ED Futures' Economic Well-Being Survey

ED Futures is conducting a survey of economic development organizations on the subject of how ED policies and programs contribute to citizen economic well-being.

A notice was emailed to ED Futures subscribers on Friday and already nearly 80 people have completed it. That indicates to me this is a subject of significant interest to ED Futures readers.

If you would like to take the survey and did not receive the email invitation, please click here:
Economic Well-Being Survey Link

Thank you.

Don Iannone
Publisher, ED Futures
Tel: 440.449.0753
Email: dtia@don-iannone.com

Kerr-Tar Hub

The Kerr-Tar Hub is a multi-county collaboration to create a technology center that will serve as a magnet for business investment in Franklin, Granville, Person, Vance, and Warren counties of North Carolina.

Business and academic partners in the five-county Kerr Tar Region of North Carolina, with help from local governments, are developing a bold plan to develop a new kind of business park to attract 21st-century jobs and investment to the region.

It will target innovative and growing companies making advanced products, providing on-site training, services, facilities and networks to help them remain globally competitive and continue to hire. Jobs created in the hub will offer attractive wages for local technicians and others ready to train for needed skills.

Learn more about Kerr-Tar Hub.

North American Bioetch Companies

Source: Ernst & Young LLP, America's Biotechnology Report: Resurgence, 2004.

Target Industry: Agricultural Biotechnology

Agricultural biotechnology is an advanced technology that allows plant breeders to make precise genetic changes to impart beneficial traits to the crop plants we rely on for food and fiber.

For centuries farmers and plant breeders have labored to improve crop plants. Traditional breeding methods include selecting and sowing the seeds from the strongest, most desirable plants to produce the next generation of crops. By selecting and breeding plants with characteristics such as higher yield, resistance to pests and hardiness, early farmers dramatically changed the genetic make-up of crop plants long before the science of genetics was understood. As a result, most of today's crop plants bear little resemblance to their wild ancestors.

The tools of modern biotechnology allow plant breeders to select genes that produce beneficial traits and move them from one organism to another. This process is far more precise and selective than crossbreeding, which involves the transfer of tens of thousands of genes, and provided plant developers with a more detailed knowledge of the changes being made.

The ability to introduce genetic material from other plants and organisms opens up a world of possibilities to benefit food production. As an example, "Bt" crops that are protected against insect damage contain selected genes found in the common soil bacteria, Bacillus thuringiensis. The Bt genes contain information that the plant uses to produce a protein toxic to the larvae of certain plant pests but is safe for humans, animals and other insects. Pest-protected Bt plants stop these insects from eating and destroying the plant, which improves yields and reduces the need for pesticide applications, saving the farmer time and money. Organic farmers use this same Bt to protect their crops from insects.

More? Consider going here.

Book Review: Will Your Next Mistake Be Fatal?

Will Your Next Mistake Be Fatal?
Avoiding the Chain of Mistakes that Can Destroy Your Organization
By Robert Mittelstaedt, Wharton School Publishing, 2004

Are economic development organizations subject to fatal mistakes and disasters? Folks, all organizations are subject to these situations. For that reason, this book review might be important to you.

Robert Mittelstaedt has done a masterful job of showing all of us how "fatal mistakes" occur in organizations (and communities I might add) and how we can see them coming, avoid them, or deal with them if they occur.

Some red flags can indicate that your organization is predisposed to big-time blunders, including:

• “Failure to believe information that you do not like” or to “evaluate assumptions.”
• “Success that breeds arrogance and adversely affects decision-making.”
• “Frequent communications absence or failure.”
• “Cultures that suppress initiative, information or action.”
• “Failure to evaluate past mistakes and learn from them.”

In addition, some signals warn that a seemingly minor businsess verge of spinning out of control. These signs should always raise concerns. They include:

• “Situations you have not seen before” or “unusual or rapidly changing data.”
• “Results ‘on plan’ through luck.”
• “Failures of control systems.”
• “Need to retrain significant numbers of personnel because they are not performing.”
• “Frequent operational problems that are not addressed by standard procedures.”
• “Problems caused by communications issues.”
• “Problems where help was available but not utilized.”

Research and experience offer several insights into how to avoid fatal mistakes, including:

• “Fly the airplane” – This old aviation maxim tells pilots that even when things are going wrong, their primary function is still to fly the airplane.
• “Clarify responsibilities” – Delineate who is responsible for what; leave no gray areas.
• “Stop and figure out what’s going on” – If something just doesn’t make sense, don’t continue to do business as normal. Call a timeout and figure out what’s happening.
• “People are usually at the root of the problem” – This may seem harsh, but the phrase “human error” exists for a reason. Most errors with fatal outcomes stem from multiple mistakes that can be traced back to people.
• “Failure to analyze data points and ask what they mean” – Especially under pressure, people tend to overlook or rationalize data that doesn’t make sense.
“Across industries and situations, ineffective communications can accelerate deterioration of a mistake chain” – Communication glitches are extremely dangerous.
• “Test and retest assumptions” – Faulty assumptions lie at the heart of any mistake.
• “Believe the data” – Trust that your indicators are telling you something important. At Three Mile Island, people ignored indicators that were sending warning signals.
• “Train for the ‘can’t happen’ scenario” – If nothing else, this will open people’s minds to a broader view of what can go wrong.

Mittelstaedt provides us with some really sound advice. Heed it!

Buy the book at Amazon.com

Jacksonville Commercial Real Estate Market Ranked Last

Jacksonville, Florida's commercial property market ranked the lowest in the country this quarter, according to Moody's Investors Service.

Jacksonville's vacancy rate for the central business district jumped to 21.3 percent from 18 percent last quarter. Moody's considered 70 areas in ranking cities in terms of supply and demand for commercial real estate.

Joining Jacksonville as the worst commercial property markets were Hartford, CT, Trenton, NJ, Atlanta, GA and Las Vegas, NV. The top five markets were Los Angeles, CA, New York, NY, Orange County, CA, Honolulu, HI and Washington DC.

Source: Commercial Real Estate News

How Does Economic Development Work and Is It Working?

I posted a short article on this subject last week. It turned out to be the most popular article in last week's ED Futures newsletter. Nearly 200 people downloaded the file I posted on the subject. That tells me the question deserves a serious answer. So, here goes.

Those of you who read the "How Economic Development Works" article and clicked on the link discovered it was a "trick" article. I posed the question to the "How Things Work" portal of Answer.com, which served up the reply: "No results available on this question." I copied this information into a PDF file and upload it to the website.

In reality, that is the correct answer. Honestly, there is no widespread consensus within and outside the economic development profession about how economic development works, or even the degree to which economic development is working in achieving its most important goals.

Before answering the question of how something works, we need to define the thing. According to the International Economic Development Council, there is no single, widely accepted definition of economic development. However, IEDC says there is general consensus about the overall goal of economic development, which is to contribute to an improvement in the economic well-being of people living in a geographic area.

With this observation in mind, perhaps we should re-phrase our question to this: "How do economic development efforts contribute to the population's economic well-being, and how effective are these efforts in enhancing economic well-being in local places?"

What is the best way to measure of economic well-being? According to the U.S. Census Bureau and many economists worldwide, personal and household income are the best measures of economic well-being.

Research on economic well-being indicates that:

1. Major disparities in personal income exist across the American population based upon racial status. American Indians, Blacks, and Hispanics consistently lag Whites and Asian Americans in personal income and wealth creation.
2. Several structural factors, including family structure and history, educational attainment, occupational status and related earnings, prejudice, and ownership of economic assets account in significant part for the personal income are seen as drivers for income growth in various population groups. Ownership of economic assets and educational attainment are two issues receiving much greater attention in the fight to achieve broad-based prosperity growth in America.
3. Personal income growth has slowed across America, but especially in those states experiencing major declines in their wealth-building industries, particularly old-line manufacturing.
4. Our national population is relying more on transfer payments, in large part income from retirements and stock market dividends, as a source of personal income. While earned income continues to be the major source of personal income, it has been slipping as an income source in the past decade.
5. Wages for average workers have been growing slowly across the country, and an increasing number of both low-skilled and higher-skilled jobs are being eliminated. Those geographic areas more dependent upon low-wage/low-skill jobs have seen the weakest wage growth.
6. Salary growth for middle management types has slowed considerably, and an increasing number of management level jobs are being eliminated because of corporate restructuring.
7. A larger number of American workers, across all occupational categories, are facing serious cuts in their retirement and healthcare benefits as employers apply the cost-cutting knife to these areas.
8. Technology continues to eliminate jobs in most industries as automation and the Internet reduce the need for people to perform "routine" work. On the flipside, technology is creating new many jobs, which tend to be highly skilled in nature and require advanced education.
9. Outsourcing, especially to offshore sources, is a major cause of job and personal income declines in both growing and declining areas across the country. New jobs created in new places are eliminating old jobs in old places.
10. Our nation's future path to prosperity appears more uncertain today than it has in a long time in our history. Economic development's role in: a) improving the economic well-being of Americans is not well documented; and b) finding this new, more productive, path to prosperity is unclear.

How does economic development contribute to an increase in the economic well-being of people? As a profession, our intent over time has been to help geographic areas compete for "good" jobs by capitalizing on the area's economic development advantages and by reducing or eliminating barriers (disadvantages) that inhibit the creation of "good" jobs that create wealth for people.

That intent has been embodied in a variety of policies and programs designed to: 1) create an advantage for businesses to create good jobs; 2) prepare people with the knowledge and skills to compete for good jobs; and 3) make geographic areas more hospitable (competitive) locations for business growth and job creation.

Frankly, our profession uses most of its resources to help businesses achieve "their" objectives, which are often not the same as a geographic area's economic development objectives. We keep hoping (and praying) that the help we give businesses will translate into a real improvement in the economic well-being of the community. Often, it doesn't.

Remember the old saying: "What is good for General Motors is good for America?" Don't believe it. At times, the two interests (community and business) are aligned, and at times they are not aligned. The ultimate test of an economic development professional's skill is to know when this alignment does and does not exist, and then institute the appropriate course of action that either improves the alignment of interests or helps the community adjust to business decisions that are harmful to local citizen's economic well-being.

Increasingly, economic development organizations (EDOs) have been giving more attention to the same driving issues that businesses are focused on: globalization and its effects; and technology and its effects. The real question is which economic development policies and programs aimed in these two directions will result in a tangible improvement in local citizen's economic well-being. That is a crucial issue the economic development is struggling with right now.

Globalization and technology are two-edged swords that both create new opportunities and destroy old opportunities. New opportunities (new types of jobs, businesses, technologies, etc.) often seem to come at the expense of old opportunities (old types of jobs, businesses, technologies, etc.) , and the growth of new places (new and emerging economies) often comes at the expense of older places (established and mature economies).

In my view, we are shortly about to reach the day when nearly any business or economic function can be performed just about anywhere in the world. This explains India's and other developing nations' success in attracting high-tech and knowledge-intensive businesses and jobs. These nations are moving along the "learning curve" very rapidly by using "leapfrogging" growth strategies.

Economic development advantage is becoming increasingly "portable" worldwide. Its portability is driven by globalization and technology, which are moving us in two opposing directions simultaneously: 1) reducing the gap between nations and local places to perform economic functions; and 2) increasing the gap between rich and poor people on all continents. These trends and directions suggest that economic development, as organized and practiced today, will have even less ability in the future to contribute to the economic well-being in local places.

If we do not act now, our long-held worst fear could come true: our profession is doing little more than re-shuffling the deck chairs on the Titanic. I believe the situation is just that serious.

Like most business managers and leaders, economic developers are too short-sighted. We're tinkering when we should be innovating. We're using the microscope more than we use the telescope. We are working separately more than we are working together as a team. We are thinking too much about how we can get more for individual communities, regions, and states, instead of thinking about how we work within a global economic network to serve the needs of others and in so doing improve our overall economic well-being.

Economic development everywhere is at a major crossroad when it comes to its ability to shape the economic well-being of those we exist to serve and many people in the field don't realize it. Most people sense that things are not right and that something "big" is happening, but most can't seem to put their finger on what exactly is happening. Like any crossroad, there are different possible directions any geographic area might take. The choices available to your area are defined by those you have the ability to see.

I believe economic developers need to re-dedicate themselves to their most important goal, which is contributing to an improvement in the economic well-being of people in a geographic area.

How we go about this goal must change. Here are five concrete suggestions on how we should approach this goal and make economic development work better in the future:

1. Accelerate Entrepreneurial Growth: Increase efforts to expand entrepreneurship and self-employment across America. People stand the greatest chance at creating wealth for themselves and others by creating successful new businesses that meet new market needs. Special attention should be given to "innovative" business development.
2. Globalize Your Area's Economic Strategy: Chart a global growth course for your local area and its economic base. Focus beyond foreign business recruitment and international trade development. Identify how businesses, industries, institutions, and people within your area can serve global market needs and how they can use the power of the global economic network to access resources and opportunities. Places with strong global relationships will be those where economic well-being is the highest in the future. Be a globally-connected place.
3. Invest in People: When it comes to economic growth, all roads in the future will lead back to human assets. We must do everything in our power to educate and train people for the jobs and industries of the future. We must also teach them how to become responsible global citizens with an understanding of and appreciation for people, cultures, and ideas worldwide. Give special attention to improving people's ability to "innovate."
4. Cultivate Leadership by the Many: We can't get there without effective leadership. Change the concept of leadership in economic development from leadership by a few to leadership by many. Every child needs to understand that they must be capable of giving effective leadership to his or her own life, and in so doing they will make a positive contribution to the world.
5. Become a Master Resource User: Most places today aspire to create wealth for themselves by creating their own resources for economic growth. A more effective strategy in today's economic world is to become a more "masterful user" of resources anywhere in the world. Your first choice should be to use what's out there, instead of blindly creating your own version of what already exists. Develop national and global partnerships with other economic groups to use, share, and trade resources vital to economic development. Special attention should be given to sharing technological innovation resources, which are costly to create and in many areas are greatly under-utilized.

Taken together, these five actions can strengthen economic development's ability to contribute to an improvement in the economic well-being of people. I believe it's worth a try. Don't you?

Sound Advice for Every Economic Developer

"The two worst strategic mistakes to make are acting prematurely and letting an opportunity slip; to avoid this, the warrior treats each situation as if it were unique and never resorts to formulae, recipes or other people's opinions."

--Paulo Coelho, Author, The Alchemist

One to Take Personally

"I'm convinced that we can write and live our own scripts more than most people will acknowledge. I also know the price that must be paid. It's a real struggle to do it. It requires visualization and affirmation. It involves living a life of integrity, starting with making and keeping promises, until the whole human personality the senses, the thinking, the feeling, and the intuition are ultimately integrated and harmonized."

--Stephen Covey

Wise Words on Branding

"A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well." --Jeff Bezos

I believe economic development branding efforts would benefit if they heeded this wise advice. A community's reputation, and therefore it's brand, must be earned. Too many marketing and public relations companies get hired to give a community a brand it hasn't yet earned.

One for Your Community to Bear in Mind

"The winner is the chef who takes the same ingredients as everyone else and produces the best results."

--Edward de Bono, Creativity Guru

Character Trumps Strategy Any Day

"Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy."

--General Norman Schwarzkopf

Servant Leadership

"Leadership is an opportunity to serve. It is not a trumpet call to self-importance."

--J. Donald Walters

Divine Solutions

"When the solution is simple, God is answering."

--Albert Einstein

Ontario's New Biotech Web Portal

Here is a good resource to check out.

The BiotechOntario Web portal is the premier resource for information on the biotechnology sector in the province of Ontario. The web portal features a Biotech Directory of all companies, research institutes, hospitals, universities and colleges in the province, as well as BioGuides, which provide information on regional biotech clusters as well as business, investment and government programs relating to biotechnology. The portal’s BioMatch tool assists stakeholders seeking or offering a range of services, including financing and business development.

This web portal helps stakeholders network and develop strategic partnerships within the biotech community. BiotechOntario highlights the province’s dynamic biotechnology sector to interested parties both locally and internationally.

Visit the BiotechOntario Web portal at www.biotechontario.com.

The Biotech Buffalo Hunt

Here is a biotech story to make all of us think.

Florida officials have been courting the Scripps Research Institute for some time to augment the state's biotechnology resource base. It's a nice trophy and there are lots of good things that will go with it. The question is: "how much is it worth?" Time will tell.

Other states and metro areas nationally have also been infected with the same fever, which often makes them see visions of high-paying jobs and dramatic impacts on economic development - not to mention revolutionary advances in health care and agriculture. And the cure, as some experts point out, may come only after sufferers have wasted years and millions in taxpayer dollars chasing after a mirage. For everyone's sake, let's hope that is not the case.

That's the skeptic's view of the economic development community's obsession with biotechnology. Seven years ago, just 14 states had targeted biotech as a way to grow their economies. Today, 41 states are chasing the business. It is true that not everybody can win, or at least win big. Read more on the Florida situation here.

What is my view? Biotech (life sciences) is the future. Economic developers should be paying more attention to biotech's future growth potential. After all, we will be relying less on the automotive sector in the future. I think the real question for any area entering the biotech race is to be realistic about outcomes and timeframes, and be careful what you spend the public's money on. We should avoid the obvious stupid things, like giving away the farm to some company promising heaven. It won't happen.

Watch where the private sector's money goes. Invest in that direction. And yes, there are times when you will need to break from the herd and invest in some "out there" ideas. After all, Bill Gates was considered "out there" in the 70s when he was looking for New Mexico's help.

Political Branding of Economic Development

Every elected official does it; that is politically brands economic development. Why? Because that's what they think they must do to get elected and stay in office. You might find this article by Michigan's conservative-thinking Mackinac Center to provoke some thought on this issue.

One point that the Center has raised consistently over the years is that "targeted policies for economic development" (picking winners and fixing losers) do not work, and yet economic developers and their political bosses continue to seek out and deploy these strategies.

What does Don Iannone think? I see a lot of wasted and misplaced energy in this area nationwide and even worldwide. Most of the waste comes from not doing the job right. Many areas simply develop a list of industries they like and charge after them like it's a big buffalo hunt. That is a mistake.

I think it makes sense to know your economy, the industries that comprise it, which are growing, and which are declining. It is also important to understand the factors that drive change in these industries. It also makes sense to anticipate and take action to mitigate the negative effects of business and economic decline, and to anticipate and act to promote the growth of industries that fit with an area's values and resources.

Let me put it this way. If it is ok for industries to pick places, then it's ok for places to pick the industries they want to keep company with.

The Center's researchers use Michigan as an example of where the state's governors over the past several decades have tried to diversify the Michigan's economy through targeted development policies with little success. Although, in my assessment the state has a more diverse economy than it did let's say in the 1970s. I would add that many factors have contributed to this diversification. For one, the auto sector has become smaller and therefore other industries have risen in importance.

On the one hand, the Mackinac researchers might be correct. Automotive, even though smaller, is still the state's biggest economic driver. I would add that automotive has been driving the state's economy downward over the past several years.

Should Michigan work at diversifying its economy? Crazy question. Yes, the state's leaders should be working at improving its global industry mix to contain more growth. The real issue is how those state leaders go about this job. Michigan, like many other states, has shifted its economic strategies as new political regimes come into power. While regime changes can be useful "cleansing exercises," they can also create mixed expectations over time about where the state's economy should head.

Change is the only constant, which suggests that agility and flexibility are important ingredients to state and local economic development success. That means state leaders should not be afraid to change the program if the business investment market is headed in a different direction, or if businesses are not responding to the program you have in place.

Many conservatives say we (the economic development community) shouldn't mess with the private economy. Hands off they say. Let it run itself. Don't favor industries. Sounds like a noble idea, but guess what? Even the conservatives mess with the economy. And yes, even the conservatives have industry favorites, like nuclear energy, defense, and agriculture). So, maybe the real issue is whose messing do you like.

Your thoughts?

Welcome to the Latest Issue of the ED Futures Newsletter

Dear ED Futures Subscriber:

Did I ever tell you have much I appreciate what each of you do? If not, let me take this opportunity to say "thank you."

As an economic developer, you have a unique vantage point on vital economic, business, and community issues. No other profession that I know of places you at the very important intersection of so many interesting and exciting developments and activities related to communities, businesses, industries, technology, human relations, finance, and many other things.

What you do is eminently important to society. I am thankful that I "stumbled" into this field some 30 years ago. To think, I almost became an organization development (OD) consultant, which isn't all that bad either. In fact, my OD background has come in quite handy as an economic developer.

Lately, I have been re-reading an old book on mythology. The book made wonder about what mythical heroes and heroines might we look to in economic development. Here are a few I ran across.

Goddess of Business Attraction: That would be Artemis, who was the Greek goddess of hunting. Myths about her are often stories about hunting. Artimus could be very fierce. One of the best-known myths about her is the story of Actaeon, who accidentally saw Artemis while she was swimming in a lake. She was so outraged at being spied on while she had no clothes on that she turned Actaeon into a deer. His own hunting dogs chased him and killed him.

Goddess of Competition: The mythical hero for competition would be Nike, who was not one of the twelve Olympian gods. The Greeks (and also the Romans) sometimes worshipped things like good fortune, virtue, or wealth. Although these are ideas, not people, they turned them into gods and goddesses, complete with statues and temples. Nike was the goddess of victory and was usually pictured with wings. She was a very popular goddess in time of war.

Revitalization (Rebirth) God: In ancient Greek and Egyptian mythology, the Phoenix is a mythical bird and associated with the Egyptian sun-god Re and the Greek Phoibos. The Phoenix bird symbolizes immortality, resurrection, and life after death. Only one phoenix exists at one time. When the bird felt its death was near, every 500 to 1,461 years, it would build a nest of aromatic wood and set it on fire. The bird then was consumed by the flames. A new phoenix sprang forth from the pyre.

Consider your mythical roots, fellow economic developers, and pray for their help as you continue the journey to build stronger communities and economies for tomorrow's economy.

Here are a couple articles you may want to check out:

How Economic Development Works.

India Outsourcing Situation.

Thirteen Leadership Mistakes to Avoid.

In conclusion, if you know someone who would like to sign up for the ED Futures newsletter, just provide them with this link, which can be used to directly sign up for our mailings.

Thank you.

Sincerely,

Don Iannone
Publisher

Tel: 440.449.0753
Email: dtia@don-iannone.com

Einstein on Service

"Strange is our situation here upon earth. Each of us comes for a short visit, not knowing why, yet sometimes seeming to divine a purpose. From the standpoint of daily life, however, there is one thing we do know: that man is here for the sake of other men."

— Albert Einstein

Lincoln on Leadership

"Nearly all men can stand adversity, but if you want to test a man's character, give him power."

— Abraham Lincoln

Thirteen Leadership Mistakes to Avoid

In his 1966 book, The Officer as a Leader, Brigadier General S.L.A. Marshall shared thirteen mistakes leaders should avoid that are worth considering:

1. To attempt to set up your own standard of right and wrong.
2. To try to measure the enjoyment of others by your own.
3. To expect uniformity of opinions in the world.
4. To fail to make allowance for inexperience.
5. To endeavor to mold all dispositions alike.
6. Not to yield on unimportant trifles.
7. To look for perfection in our own actions.
8. To worry ourselves and others about what can't be remedied.
9. Not to help everybody wherever, however, whenever we can.
10. To consider impossible what we cannot ourselves perform.
11. To believe only what our finite minds can grasp.
12. Not to make allowances for the weaknesses of others.
13. To estimate by some outside quality, when it is that within which makes the man.

I pass this along to all of you. Pretty good advice on what not to do as a leader!

How Does Economic Development Work?

Good question, huh? As we all know, the recipe varies. A tablespoon of this, two parts this, a piece of that, but always a dash of magic.

So, how does economic development work? I decided to ask an expert. Click here to see what I learned.