure and denied that the financial services company is making any fundamental shift in the amount of development work it sends offshore. But one former Amex IT worker, who said he left the company because he disagreed with the offshore policy, hotly disputed that.

"They tell [the media] one thing and tell us another. I've seen it. I was there," the former employee said. "I was the guy training these [offshore-worker] greenhorns. They're asking me to transfer my skills to someone making $4 an hour."

The sources were unable to say what portion of the company's development work is currently handled offshore, and Amex declined to comment, citing a policy against disclosing such information. What's clear is that some IT employees within Amex are disturbed by what they understand to be a major offshore shift.

"They qualify as one of the Benedict Arnold companies exporting jobs overseas that [presidential candidate] John Kerry has been talking about," said a current Amex employee, who spoke on condition of anonymity.

Read the full story here.

How Wal-Mart and Dell Do It for Less

The simple answer is effective integration of knowledge management in business processes. Here is an abstract of a great article on this subject. The link to the full article is found below.

Recent industry case studies provide illustrative examples of successes and failures in integrating
knowledge management technologies for enabling organizational business processes and new business
models. Based upon insights from selected case studies, this article identifies three key paradigms that have
characterized the implementation of KM systems, technologies, and techniques in organizational business
processes. Taking a critical view of the mainstream characterization of KM technologies, this article
highlights the 'critical gaps' between technology inputs, related knowledge processes, and business
performance outcomes. Drawing upon the above issues, the article develops pragmatic understanding for
leveraging the power of disruptive technologies through disruptive business value propositions and customer
value propositions embedded in organizational business processes and enterprise business models.

My question is: "Are we thinking about these issues in economic development?"

Go here for more.

Australian Business Conditions

Here is an update on the business and economic environment in Australia.

Australian business conditions plummeted in January to their lowest levels in a year, in another sign that the domestic economy is losing steam.

National Australia Bank, in its recent business survey, said its business conditions index slumped 15 points to 3 points last month, building on December's decline from record levels and returning to where it was in early 2003. The survey findings, combined with recent weaker-than-expected readings on housing finance, the labour market and retail trade, look likely to fan speculation that the Reserve Bank will leave interest rates on hold again next month.

NAB's measures of profitability, trading and employment all fell in January, although forward orders, investment and exports were stable. On a sectoral level, the slowdown was broadly based, with the largest falls in domestic sectors.

Here to read more.

Protectionism Alive and Well in Europe

For those of you interested in the world of trade policy, you may find this article of interest. it is about the EU's latest efforts to shore up textiles and other "low-value" industries. Here to read more.

Banking Industry Restructuring in China

One of China's biggest banks plans to cut more than 100,000 jobs, or about one-third of its workforce, as it prepares to sell its first shares to foreign investors, according to a major state newspaper.

The Construction Bank, China's third-largest state-owned commercial bank, is expected to sell up to US$5 billion worth of shares in a public offering sometime in the next two years. Other major state banks are also expected to raise money through share sales.

The communist government is trying to turn its debt-laden banks into profitable, competitive businesses as it prepares to open its financial markets to foreign rivals as part of its commitment to the World Trade Organization. Last month, the government announced a plan to spend US$45 billion to replenish the capital of the Construction Bank and another of its four main state-owned commercial banks.

Here to read more.

Pension Funds and Economic Development

For some time, I have felt that economic development has not fully engaged the pension fund community in its efforts. We need to give more attention to how to interest these funds in worthwhile ED investments. For some starting ideas, click here.

The Race for Talent

Many cities have initiated campaigns to retain and attract talented people. Recently, I read an article about Chicago's 'Forty Under Forty.' This article produced a simple idea that I would like to share with all of you. Economic development should be making in-roads with this young talent pool. These are the new and emerging leaders in many communities.

Here is the link to NY City's 40 Under 40 List.

Here in Cleveland, I have been working with the Cleveland BridgeBuilders to do just that.

Detroit Fights Its "Fat City" Image

I like Detroit's strategy to combat its "Fat City" characterization by Men's Fitness Magazine. They are going to launch a "Fifty Fittest CEO's" campaign. Go here to read more.

You know what? Fittness and health matter in business or any field for that matter. Maybe economic development should launch a similar campaign. What do ya say?

How Much of a Difference Does Attitude REALLY Make?

In short, attitude matters some in shaping an area's economic growth prospects, but not as much as driving factors such as regional business costs, labor skill availability and other factors. At least that is what I said in a recent interview with Crain's Cleveland Business Journal.

Donald T. Iannone, a locally based economic development consultant, acknowledged that attitude may influence economic growth. However, he said its effect should be put in perspective. "Its (attitude's) strength is less than other drivers, such as real cost advantages of doing business in the region and the availability of highly skilled labor and knowledge workers," Mr. Iannone said. "Business success in Northeast Ohio or anywhere else is 80% business strategy and maybe 20% area locational advantage."

I'd like to elaborate on the 80-20 remark. I believe we need to equip businesses in NE Ohio with new business strategies that enable them to become more successful in the global economy by operating here versus other locations. To that end, our economic development efforts need to spend more time helping local companies reengineer their businesses here to fit more successfully into the changing global marketplace. This also says that a business' success here or anywhere else depends four times more on its own business strategy than what the local economic development climate has to offer.

Your view?

Here to read more.

Do the Area Economic Development Ratings Really Help?

Many folks in Portland, Oregon are beginning to wonder whether all the ratings their city and region receive are "over-rated." Do they really help a city or region understand its competitive position or what it needs to do to improve in the future?

I think this is a fair critique. Places receiving favor ratings for their business climate, quality of life, etc. tout them. Those receiving unfavorable ones either work to discredit them or ignore them.

From a purely research standpoint, there is much room for improvement in how many business and economic climate ratings are undertaken. And as one Portland official notes, many of these ratings are done by people who have no idea what the places being rated are REALLY like.

Will this deter the raters from rating? Probably not, but maybe they will pay closer attention to how they undertake these studies in the future. Hopefully so. I find most to be of only marginal utility in judging an area's readiness or success for economic development. One thing is for sure--the media likes to write about them and talk about them.

Go here to read more.

Public Transit and Suburban Development

For a good example of how to improve workers' access to suburban jobs, see what Pittsburgh is doing. Click here.

One Female Economic Developer Speaks Out

We hear relatively little about what it's like to be a woman working in economic development. In a recent interview with the San Diego Union Tribune, Julie Meier Wright said this: "I think that's really the only way to be effective at what you do," says Wright, chief executive of the San Diego Regional Economic Development Corp. and a former cabinet member of former Gov. Pete Wilson. "You have to be yourself and trust that others will accept that." Wright counts that confidence as one of the keys to her success. Good for you, Julie!

Go here to read more.

I've Had It With the Lies

In the words of Gautam Adhikari, a former executive editor of the Times of India, and currently a visiting fellow at the American Enterprise Institute: "Although high-tech outsourcing unfortunately causes temporary disruptions in the jobs situation and keeps wages depressed in some skilled occupations, it also helps moderate inflation and thereby keeps prices low for the average American consumer.

Threats to the U.S. economy probably lie elsewhere--in ballooning and unprecedented budget deficits, in a dollar that is cascading in world markets, in creeping doubts abroad about its long-term financial credibility--and not in the shift of a few high-tech jobs abroad." Read more here.

These are quotes from a recent guest article in the Fort Worth Star Telegram. Adhikari is creating a smoke screen that is designed to cover the plot that American corporations and foreign governments are hatching to piece-by-piece move large parts of the Amnerican economy offshore. And sadly, Washington is going along with the plot--all in the name of globalization and what's right for the world. When was the last time anybody in Washington really gave a hoot about what's good for the world? Certainly not in the last four years.

My assessment is that the two sets of issues raised by Adhikari are not in fact separate issues. Instead, they are closely related. Business strategy and the macroeconomic environment are always related issues. The Bush economic strategy is not working. More time will not help, instead it will only make things worse. Don't be misled by those seeking to deflect attention away from the problems caused by offshore outsourcing and other contemporary business strategies. At the same time, the Democrats must find a real solution to the problem, and not just more rhetoric. Right now, the other side of the aisle is desparately struggling to find a better way.

The global economy is not an explanation or justification of anything. It is a simple reality that markets, businesses, government policy, and people transcend local and national borders. It is ludicrous to use it as an excuse for why companies are employing current business strategies to make themselves more profitable at the expense of American jobs.

A more sensible strategy would be for our businesses to cleanup the corruption and double dealing that goes on in the corporate world, stop lying to workers and citizens about the "give to get" strategy of economic development, and get with a real strategy that holds everyone everywhere to the same standard of an honest economic return.

Personally, I am tired of the lies and the cover-ups. If Americans want to help themselves and do the economic world a favor, let the markets be silent for one month. Stop listening to the TV and newspaper ads about sales, cut all discretionary spending. Put your money in the bank or under your bed. Our economy needs just this type of day of reckoning. Let American and foreign corporations alike know that the American consumer is going to exercise his/her right to not spend until some real solutions to our economic problems are put on the table.