Throughout modern history, the founding and continuation of communities has been predicated on compelling economic opportunities that drive individual investment of time, money, and labor to convert natural resources into monetary gain. Whether a community is founded for its access to trade routes via lakes and rivers or abundance of wildlife, timber or gold (to name a few), the founding of America has been a fascinating economic story.
I don’t debate that there’s going to be a robot revolution. My question is, will it be an American one?
— Matt Rendall, Otto CEO and co-founder, originally quoted in this article by Kevin J. Ryan, staff writer for Inc. Magazine.
Every so often, the Redevelopment Resources main blogspot is dedicated, in full or in part, to the rise and evolution of technology, and its effects on local economic and workforce development. Whether it’s encouraging learning to code for young and old alike, highlighting “Where Life Meets Art” in the age of robotics, or how machines are being leveraged to enhance learning, the affect that technology is having on the workforce (see the National Conversation on the future of American jobs) and the global economic landscape is inescapable.
Shifts such as these are difficult to navigate. Technology is changing and evolving at such a rate that it is generally impossible to the layperson to keep up — but it is the layperson that will ultimately be affected (and likely for the worse from their perspective). In such a climate, the temptation to hearken back to a more stable time, where manufacturing jobs in particular were abundant, and the middle class American dream was not only achievable – but achieved (as evidenced by the strong growth in the economy and rise in the middle class across the nation) is palpable.
That certain, indescribable something.
Every community across the US wants to have it. It is that seemingly magical essence that drives engagement and investment, and instills a sense of pride and responsibility in a community. Where does it come from? How does it permeate neighborhoods in such a way that even visitors – strangers to the area – are drawn to it, and find that they somehow want to become part of it?
Don’t teach your children to fish. Teach them to code.
The landscape has shifted beneath our feet. Again. We were aware of it to the point that it affected our daily lives; which means that for most, it was an interesting factoid that came up in our twitter newsfeeds. Many still don’t know what even happened or why it matters.
3D printers began to create food. Or, “food” if you prefer. Either way, an edible food-like product is no longer just available on the shelf of an average grocer; it is now available “hot” off the press. Human technology has come a very long way since Guttenberg’s original printing press made its debut in 1450. Just as Gutenberg’s contraption sparked social and economic revolution (and fueled many more), the 3D printer has the promise of social and economic upheaval hidden within its very code.
Imagine having access to almost anything you want – almost anything – with no need to rush out to the store to get it. Just print it. Think about that.
Think about every job that a general merchandiser supports. Textile manufacturers, plastic molders and assemblers, metal fabricators, shipping and transportation…everyone that is part of producing and distributing the goods to the store – and then, of course, there is the store itself. Consider all of this, and prepare to lose a fair number of those jobs to the revolutionary home 3D Printer. Think also about the food system in America. Think about fast food, “slow food” and everything in between. Think about food pantries and commercial kitchens and food incubators. How will this revolution affect them? What kind of world will we face in 50 years?
All of this is both amazing and intimidating.
While it is also mere conjecture, there are folks writing for the Harvard Business Review and the Huffington Post that seem to agree that 3D printing will permenantly change the economic landscape. And printed food? It isn’t something new in the lab – it is all the rage at food shows, is trending in the industry, being contemplated to end world hunger, and is being utilized as a real solution for feeding the elderly in Germany today.
What 3D printers could mean for the global economy (and the Economic Development profession) is staggering. Economic Developers exist to increase tax base and support wealth creation for the constituencies that we serve. With the normalization of 3D printing (even now, basic versions sell for less than $200), means that the way that we measure our work – historically in jobs numbers, square feet of new development, business investment dollars, and tax base growth – will become less relevant.
How to win in the New Economy
Economic Development practitioners have become increasingly aware of the market efficiencies caused by the growth of technology across sectors, and the subsequent contractions in footprint and job growth that result. To account for this shift, alternative metrics, such as income and population (via migration) growth, have become part of a new narrative for measuring success for EDOs.
Trending topics in the Economic Development industry today are the “Skills Gap” and the “Talent Gap,” where manufacturers are missing key skill sets today, and demographic trends point to a lack of warm bodies to fill jobs in the future.
Whether today’s gaps are a result of skill shortages (blame to be placed on the education system) or lack of sufficient wage incentives (blame to be placed on businesses), the core truth is that the market will adjust, and the skill shortage will be only temporary. Workforce Development boards, State governments, and local education institutions have stepped up their programming and responsiveness to the needs of industry.
Up Next: the Big Shift
Just as programs aimed at addressing the skills gap are coming on-line (and governmental bureaucracies are scrambling to keep pace with the speed of business), innovative communities are recognizing that they are only a short-term solution. These communities are recognizing that the true end-game lies in their demographics.
Because of this, the new wave in Economic Development is becoming community development and talent attraction, not business attraction. And, as many have discovered through work and research, the key to attracting talent back into areas that are laid waste by demographic realities is the development of quality places and attractive amenities.
The next generation of workers is more interested in the quality of place and local amenities – including broadband access – than their predecessors were. Where small communities have been operating at an intrinsic disadvantage for business attraction, in the new economy, well-connected, well-invested communities that offer a great quality of life will have a leg up in the race for talent.
With this in mind, the Redevelopment Resources teams are continuously encouraging our client communities to invest in themselves. Recommendations to acquire and demolish blight aren’t based on a personal preference; they are based on market realities. To attract both business investment and talent to your town, communities must be willing to put the first nickel in the bucket. Investors are attracted to places where things are happening – not to places where plans have been developed in a vacuum with no intention for the City to follow-up and invest where they recognized that it was needed.
Winning in the new economy requires foresight, courage, and intuition. Most of all, it requires investment.
Is your community ready to invest in their future?
Communities are organic beings. They grow or shrink; they can thrive or become ghosts. They can become physically diseased with blight and outdated infrastructure or face social plagues such as drug dependence, violence or systemic poverty. But like all other beings, they can also find healing by addressing their health problems head-on; strength by challenging their current capacity; and resilience by overcoming mounting adversity.
None of these things – healing, strength or resilience – can come unless the community is first both aware of its challenges and willing to completely let go of what it currently is / has been in order to address them. Beyond this, there must be an understanding that through this process of healing, growth, and change, the community will become something different from what it ever was before. Undoubtedly, systemic change aimed at healing disease, building capacity, and cultivating resiliency will encounter roadblocks. But it is through these challenges that the true test is met:
“The single factor that will do the most to change a culture toward acceptance of development … is the process of overcoming the challenges that face [the] community in difficult times. If communities come together to face change, they will adapt and thrive. If they don’t come together, they will pass away just like any other organic entity.”
— John Woods
Invest in Transformation
The process of overcoming challenges – that is, coming to an obstacle and surmounting it – is the driving factor in transformational change for both people and communities. It is in this process that resilience is formed, and through this process that new, or emergent community identities are forged. By shedding the past and investing in the future, communities can position themselves as home for unmet generations, and improve their odds for survival during challenges yet unseen.
Encouraging the types of investment required for sustained, systemic change may require the investment of public funds in the form of incentives. Incentives are a critical factor for projects that would not gain traction in the private market, yet serve the broader public good. By leveraging public dollars for the purpose of engaging in transformational investments, a community can take a proactive role in shaping their future.
Incentives are a topic of debate among economic development professionals as well as the public at large. Beyond the stated standard practice, I would contend that so long as the incentive is an investment – a strategic choice that results in growth (i.e. increased monetary base, enhanced workforce skills, etc.) throughout the broader system, they are a wise choice. Cultivating change is a difficult task, and is nearly impossible if a community asks the private sector to bear the entire burden.
Initiatives for Youth
Systemic change initiatives face a myriad of challenges – vested interests, conflicting opinions and comfort zones tend to muddy the water for the folks burdened with developing policy and/or implementing plans. Often, community leaders are well-seasoned, experienced people with a well-developed (and somewhat static) vision for what the community is – or can become. While dialogue may include topics such as empowering or engaging youth in the process, it is generally done via the bureaucracies of the school system, rather than engaging the under-25 year-old population directly.
This, of course, encourages the disengagement of a critical population in communities that are seeking healing from current physical and/or social disease or future growth. Community leaders must engage their prime customers – under-25 year-olds – in planning and implementation if they are to have any hope of retaining them as a quality future workforce and future leaders. Direct engagement is not without challenges; but without this critical piece, the broader challenges will only mount.
Interestingly, youths are generally endowed with an incredible capacity to adapt and change as obstacles or challenges impede their goals. This particular trait makes the youth in a community an invaluable asset when mental fatigue gets the edge on tenacity when implementing change. The ability to bounce back – to identify solutions and alternatives at each roadblock – is critical to building community resilience and strength when engaging in community healing.
Though it has become cliché to pound the ‘invest in our youth’ drum, is it not also interesting that sustained efforts to do so are fewer in number and often piecemeal or limited in scope? This paradox feeds generational stereotypes, limits a community’s boomerang capacity, and ultimately erodes the quality of the workforce for the long-term.
While traveling in Ireland recently, I was intrigued by an article in the Irish Times newspaper entitled, “Immigration policy must target entrepreneurship”. While one would first think this article is about Ireland targeting entrepreneurs through their immigration policy, a majority of the article referenced the environment for entrepreneurs in the United States. It stated that 52% of the start-ups in the Silicon Valley from 1995 to 2005 have been founded by immigrants. Also, 40% of Fortune 500 companies were founded by first-generation immigrants or their children.
Toward the end of the article was finally the point that Ireland should open the door to all of Europe and the rest of the world, inviting entrepreneurs from all over go there to start their businesses. While the United States is deciding what to do about immigration, other countries are poised to capitalize on our indecision and invite entrepreneurs in. Having an entrepreneurship strategy, and opening the door to skilled talent will boost economies wherever they land, according to entrepreneur turned academic, Vivek Wadhwa, who was interviewed for the article in the Irish Times.
Shoppers are becoming more and more savvy and difficult to reach through traditional media. Consumers are paying attention to the internet, social media and on a smartphone in addition to in stores and mass media like television and radio. While growth in e-commerce is not a new trend, its impact on how retailers get the right products to the right customers at the right time for the right price is becoming more substantial. Retail environments are going from bricks-and-mortar (single channel) to online (multi-channel or omni-channel). Consumers can order online and pick up at the store, visit the store and order at a kiosk, visit the store and order through mobile phone, visit the store or online and price compare and purchase at lower-priced store, and any other combination of options.
In a recent Deloitte study, survey respondents expected the percentage of sales generated by bricks-and-mortar stores to plummet in the next five years from 91% to 63%. Traditional retailers may end up staging showrooms for consumers to feel and touch the product. Online retailers have leveraged this trend to siphon customers away from category killers such as Best Buy.
As the world becomes smaller and smaller through the speed of and access to technology, goods are moving in and out of markets more quickly and easily than ever before. Retailers are turning their focus away from a solely domestic enterprise. Turning toward a global world of cross border sales retailers are looking to sophisticated global consumers, providing access to millions of new customers every day. Twenty two percent of online shoppers made their first online purchase within the past year. AND, these consumers are expecting fast, if not immediate delivery …..and some retailers are promising this!
Our point in sharing this is the demand for “big box” real estate is turning to distribution and warehousing operations. The “just in time” philosophy has taken hold due to the recession (retailers don’t want to hold significant amounts of inventory on their shelves) and the high demand for quick turnaround on orders to consumers. State of the art big box industrial development is trending toward 36’ clear heights so multiple mezzanine levels can be utilized to stack goods.
Communities with vacant, shovel ready land on rail and near highway infrastructure will see activity and interest in large parcels increase into the second half of 2013. With steady growth in domestic intermodal volumes and continued investment from railroad companies, access to rail remains an important factor driving the market.
Maintain and enhance your community’s logistics infrastructure so it can capitalize on the coming demand for distribution expansions.
Have you heard of this group, Carrotmob? Information taken from their web site is summarized below:
In a Carrotmob campaign, a group of people offers to spend their money to support a business, and in return the business agrees to make an improvement that the people care about. The group is called Carrotmob because it uses the “carrot” instead of the “stick.” Traditionally, people who wanted to influence businesses would threaten or attack them. The Carrotmob movement believes people can have more influence on businesses by giving them a positive incentive to change: their money.
People want to “vote with their money” to advance their values and improve the world from New York to Paris to Bangkok. This group is building a website to make voting with one’s money easier, more effective, and more fun. Carrotmob organizers around the world have already created a growing movement. Find out more at https://carrotmob.org/.
This concept has interesting implications for the work we do as economic development practitioners. In reading a lot about innovation lately, my belief has been confirmed that innovation is just as much about applying a new concept to the way we typically do something as it is developing a new gadget or coming up with a new product. So here is an innovative way to get a business to change.
The Carrotmob concept could be applied effectively through a Mainstreet organization (or a group of passionate citizens) to create excitement around the businesses in a central business district. Like anything truly worth the effort, it takes leadership, dedication and hard work. But publicity and excitement will be generated around the idea, and who couldn’t benefit from a little more of that?
When we apply this concept to government, it sounds really similar to lobbying, however, with the Carrotmob concept, people aren’t paying the business to change rather they are giving the business their patronage so the business will have the capacity to make a change. It shows an investment of time and money on the part of a whole host of participants.
If we were to organize ourselves around an effort is there a way we could lobby for good? Think of the impact if we were to energize our constituents passionately around a proactive, positive effort or topic rather than only at the threat of something being taken away. It appears to me that more attention is turning to local efforts, grass roots groups organizing and being effective at producing results around a cause. How can you impact your community today?
Whac-A-Mole is an arcade redemption game. Once the game starts, the moles will begin to pop up from their holes at random. The object of the game is to force the individual moles back into their holes by hitting them directly on the head with the mallet, thereby adding to the player’s score. The quicker this is done the higher the final score will be.
Sitting at a local EDO Board meeting yesterday, the executive director (and only employee) was explaining to his board that he is really busy, and sometimes feels like he is just able to keep up as if he were playing a game of Whac-A-Mole. A business owner calls, an alderman calls, the state sends an inquiry which needs a response by Friday, there is a Workforce Development Board meeting, a local ribbon cutting, bills need to get paid, and don’t forget the regional conference, City Council meeting and sixteen emails that need responses.
As an economic developer we have to be good at so many things, especially if we are sole practitioners in a one-person operation. We have to know the specifics of a solid business retention program and along with that, the ins-and-outs of a successful business. That alone is enough information and learning to keep a person busy for lifetime. In a small operation it’s not enough just to do business retention/expansion activities all day long (although that is the most important work we undertake). Economic developers also have to be good marketers. We market the community to outsiders (site selectors, businesses, visitors, partner organizations located elsewhere, etc.) as well as local stakeholders and residents. We also market our efforts to our funders and supporters. And marketing isn’t just being able to sell. Marketing includes knowing what makes a good web site and how to actually reach out to those with whom we need to connect.
Oh yeah, we have to be fundraisers too. And it is important to understand workforce development, entrepreneurial development, strategic planning, organizational development, technology, and so much more.
How do we even know we’re making progress? I have always said, “Economic development is not a game for the impatient”. By focusing our individual efforts on the needs of the businesses in the community we will make the biggest impact. That focus will lead to becoming adept at financing issues, workforce development issues, expansion issues and more.
The practitioner who was playing Whac-A-Mole told his board that he will drop everything for a business that needs his assistance. That’s the right attitude. The next challenge lies in how we communicate those results to our stakeholders. Stay tuned for next month’s blog!