Archive for October, 2004

Reinventing Rural America

Saturday, October 30th, 2004

by Dean Whittaker

While visiting a potential client this week, I had a chance to see and feel the effect the restructuring of our economy is having on small-town, rural America. When asked, community leaders had difficulty describing what was unique about their town. It was founded about 150 years ago, when one could earn a living with one’s hands. It is historically a “Blue Collar” town, where the major workers’ Union is now protecting older employees at the expense of younger ones and trying to buy time for both. Like many small rural towns, this one was bypassed by the interstate and has no institution of higher education. An aging workforce, a declining population, and a talent and brain drain to surrounding metro areas complete the picture.

Rural areas are struggling to compete in a global and knowledge-based economy. Many of the manufacturers who selected rural locations did so for the lower operating costs that these areas provided. Now, those same firms are seeking to move their labor-intensive, high-volume operations to even lower cost areas. Ok, so we know all of this. The real question is what can and should we do about it?

If one takes the long view (100 years or so), prosperity may once again return to these areas. As the economic cycle continues its oscillation, a town’s location at the intersection of two major railroads may once again be a critical factor for economic enterprise, especially with energy costs rising at a record pace.

Yet the question remains: what do we do today? How do people learn to earn a living with their heads instead of their hands? This employment challenge may be too difficult for many people, resulting in major new demands being placed on social service agencies.

For rural areas to continue a healthy existence may require that they create economic reasons for being. What can rural America provide to the metropolitan world? How about a place for a low-stress vacation or a simpler way to live? How about a creative, artistic community that’s also close to nature? How about a safe place to raise a family? How about a sense of community and belonging as one is greeted by name on the street and in the shops (including a local coffee shop where all really important discussions take place)? How about recreating the town as a nexus for antique collecting or weekend getaways? Or how about bringing the country to the city in the form of a farm-to-market service?

Reinventing rural America is going to challenge all of us to be more creative, compassionate and humane, and to think in terms of multiple generations when there is little short-term return on the investment. We’ve got a long ways to go, so we best get started!

Innovation Economy

Saturday, October 30th, 2004

by Pete Julius

Innovation is accelerating rapidly in some industries, while lagging in others. With the rush to find a cure for AIDS and fight cancer, heart disease and other life-threatening diseases, the health care industry is booming with innovation. Nanotechnology is a new and dynamic industry that is helping generate advancements in many industries, from health care to energy to transportation. Innovations in information technology have allowed all of us to communicate more easily and have made globalization possible. While these industries have flourished with innovative discoveries, other industries such as energy and transportation have not. So how can economic development professionals integrate future innovators into their overall marketing strategies?

The recent 75th anniversary issue of Business Week focuses on “The Innovation Economy.” This one-hundred-plus page report provides valuable insight into where the global economy has been and where it is expected to go in the future. As an example, Silicon Valley played a central role in the tech boom of the mid 1900′s, but where does it stand today? The region still possesses much of the talent and resources present during the tech boom. Silicon Valley still possesses abundant intellectual capital, venture capital, risk takers, and the necessary businesses needed to support small, innovative companies. However, it now operates with one distinct difference. Some companies in the Silicon Valley are now outsourcing their research and development component to places such as India. The lowered cost of doing business, the access to their intellectual capital, and the increased possibilities for collaboration are the key drivers to this strategy.

Recently, even outsourcing is experiencing innovative trends. For the past several years, commodity and routine-based jobs have gone offshore. But now, more and more research, development and engineering based jobs are moving to places such as India and China. Europe is also a hot bed of innovation. While Europe does not invest as much money into research and development as the United States, their innovations in aerospace, mobile electronics, health care and alternative industries have made significant strides.

The economic development profession must help communities realize that to successfully compete they must look beyond neighboring communities and surrounding states. Communities must focus globally and pay attention to the trends and developments occurring around the world. Globalization has led to a significant drop in the number of relocation and expansion projects in the United States. Globalization has made the economic development profession much more difficult. Globalization is affecting a wide range of industries, but innovative companies will be key drivers in our future economy. Given the increased competition due to globalization, what can communities do to attract, develop and grow innovative companies?

  • Promote co-opetition – get people to openly communicate and share ideas.
  • Provide access to tools needed by risk takers – secure resources from capital/funding to educational and training opportunities.
  • Encourage & promote entrepreneurialism – host and sponsor activities to get people to become risk takers.
  • Organize community think tanks & peer-to-peer groups – offer local businesses the opportunity for collaboration and a way to share and generate ideas.
  • Create speakers & training programs – schedule periodic community functions to educate local businesses about available resources, economic trends and resources for education in skills such as writing successful business plans.
  • Develop internships – establish a connection between local businesses and higher education institutions to provide job opportunities for students.
  • Establish roundtables – assemble roundtables that will allow business leaders to meet with a small number of individuals to discuss best practices and generate ideas.
  • Connect with higher education institutions – establish an affiliation with a major state or regional college, and if none exist nearby, build a branch campus.

These strategies must be aligned with the overall marketing program of an economic development organization. It is important to first understand the current local economic environment before undertaking aggressive marketing initiatives geared around spurring innovation.