Update on Arizona's Technology Industry Strategy

Arizona’s concentration in technology industries that are primary producers of new hardware, software and electronic technologies has declined, while those that integrate and embed technologies into their products, services and systems are on the rise. To ensure the state’s competitive position going forward, Arizona must create and add value to retain jobs in the producer sector and encourage further growth and innovation in the embedded sectors. This is the message of Building from a Position of Strength: Arizona Advanced Communications and Information Technology (ACIT) Roadmap, released recently by the Arizona Department of Commerce and the Arizona Board of Regents.

Primary ACIT sectors – computer and peripheral equipment, semiconductor and electronic components, communications equipment and services and software and data processing – have long been strong drivers for Arizona’s economy. Embedded ACIT sectors include navigational instruments, aerospace, research and development (R&D) firms and corporate administrative offices. During the recent economic downturn, Arizona’s embedded sectors actually added 1,900 net jobs between ’98-’02, while primary ACIT sectors lost almost 4,300 jobs over the same period.

Here for more.

Lake Havasu City, AZ on the Move

Hundreds of economic development professionals will gather in Lake Havasu October 6-8 for the 2004 Governor’s Rural Development Conference. This 30th annual event is being presented by the Arizona Department of Commerce in partnership with the Arizona Association for Economic Development (AAED) for the second year in a row. Click here for more.

ED Branding: Utah...Where Ideas Connect

I have been looking at several economic development branding strategies. Here is the one used by Utah:

Brand Message: Utah...where ideas connect.

Five central themes are being pushed under the idea:

1. Growing Workforce - Utah workers are young, dedicated and highly educated. Their numbers are growing at twice the national average.

2. Education Oriented - Utah is producing more graduates than ever before from its 12 universities and colleges, including three major research universities. The state continues to lead the nation for investment in research and higher education.

3. Tech Savvy - With thousands of technology companies thriving here, Utah is often ranked among the top high-tech hot spots in the country. Utah is also known as one of the nation's most wired states.

4. Affordable - Thanks to low labor, energy, tax and lease rates, the cost of doing business is lower here than in other technology hot spots.

5. Recreation Minded and Livable - Clean air and water. Free-flowing traffic. Safe communities. Stunning natural landscapes. And above all, the best recreation in the world.

Here to read more.

InvestChile

Recently in doing some research on Latin America, I ran across the link for the Chilean economic development agency that is promoting high tech business development for the country. Interesting website. I urge you to stop by. Go here.

How Business Leadership is Changing

Leadership styles today combine the classic values of discipline and execution with the contemporary values of openness and natural expression.

The New Economy of the 1990s brought much that was new and refreshing to work — casual office culture, enthusiastic employees, nonhierarchical leadership principles. It also led to excesses (on-site personal fitness trainers, luxury cars, stratospheric salaries for unseasoned managers, stock options for everyone) that topped even the avarice of the 1980s. That party is over, for now. Internet entrepreneurs (the few that are left from headier days and the latest entrants) are more restrained. Corporate leaders are reverting to classic styles of leadership. In Europe, CEOs such as Gunter Thielen of Bertelsmann AG and Jürgen Dormann of ABB Group are concentrating on basic tasks: business and cost consolidation, reorganization, shifting of strategic priorities, and rebuilding.

Does this imply that the managerial style the New Economy brought us is appropriate only during boom times? As we begin 2004, cautiously watching for signs of economic recovery, should we assume that command-and-control is the prudent leadership standard?

No. The truth is, leadership styles are always evolving, with newer elements complementing more traditional ones. Increasingly, senior executives, even entire corporate cultures, are combining classic leadership values, such as discipline, focus, and execution, with more contemporary values, including openness, a greater emphasis on the quality of communication, and naturalness. This bodes well for the future of all companies.

In many ways, it’s unsurprising that the integration of a new, younger generation of leaders into archetypal industrial enterprises is producing new leadership methods. It remains to be seen, though, whether this trend will include continued appreciation for one of the most beneficial shifts in business culture to occur during the 1990s — a greater tolerance and respect for expressing emotion and personal values, even spirituality. As Anselm Grün, a German Benedictine friar who is the business manager of the Abbey of Münsterschwarzach in Germany and an author of many books, writes: Only the one who “is able to find his peace inside himself, and in God, may create an atmosphere of peace around himself making employees feel well and enabling them to enjoy their work.” Grün, who oversees 20 companies owned by the Benedictine order, is also an acclaimed writer in Germany, with a strong following among German CEOs.

Another clergyman, American Matthew Fox, has preached similar themes to businesses executives. A former member of the Dominican order, Fox now is an Episcopal priest and founder and director of the University of Creation Spirituality in Oakland, Calif. In his book The Reinvention of Work — A New Vision of Livelihood for Our Time, published by HarperCollins in 1994 (before the exuberant half of that decade), he writes: “Perhaps this reinventing of the quality of the workplace will also contribute to the reinventing of the quantity of work available. When workers have integrated spirituality with their work, their values, their creativity, addictions such as overwork and the practice of overworking employees might give way to more shared work.”

Here to read more.

Manufacturing Ain't Dead

Reports of its demise are premature, but in an era of rapid change and shrinking margins, smaller outfits face a new and scary world.

Read this. We need more of the "Joes of this world."

"Manufacturing is dead here," declares the blasé moderator of a Center City forum in Philadelphia called Selling Overseas, where I recently served as a panelist. I was taken aback by her glib assertion, which seems to be the conventional wisdom these days. Venture capitalists and local government officials have jumped on the latest bandwagons, chasing opportunities in biotech and information technology. In so doing, however, they ignore a sector where we still have considerable competitive advantages, not to mention a solid tax base and proven potential for job creation, meaningful work, and long-term community stability.

Of course, not everyone has given up on manufacturing. Joe Houldin, the dedicated CEO of the Delaware Valley Industrial Resource Center (DVIRC), cherishes the memory of his father, a factory worker, "who raised us with a sense of dignity and aspiration." Locally, Joe leads the battle to preserve and develop our local manufacturing base. Funded by the state and federal government to help us become more efficient and competitive, the DVIRC has had considerable success. Indeed, the most recent numbers from the Philly Federal Reserve show continued expansion in the sector.

Joe points to our local heritage as the key to our success. By contrast, he states, "Other parts of the country that build their economies around high-volume manufacturing have been decimated by the shift overseas. Here, we have a tradition of small, specialized niche businesses." He equates our micro-economy to "the colonial era or the beginning of the industrial revolution."

Overall, Joe is optimistic about our prospects. "We're a very high-cost region and we want to stay that way. If we can maintain our high-valued added, low volume, niche businesses, we'll be well positioned," he continues. "If we do things right, we're going to kick butt." But that's a big if. To prosper, we must remain innovative, continue to invest in our operations, attract skilled employees, and target healthy markets. Even with DVIRC support -- itself under threat of government cuts -- any misstep could prove fatal.

Here to read more.

Converting Displaced Workers Into Entrepreneurs

The Kaufman Foundation has a wonderful program called FastTarc that can aid your efforts to help displaced workers, which are growing in number, into entrepreneurs. It's a very useful tool and you should know about it. Click here.

Venture Investment Information Portal

Looking for information about the vast venture capital investing community? You may want to check out this site. It might provide you with just what you need.

How Do I Figure That?

Ever been stuck with how to convert data or analyze certain types of problems? Before you dispair, click here to use some of the online calculators that are available to you.

Industry Sector Data

You can find some very useful data on industries and industry clusters at EconData.com. Go here to access the site, which contains a lot of free data and links to free data.

Foreign Country Data

If you're looking for a great source of information on countries for trade and reverse investment development, click here and visit the World bank Group's website. Note: many publications now cost money, but they are great.

Small Business Profiles

I need data on small business growth in my state, where should I look. Look no further. Click here and it's yours for free. The SBA state small business profiles are quite informative.

Foreign Direct Investment Trend Data

Where do you find good quality comparative data on FDI in the U.S.? Click here and it's yours for free from the Bureau of Economic Analysis (BEA).

Must Read: The Essential Drucker

Peter Drucker has always been one of my favorites. Here is a summary of what his new book is all about.

Drucker himself chose the material in this from books and articles written during a 60-year career, one which continues in his 93rd year. Can you believe it?

According to Drucker, this volume has two purposes: "First, it offers, I hope, a coherent and fairly comprehensive Introduction to Management. But second, it gives an Overview of my works on management and thus answers a question that my editors and I have asked again and again.

Where do I start to read Drucker? Which of his writings are essential? The material is divided within three parts: Management, The Individual, and Society. In all of what Drucker has published thus far, he either asserts or implies that the profession of management has obligations to society in general (indeed to the global human community) as well as to any one organization. Indeed, he entitles another of his works The Profession of Management. The title of Drucker's first chapter in this volume suggests this: "Management as Social Function and Liberal Art." The title of the final chapter is "From Analysis to Perception -- The New Worldview." As always, Drucker has one eye on the task at hand and the other on the future. All of the material in this volume is first-rate.

It's worth a cruise. Drop by Amazon.com or Barnes and Noble.com for a look.

Forbes Says US Doing Fine at Trade Game

Hum. I would agree in general that we are making headway in international trade. I would not agree that we are positioned properly from a trade policy standpoint for our future competition. In any case, click here to read what Forbes has to say. There are three videos on the site for the reading-impaired.

Educational Paradigm Shift, I Like It

What can executives learn from a women's liberal-arts college in Milwaukee? The most important lesson: how to turn their companies into learning organizations. Sounds like a valuable source of competitive advantage for businesses to me. Want to know more? Read on.

At first glance, Alverno College appears unremarkable. With a campus of tan buildings on the south side of Milwaukee, it has just under 2,000 undergraduate students, all of whom are women, many of whom come to class on a typical day in hooded sweatshirts and ponytails. But appearances can be misleading: Alverno has been internationally recognized for its innovations in education. The reason why is both simple and revolutionary: Its students are actually learning.

"At the core of our philosophy is the idea of the student being conscious of what learning means as she goes through her life," says Sister Austin Doherty, director of the Alverno College Institute, which works with other educators who are interested in replicating Alverno's best practices. "When a student graduates from Alverno, it's not like, 'I got the degree. That's it.' It's more like, 'This was the formal setting where I focused on how to raise questions and make judgments.' "

Go here to read more.

Incrementalism or New Breakthroughs: Which Is It?

A recent Economist article says that rather than chasing new wonder products, big companies should focus on making lots of small improvement. Hum. let's talk about this one.

Big companies have a big problem with innovation. This was most vividly described by Clayton Christensen, a Harvard Business School professor, in his book, “The Innovator's Dilemma” (Harvard Business School Press, 1997). Few conversations about innovation take place without reference to this influential work.

The Oxford English Dictionary defines innovation as “making changes to something established”. Invention, by contrast, is the act of “coming upon or finding: discovery”. Whereas inventors stumble across or make new things, “innovators try to change the status quo,” says Bhaskar Chakravorti of the Monitor Group, another consulting firm, “which is why markets resist them.” Innovations frequently disrupt the way that companies do things (and may have been doing them for years).

It is not just markets that resist innovation. Michael Hammer, co-author of another important business book (“Re-engineering the Corporation”, HarperCollins) quotes the example of a PC-maker that set out to imitate Dell's famous “Build-to-Order” system of computer assembly. The company found that its attempts were frustrated not just by its head of manufacturing (who feared it would lead to most of his demesne, including his job, being outsourced), but also by the head of marketing, who did not want to upset his existing retail outlets. So the innovative proposal got nowhere. Dell continued to dominate the business.

Mr Christensen described how “disruptive innovation”—simpler, cheaper and more convenient products that seriously upset the status quo—can herald the rapid downfall of well-established and successful businesses. This, he argues, is because most organisations are designed to grow through “sustaining innovations”—the sort, like Gillette's vibrating razor, that do no more than improve on existing products for existing markets.

When they are hit by a disruptive innovation—as IBM was by the invention of the personal computer and as numerous national airlines have been by low-cost carriers—they are in danger of being blasted out of their market. This message found a ready audience, coming as it did just as giant businesses from banking to retailing, and from insurance to auction houses, were being told that some as-yet-unformed dotcom was about to knock them off their pedestal.

There are implications of the improvement versus radical innovation strategy. Many manufacturers are struggling with current products, and some think we need to stop tweaking old ones and focus instead on birthing the next generation products and services. Who's right? I guess that depends on who you talk to. My suggestion is that we do both. Novel idea, I know. Truthfully, we need to enhance existing products and push them as far as we can, and we need to get with next-gen technology before our world competitors do.

Go here to read more. This is an important one for economic developers.

U.S. Trade Negotiators Aren't Cutting It in Asia

So we want to increase our international competitive position. Great! So, what is holding us back? If you look at recent events, you'll see that our trade negotiators are not getting the job done. Read on.

It was a week of stark contrasts in the changing fortunes of East and West. On February 16, Robert Zoellick, the chief trade negotiator of the United States, landed in dusty New Delhi with a mission—to convince India to break down its barriers so that more American goods could compete in the local market. The following day, Praveen Kadle, the CFO of Tata Motors, hopped on a flight from Bombay to Seoul to complete the acquisition of a South Korean company. After days of preaching the virtues of free trade, Zoellick left India empty-handed and perhaps a little embarrassed. Kadle, meanwhile, returned with a deal that gives India's largest automaker a 26 percent share in the Korean heavy trucks market.

Seemingly unrelated, the two events are in fact key indicators of a power shift in the subtle game of global trade. By all appearances, US trade negotiators have lost their footing. Fretting over a record trade deficit of US$542 billion, they call for Asian governments to remove trade barriers. At the same time, Congress introduces protectionist policies at home. Treasury Secretary John Snow presses Beijing's leaders to revalue the yuan. Yet the Bush administration relies on China and Asia to finance its budget deficit by snatching up US Treasury bills, mass investments that keep interest rates soothingly low. In sum, the US needs Asia more than ever before, but its leverage is diminishing and its policies are all over the map.

Here for more.

Quality and Innovation Will Drive Manufacturing

How will manufacturing grow in the future? That is the question everyone is asking.

Manufacturers know that to survive is to change. And the changes they're making are sweeping now and will soon be revolutionary. With America's worst industrial recession since World War II drawing to an end, it's increasingly clear that the future of manufacturing won't look much like its past. However painful the transformation, the U.S. factory sector is continuing a decades-old evolution away from labor-intensive activities measured more often by scale than precision.

Those manufacturers still standing are concentrating on ever-higher-quality products and processes, even if that means tearing up long-standing business practices and shedding workers to survive. And in the wings awaits a new generation of molecular manufacturers -- which have more in common with chipmakers than carmakers -- aiming to create self-assembling machines on a nanoscale. A focus on quality in the near term helps fuel innovation down the road.

Here to read more.

Chinese Workforce of the Future

Click here to read about how China plans to fuel the growth of its workforce in the years ahead. The answer: more attention to hiring the young, the old, and the disabled. Read about how the Chinese Government plans to tackle this challenge.

U.S. Venture Investment Continues Growth

Investment in U.S. venture-backed companies reached $5.1 billion in the first quarter of 2004, continuing an encouraging trend of quarter-on- quarter growth since the first quarter of 2003, according to the Quarterly Venture Capital Report released by Ernst & Young and VentureOne, a service of Dow Jones. Larger deal sizes pushed the total dollars invested up 5% to the highest amount in almost two years. However, the number of transactions dropped 15% from 549 deals in the fourth quarter of 2003 to 465 deals this quarter. The decline is consistent with annual trends; the first quarter of the year is an administratively focused period for many venture capital firms.

The biopharmaceutical segment attracted its largest infusion of venture capital spending ever, with $1.5 billion invested in 57 deals, noted John Gabbert, Vice President of Worldwide Research for VentureOne. "The biopharmaceuticals segment is really the new bellwether for the VC industry as a whole. Half of the largest deals this quarter were for biopharmaceutical companies," Mr. Gabbert said. "In fact, this segment attracted 29% of all investments this quarter, even though deals were slightly reduced from 4Q03.

Here for more.

New EU Member Nations Cut Business Taxes

New EU members have sharply reduced corporate taxes to attract foreign investors, drawing the ire of some western EU states that complain they have been left to pay the bill. Since January 1, business taxes have fallen below 20 percent in most of the former communist countries that are to join the EU on May 1.

Within the union's 15 members, the average rate is 31 percent to 32 percent, despite having fallen sharply in the past few years, according to a recent study by the auditing group KPMG.

Upon entering the EU, new members will lose the decisive advantage of being able to completely exempt an investor from taxes for a period of 10 years or more. The European Commission insisted on gradually eliminating such practices, which it considers unfair state aid, during negotiations with each applicant country. The new members are Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

They were left with the option of imitating Ireland, which has been successful in attracting investment with an average tax rate of 12.5 percent. Western EU countries that impose higher tax levels have become concerned that they will end up paying for the new members' lower rates. "Fiscal policy will be a big battle within the EU," said Jeffrey Owen of the Organisation for Economic Co-operation and Development.

Here to read more.