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Oct 11
2011

Transformational Economic Development

Posted by: Robert J. Leaver in Next Economy

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Robert J. Leaver
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Transformational Economic Developmentchange

The profession of economic development was born in the 70’s to develop methods for attracting companies and jobs to a municipality or state. Times and conditions have changed and the profession has not.

This manifesto is a call, among economic development professionals, for the use of a fresh set of ideas and practices to guide the future of our economies.  The manifesto is not a demand to let go of the past, but rather juxtapose the future and the past as creative tension of the opposites.

A Manifesto

Robert Leaver New Commons

neda logo

Scott Gibbs Economic Development Foundation of RI

Context for This Manifesto

NEDA held its 54th annual conference in Providence, RI, October 17 to 19, 2010. The theme was “Transformational Leadership in Economic Development.” It was designed to seed continuous conversation about the transformation of the profession and NEDA.  The entire conference was recorded and transcribed as a 78 page summary. This draft manifesto was inspired by conducting content analysis of what was said by presenters and participants.

Two words require explanation. Transform is to change the form or give a new form to something; in effect, change the substance, character or disposition of something – in this case economic development.  A manifesto is a public declaration about changing something that matters to you. Manifesto comes from the Italian “caught in the act, flagrant.” In effect, a manifesto is a coming-out.

Based on this manifesto, each community will be challenged to tailor, rooted in its own values and conditions, two things.  First, public policies – statements of what ought to happen. Second, local practices or what has to happen to change the game of economic development.

This manifesto challenges us to tell a new story for the future of economic development.

Current Reality of Economic Development

We know some economic development stakeholders are trying to change course. But as a general observation, the predominance of economic development activity is rooted in the old economy. The focus is still using old economic development practices, e.g., recruitment of capital through business attraction and economic development incentives. There is too much use of low-road strategies such as lowering business costs and regulatory relief. The focus of investment is hard capital instead of people as human capital. Absent of research supporting the efficacy of this approach, and an estimated $50 billion spent in economic development incentives annually, we really have to ask the question, what are we doing?


This Call to Action

The manifesto is a call to action to reinvent the way we think and behave about fostering economic health. This call to action demands true leadership from us, including the ability to integrate into economic policy formulation fresh questions. It requires the ability to break away from the economic development pack and do things differently.  It requires us to be willing to depoliticize economic development and build an inclusive, collaborative, and knowledge-based community dialogue concerning the future of our local, state, and regional economies. It requires us to focus on long-term transformational strategies and look away from the desire for short-term, incentive-driven quick fixes. It requires us to be aware of our propensity to develop economic development institutions instead of what we need: economic development systems or networks. And finally let us build economic development cultures that are value-based, not strategy blinded.


Motives – are what drive change

The conditions of the 1970’s that defined the profession of economic development have changed. Chris Martenson told us in Providence in October 2010: “The next 20 years is going to be completely unlike the last 20 years.”

  • The motives, or drivers of change, are framed as what-if questions born from the issues discussed in last year’s NEDA conference:WWhat if the economy does not resume growth at a compounded rate? What does that mean to our financial institutions, and the capacity of our public sectors to provide adequate services?
  • What if the cost of energy continues its upward trajectory (notwithstanding its continual fluctuations)?
  • Our economic system must grow, but how to do it in a resource-constrained world of less energy...less natural resources...less money?
  • What if the gulf between the haves and have-nots continues to widen? Stated otherwise, what if we continue to witness the decline of the middle-class?
  • What if we continue to experience increasing economic change and volatility? How do we react to increasing mobility of capital, and declining product/company lifecycles?
  • What if manufacturing is a future growth industry?
  • What if what we are experiencing is the new normal?

None of us has the answer to any of these questions. We all know we are experiencing a fundamental change in our competitive environment.  And this fundamental change demands different approaches to facilitating economic health (notice, we didn’t use the term economic growth). We need a redesign in the face of increasing economic globalization and financial risks...continued depletion of our natural resources...concerns over environmental degradation...failure to develop our people...are all risks that cannot be ignored.


Vision – an achievable dream of what has to be different for economic development

  • Integrate economic and community development.  Build the capacity of a local community to be resilient to adverse shocks and include diverse stakeholders at the table.
  • Ensure that business drives economic development.  And that business has staying power when elected officials change.
  • Advance the profession as a profession in the eyes of the public, especially politicians
  • Evolve three new economic development roles: manager of serendipity, educate/cultivate conveners and coordinate and accelerate networks.
  • Bring young people into the profession...young people who don’t think like the elders and use technology in effective and creative ways.
  • Redesign the business model for economic development to get paid differently than only using tax money. Develop entrepreneurial/earned income funding models that do not rely on the public dollar alone.  Develop funding models that reward collaborative behavior, such as sharing credit, across silos.


Values – taking a stand on what really matters

Foster value-based leadership to evolve economic development professionals. These values are fundamental to shaping the future of economic development, programs, organizations and systems.

  • Use crowd-sourced innovation and not internalized innovation. Capability solutions are now global.
  • Live a stakeholder-drive, ethical mindset and not stockholder mindset...do what is best for the local community.
  • Collaborate among diverse partners through continuous dialogue and not control and credit.
  • Use systems and networks and not stand-alone organizations. Rely on intangible assets such as trusted relationships as the competitive advantage. Competitive advantage is now about connecting people, processes and ideas in combinations that are not replicable.
  • Work with economic development predicaments and not problems. Problems have known or achievable solutions, while predicaments have outcomes not yet known. Predicaments need to be mitigated, as there is no 100% fix as there often is no solution. To face our predicaments, we must mount many experiments because we can’t predict which ones will take hold.  
  • Rely on Information/knowledge to make an effective case and not opinions and anecdotal information...and foster transparency and metrics and not hubris and self-promotion.
  • Use a pull-strategy focus and not a push-strategy.


Creative Tensions – opposing ideas to hold at the same time

These “opposite” ideas have to be held in our minds at the same time without getting seduced into letting one side go in favor of the other. Each pair is a creative tension, where one side is more familiar and historically used in economic development. With each pair, one side is newer to the economic development profession. It will take a lot of heavy lifting to keep the newer idea in our minds.

  • Short-term thinking...Long-term thinking
  • Transactions...Transformations
  • State focused...Regionally focused
  • Political....Transparency, equal access
  • Old organizations...new organizations
  • Attraction of companies from elsewhere...grow local companies from the inside through “economic gardening”
  • Fixed-capital investment…human-capital investment
  • Strategic planning…vision/mission/value acculturation

The intent of these creative tensions is not to imply that they are mutually exclusive, but rather to emphasize that it is a question of balance or learning how to stand in the tension of the opposites. For example, let’s not lose our ability to do transactions, but strive to continually transform at the same time.

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the end of growth
written by greg gerritt, October 24, 2011
Rarely in looking at documents in the field of economic development are there any acknowledgements that growth as we know it may be a thing of the past. Very glad that Robert acknowledged that this phenomenon may be occurring. I strongly believe that due to ecological collapse growth will essentially disappear, and that we need to figure out how to create more jobs with less money. Ecological healing and a focus on food will help us do that.

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