Monday, November 14, 2011

Unleashing Fundamental Change - Networking tranformational thinking and action through economic development

AUTHORS: 

LaDene Bowen, Associate Director, Institute for Decision Making, Northern Iowa University

Ronnie Bryant, President, Charlotte Regional Partnership, NC

Jim Damicis, Senior VP, Camoin Associates, ME

Scott Gibbs, President, Rhode Island ED Foundation, RI

Rick Smyre, President, Center for Communities of the Future, NC

Mark Waterhouse, President, Garnet Consulting, CT




Problems cannot be solved by the same ‘level of thinking’ that created them.”

                                                …. Albert Einstein

“When we are no longer able to change a situation, we are challenged to change ourselves.” 

…..Victor Frankl

OVERVIEW



We‘ve been borrowing from the future, and the debt has fallen due. We have reached or passed the limits of our current economic model of consumer-driven material economic growth. We are heading for a social and economic hurricane that will cause great damage, sweep away much of our current economy and our assumptions about the future, and cause a great crisis that will impact the whole world and to which there will be a dramatic response.

                                                        …… Paul Gilding
                                                              The Great Disruption

The basic premise of this article is that the global economy has changed in fundamental ways and the current practice of economic development is no longer working and needs to be changed. If you don’t agree with that premise, there is no need to read further.

OK – so you are still here. Let’s explore that premise more.

In a time of such fundamental change, the very idea of what kind of change is occurring needs to be considered. We are in a transition from an Industrial Society to a new type of society that some have titled an Organic Society, in which fundamental principles of thinking and organization are transforming. Everywhere one looks, whether in education, governance, the military, leadership, or economic development, one sees the term transformation, or it derivatives…both as a noun and adjective.

We live in an age of transformation, not one that is merely in the process of reforming traditional concepts. The more articles about transformation you read, the more it becomes apparent that there is much confusion between “reforming change” and “transformational change”. This is not done to be disingenuous or with deception by intent. Rather, we are caught in a time when there is often a misconception of the fundamental ideas of what transformation is and how it can occur….and is already occurring. Reforming change modifies, improves and makes more efficient and effective ideas and methods that have existed for many years. Transformational change redefines institutional structures and challenges undergirding principles.

It is our belief that we live in an age of such significant change that the very worldview we have used for two hundred years is in the process of transforming. Additionally, we believe that this transformation is structurally changing our economy and society and has profound implications for the practice of economic development.

We are currently in a “weak signal” stage of the next iteration of an economic system. This system demands economic developers who are able to shift their thinking and action back and forth among the current and rapidly changing future needs of business attraction and expansion (declining in importance over time); the development of a workforce capable of moving beyond continuous improvement to continuous innovation; the formation of individual collaborative connections and disconnections; and many other interrelated challenges and opportunities to help new knowledge emerge. It will be the connection of new knowledge to new resources in the creation of transformational projects that will seed what we call a “Creative Molecular Economy,” a term that is further explored and defined below.

The recent economic recession has raised questions among economists regarding how long this downtown will continue and when will we recover.  For economic developers however there is a more fundamental question: “are we in the process of shifting from an Industrial Economy to a Creative Molecular Economy?”

Our answer to this question is that we are in the midst of a fundamental systemic change.  The idea of developing a new type of economic resiliency in our communities and society is at the core of preparing for a different kind of economy that will need to adapt to constantly changing conditions. Furthermore, this resiliency cannot be achieved through just reforming the current practice of economic development. In other words, we can’t just tinker at the margins.

Adding to the complexity over the next twenty years is the fact that there are three different types of economies that are in churn and mixed together for the first time in the history of the world. 

1)   The first is the very last stages of the old Industrial Age Economy based on hierarchies, economies of scale, mechanization, and predictability. 
2)   The second is a transitional economic phase called the Knowledge Economy that was recognized a decade or so ago, and is based on knowledge creation and diffusion.
3)   This transition phase is reaching its maturity and will quickly shift within the next ten-to-fifteen years to an emerging Creative Molecular Economy (CME) in which biological principles will form the framework for how the CME will be organized and operate.

This newly emerging economy will flow with the speed and strength of a surging river, constantly overflowing the banks of traditional economic principles and thinking. A key principle in preparing for success in this new economy will be the need to have leaders in communities who are open to new ideas and begin to understand the challenges they face in transforming their approach to the future systemically - how they connect ideas, people, processes and methods; how they develop a culture in support of continuous innovation; how they build  new capacities for a new type of economic development involving as many citizens as possible with distributive intelligence; how they create an environment for individualized, autonomous education/learning; how they shift paradigms of governance using mobile technologies - and the list goes on and on.

This is no small task for economic developers…it WILL NOT BE EASY. There is no template, model or standard operating procedure to guide the journey. This new economy is in the process of emerging before our eyes. As a result, a unique opportunity is presented for economic developers that is counterintuitive and, at present, largely hidden in the fog of an incomplete and not fully formed future.

Since the profession first developed in the late 19th century, economic developers, for the most part, have been focused on the functions of business and industry attraction and expansion, with a more recent attention to business creation. The Industrial Society brought with it the term “jobs” and, until recently, there was an understanding that a focus of the economic developer was to attract “jobs” into his/her local community, region, state or specific geographic boundary.

The profession rocked along for years until the “weak signals” of change in jobs provided per business relocation began to occur in the 1980’s. Over the last twenty years the number of jobs created per recruited business has declined. Impacting this is the projection by forecasters such as Dr. Marvin Cetron, that by 2015, only 4-8% of all the jobs in the U.S. will be in manufacturing. A recent 2011 Kauffman Foundation study (Starting Smaller;Staying Smaller: America’s Slow Leak in Job Creation)  of business formations over the last twenty years reported a reduction in number of start-ups established per year as well as jobs provided per start-up.

The confluence of these and other trends and weak signals reflects a continuous shift to a more digital, entrepreneurial economy driven by collaborative networks. This Creative Molecular Economy will be defined by the following: 

1) New ways to access capital for start-ups;
2) A Future Forward Workforce able to adapt to any of the three types of economies;   
3) An ability to identify weak signals about what the future holds;
4) A broad-band infrastructure capable of uploading and downloading massive amounts of data and video-streaming;
5) The formation of interlocking networks to build momentum for new ideas, whether economic, educational or governance; and
6) Crowd-sourced innovation.




What has become obvious is that we are in a time of comprehensive transformation - and only by systemic approaches will we be able to adapt to an increasingly fast-paced, interconnected and complex society and economy. Minor reform of current systems and thinking will not get the job done.

A UNIQUE APPROACH

As a result of the transformation of society and the economy, the economic development profession has an opportunity to transform itself to be aligned with the changing requirements brought about by the emergence of a Creative Molecular Economy. The last thirty years in business and industry has focused on lowering costs, increasing productivity of production and service delivery, and increasing demand for consumption. In this environment, the economic developer could focus on competing for business attraction and retention/expansion within specific geographic areas primarily through incentives to lower costs, providing necessary infrastructure, finding access to financing, and expanding worker training.

It was a natural fit for the special expertise needed in an economic system where specialization was the norm.

We are now moving at light speed into an age of dynamic connections and disconnections, where the economic vitality and sustainability of any local area, region or state will be based on how well its leadership, workforce, capital availability, educational system and methods, and governance decision-making processes are able to adapt quickly and effectively. Hierarchies, standardized processes and predictability will give way to interlocking networks, multiple methods, and finding comfort with ambiguity, uncertainty and even situations that are more chaotic. Of great importance will be the ability to build parallel processes where different people and organizations work in deep collaboration to help each other succeed – not just in individual communities but across the globe as well. True transformation will not occur unless many projects, programs, processes and people are involved in a totally new system of dynamic, adaptive planning and execution.

It is this emerging context of a new society and economy that offers - perhaps requires - a unique approach for traditional economic developers who realize that only a system and processes of community transformation will provide a healthy economy - and that his/her local communities, by themselves, may not yet have the types of leaders who are able to build “capacities for transformation.”

In a commercial culture whose tradition has been centered on economic materialism, visionary individuals in the economic development profession can become transformational leaders who help communities transform themselves to foster a healthy economy. Without a systemic approach to community transformation, there can be no effective shift to a sustainable Creative Molecular Economy that is based on continuous innovation, openness and collaborative interlocking networks.

Simply stated, the business of economic development and its practitioners will be required to expand their focus beyond creating jobs through recruitment and retention. Rather, the responsibility of the economic developer is to help build better places in which to live, work, play and run a business. Of particular importance will be an understanding of ideas, methods and processes that are aligned with an emerging society and economy that is increasingly fast-paced, interconnected and complex – in other words, economic developers will need to learn to focus on “comprehensive community transformation.”


A SUGGESTED METHOD OF INTERLOCKING NETWORKS

We are moving from an Industrial Age based on hierarchies, standard answers and replication, and predictability to an Organic Age of interlocking networks and webs, multiple pathways leading to innovative solutions for emerging issues, and uncertainty and ambiguity. Although counterintuitive for many traditional economic developers (and many others as well), the lessons of how nature organizes its systems can be instructive as the Creative Molecular Economy emerges.

Nature’s method of developing more complex systems comes through interlocking collaboration as well as competition. Dr. Lynn Margulis at the University of Massachusetts gained fame in 1970 when she suggested that the ability of prokaryotes to connect and collaborate created the first human cell. The principles of connection and collaboration become increasingly important as complexity emerges. Increasingly, economic developers will need to connect innovators, transformational learning concepts leading to a Future Forward Workforce, new communication technologies and its application, and crowd-sourcing ideas and funding for startups as the Creative Molecular Economy gains in importance.

If that last sentence does not sound like your current job description – that is the point of this article.

In a time of stress on any system (e.g. the Industrial Age), there appear networks of factors (in the case of a society or economy….people, new ideas and multiple processes) that begin to work in collaboration. Such is the idea of “biomimicry” – the principle of interlocking networks mimicking biology.

Using this principle of biomimicry, it is suggested that multiple networks of interested economic developers be developed to work in collaboration to seed the concept of community transformation in local areas of the country. Simultaneously, there must be a shift in the field of economic development so that economic developers are seen as the leaders of a toally new approach to the future to include new concepts, new processes, new values and new methods. Only if that occurs will citizens be more likely to allow and adopt various capacities for transformation that will be needed to insure a healthy economy and society in an era of constant change.

Change is scary for many people, to be avoided if possible. As a result, leadership by economic developers is an absolute necessity to help communities understand the need to build “capacities for a Creative Molecular Economy” using the concepts and methods of “comprehensive community transformation.”

Growing beyond the context of our current economic development system, initially, three levels of interlocking networks will emerge initially:

1)   Regional (both sub-state and multi-state)
2)   State
3)   National

To initiate and model these new concepts and methods of transformation, some places must lead by example. Some areas and their economic developers are already emerging as possible leaders of community transformation including the Charlotte Regional Partnership and the Panhandle of Florida as sub-state regional areas; Rhode Island and North Carolina as states…. the Heartland states (Iowa, Missouri, Oklahoma, Nebraska and Kansas) and New England as multi-state regions. Within each are community-level collaboratives.

These areas can work both individually and in collaboration to bring the idea of systemic community transformation to the forefront, and create interlocking networks of interested economic developers who are willing to commit the time and effort to learn how to be “Master Capacity Builders.” It is important for any economic developer who is a part of this process to realize that he/she will need to be simultaneously involved in multiple concepts of economic development (to include traditional business and industry attraction) as each learns this new approach to community transformation.

TRANSACTIONAL è TRANSITIONAL è TRANSFORMATIONAL

There is no magic wand that will move us from old-school transactional economic development to the new world of never-ending transformation. Linking the two is a necessary transitional process. Economic developers have a critical opportunity and responsibility to make this happen.

In so doing, the economic development profession can be the conduit for unleashing fundamental change as we transition from one type of society and economy to another.


Digitization is creating a second economy that’s vast, automatic, and invisible—thereby bringing the biggest change since the Industrial Revolution. Business processes that once took place among human beings are now being executed electronically. They are taking place in an unseen domain that is strictly digital. On the surface, this shift doesn’t seem particularly consequential—it’s almost something we take for granted. But I believe it is causing a revolution no less important and dramatic than that of the railroads. It is quietly creating a second economy, a digital one.

Is this the biggest change since the Industrial Revolution? Well, without sticking my neck out too much, I believe so. In fact, I think it may well be the biggest change ever in the economy. It is a deep qualitative change that is bringing intelligent, automatic response to the economy. There’s no upper limit to this, no place where it has to end. What I am saying is that it would be easy to underestimate the degree to which this is going to make a difference.”

                                                …..Brian Arthur
                                                    The Second Economy

Friday, September 9, 2011

Economic Transformation Requires New Methods of Economic Development Evaluation

by Jim Damicis, Camoin Associates

As introduced in Searching for a New Dynamic: Rethinking Economic Development Rick Smyre, (President, Center for Communities of the Future) and I expressed that the Economic transformation is occurring in three primary areas:
  • The last stages of the Industrial Economy – This stage is focused on competing for business attraction and retention/expansion within specific geographic areas primarily through incentives to lower costs, infrastructure provision, access to financing, and worker training.
  • Knowledge Economy  - a transitional economic phase – The focus here is on the physical factors and lowering costs to give way to a concentration on the Digital economy.  This Digital economy requires a highly educated and skilled workforce; Research and Development; Intellectual property protection; Technology transfer; Venture and angel capital; and Commercialization. However focus still remains on competing for business attraction and expansion/retention to specific geographic areas. 
  • The emerging Creative Molecular Economy (CME)
A working definition of the Creative Molecular Economy is:  An economy based on the integration of EMERGING TECHNOLOGIES, with CREATIVE individuals, small groups and companies organized in INTERLOCKING NETWORKS, connecting and disconnecting constantly in processes of CONTINUOUS INNOVATION. 
 
From an economic development perspective, transition to the Creative Molecular Economy will see a shifting of focus away from competition among specific geographic areas and towards deep collaboration through open networks.  Characteristics of the Creative Molecular Economy include: 
  • Small is the new big for industries and companies – where the focus is on niches and distributive investment globally.
  • Location and investment decisions are not meant to be permanent – capital and labor needs to be mobile.
  • Economic Development through many partners, crossing geographic and political boundaries, context areas (workforce, real estate, entrepreneurship). 
  • Self organizing networks that drive knowledge, learning, change, and action – not command and control and top-down. 
  • New methods of funding and innovating:  Crowdsourcing/Continuous/Open Innovation, and Crowdfunding.
As economic transformation occurs, so too must our approach to economic development.  This includes our concepts and methods centered on evaluation, measurement, benchmarking, and return on investment (ROI).   Current evaluation methods are becoming increasingly ineffective.  
 
As examples:
  • Economic development inputs (resources) and initiatives are no longer primarily public driven or driven by one unit of government but based on public-private collaboration including collaboration with multiple government, non-profit and private entities – most ROI and evaluation studies are only based on public sector investments as inputs.
  • In reality, workforce (jobs), assets and costs to support development are not tied to specific local geographies (towns or cities) but are regional - yet our measurement systems on costs are narrowly focused to local geographies due to the fiscal structure (taxes and fees).
  • Measuring employment and occupations by industry sectors and clusters will become irrelevant as:
    • Industry sectors and cluster definitions become instantly outdated as new business models and technologies continuously emerge.
    • There is a blurring of the sectors making it difficult to define what sector a business or occupation is in:  such as life sciences/IT/manufacturing; energy/bio
As a result, new evaluation methods and measures for economic development are needed.  Without these new measures, the economic development community runs the risk of devising strategies and resource allocations based on the wrong data, answering the wrong questions.  As industries and places innovate and change, economic developers must follow suit to stay effective. 

New measures are needed that capture:
  • Presence and strength of networks and collaboration – through formal network and social network analysis.  
  • Regional and community leadership to embrace and support transformation.
  • The ability to identify and consider signs of emerging trends– early signs toward future trends that will dramatically impact our economy as termed by Rick Smyre, “weak signals”.
  • Capacity and progress towards participatory and open decision making – to allow new ideas and strategies to emerge. 
  • Levels and capacity of open innovation/crowdsourcing and Crowdfunding to support the start-up and growth of new technologies and businesses.
  • Employment and workforce:  non-covered, independent workers, workforce capacity for networking, collaborative, innovative thinking, and decision-making.
  • The presence of small, nimble, connected, and competitive businesses.
  • Communication infrastructure capacity – not just the hardware but the capacity to access, use, integrate, collaborate
Because this economic transformation is in the early stages, there is no “handbook” for evaluation that exists to guide practitioners.  So where do we begin? The following table is an effort to provide the context for measurement under each of the three economies.  Measures in both the industrial and knowledge economy are commonly used and understood in current economic development practices.  Furthermore data is generally available for each of these measures.  The challenge ahead for economic developers and policymakers is to further understand measures of the capacity for and progress towards a Creative Molecular Economy.  This table represents my first attempt at identifying possible measures.  In the future I will be continuing to further understand and refine measures and methods.  I welcome you to join me and start by sharing your ideas.

The Context for MEASURING AND EVALUATING CAPACITY AND PERFORMANCE
Industrial EconomyKnowledge EconomyCreative Molecular Economy
JobsKnowledge JobsKnowledge Jobs/1099 Employment
Transporation, land, sewer, water, powerBroadbandUniversal access to broadband infrastructure at a minimum of 100mbs and, preferably, 1Gb; mobile communications; intelligent communities
Workforce skills: Specialized production line, mechanization, managementWorkforce skills: Math, science, technology, knowledgeWorkforce skills: Capacity to innovate, collaborate at a deeper level and be able to adapt to constant change
debt and equityventure capital, angel investment, patient start up capitalcrowdfunding
control and hold knowledgeintellectual property protection - patents, copyrights, etc.open/continuous/collaborative innovation; crowd sourcing
sectors, unions, trade associationsclusters, technology and innovation associationsmultiple interlocking networks

Monday, August 29, 2011

Searching for a New Dynamic: Rethinking Economic Development

by Jim Damicis, Senior Vice President, Camoin Associates
and Rick Smyre, President, Center for Communities of the Future

A CREATIVE MOLECULAR ECONOMY

The recent economic recession has raised questions among economists regarding how long will this downtown continue and when will we recover.  For economic developers however there is a more fundamental question: “when recovery occurs will we be back to business as usual or are the core dynamics of the economic system changing?”  Our answer to this question is that we are in the midst of a systemic change.  The idea of developing a new type of economic resiliency in our communities and society is at the core of preparing for a different kind of economy that will need to adapt to constantly changing conditions. To add to the complexity over the next twenty years is the fact that there are three different types of economies that are in churn and mixed together for the first time in the history of the world.  The first is the very last stages of an Industrial Age Economy based on hierarchies, economies of scale, mechanization, and predictability.  The second is a transitional economic phase known as the Knowledge Economy which started around 2000 and is based on knowledge creation and diffusion.  The third is the emerging Creative Molecular Economy (CME) in which biological principles will form the framework for how the CME will be organized and operate.


A WORKING DEFINITION


As with any emerging system, there is, at present, no firm definition and no concrete set of factors for the CME since the concepts and structures are in the process of forming. With this in mind, we offer the following working definition:

“an economy based on the integration of emerging technologies, with creative individuals, small groups and companies organized in interlocking networks, connecting and disconnecting constantly in processes of continuous innovation.”

The working definition is meant to be a starting point for dialogue. Networks of economic developers, planners, policymakers, entrepreneurs, workers, and as many interested citizens as possible are needed who believe it is necessary to seed new ideas and new knowledge about a Creative Molecular Economy.


KEY CONCEPTS

There are six key ideas that, when connected, will form a new framework for a Creative Molecular Economy.  They are as follows”

1)   Regional & Global Innovation Networks

21st Century entrepreneurs will need to develop networks of deeply collaborative people and organizations able to interact in creative ways whether developing a research and development project, finding new sources of start-up capital, establishing a social network marketing approach, or developing production and distribution partners. Only interlocking networks will have the capacity to provide adaptive thinking and action at a pace and scale able to take real-time advantage of new ideas, products, services and processes. An example of this kind of economic network is found in the work of Ed Morrison and his Strategy-Nets that “emphasize the importance of developing talent, open networks of collaboration and new disciplines of "Strategic Doing."

2)   Crowdsourced and Continuous Innovation

A Creative Molecular Economy will require communities to create a culture that is open to totally new ideas and supportive of continuous innovation. A system of methods that insure constant innovation will be required. Idea Factories, 21st Century Neighborhood Academies, and Futures Institutes will all be needed. Of particular interest to communities will be the concept of crowdsourced innovation such as developed by Enventsys, Inc in Charlotte, NC. As a local community decides what assets and vision it has that are aligned with a Creative Molecular Economy, it will begin to see its economic development strategy as connecting to those organizations able to access people from throughout the world who will provide ideas for products, services and transformational processes needed to insure the vitality and energy of an economic and social culture able to adapt constantly to changing conditions. This concept will take innovation beyond what is characterized in the current knowledge economy because not only is innovation an integral component of this economy but how innovation is developed – in open and interlocking networks - is integral as well.

3)   Future Forward Workforce

In this time when three different types of economies are in “churn” (mixed together), all local communities will need to realize that a traditional approach to workforce development will not provide enough skills and capacities to allow individuals to be able to adapt to the needs of the varied requirements of each economy.

Obviously, participants in any of the three economies will require constantly updated computer and technical skills…especially for the remaining jobs in the manufacturing sector. For the Knowledge Economy and Creative Molecular Economy, the capacity to be creative is a key as well. In addition, the dynamic nature of the Creative Molecular Economy will require additional skills and capacities.  These include:

a)   Thinking Connectively: Connect three “idea spaces” that seemingly are not connected and develop a viral marketing campaign that links the three into a new product, service,  solution and revenue stream.

b)  Distributive Intelligence: Utilize Web 2.0 and 3.0 social networking software to develop a demand for new products and services.

c)   Self-Organizing Collectives: Build collaborative networks that identify and create and market a local business venture seen as leading edge

d)  Rapid Innovation: Foster imagination using virtual reality.

e)   Entrepreneurship of the Future: Design interlocking Networks for Branding New Products and Services

f)    Communication of the Future / High function sourcing of talent: Create a “generation matrix” of reactions to change in order to promote understanding and identify the ramifications of demographic shifts

g)  Future Finance: Accessing capital in a new way to envision changing economic models

h) Trend Identification: Envision the development of and
    capacities needed to develop a new “creative cluster” in the
    local area based on emerging weak signals.  

4)   Crowdsourced Start-up Financing

Over the last two years, a new approach to “startup financing” has emerged based on the use of the Internet to open up interest in innovative ideas, products and services on the part of anyone who is connected to the Web. Kiva.com and Kickstarter.com are two different approaches to funding support from individuals located anywhere in the world. Kiva.com is based on paying a higher rate of interest than can be gained from other investments. Kickstarter.com offers in-kind products and services in return for initial funding support.   The current system can be characterized as having a few gatekeepers to resources for supporting innovation. This traditional system is stifling to creative entrepreneurs without considerable management and start-up history.  This new method of funding breaks down the existing barriers to entry that the current hierarchical system presents for start-ups and entrepreneurs by expanding the potential to anyone connected to the web, potential partners, customers, and the citizen at large.

5)   New Technologies Transforming Production

The methods and system of producing goods and services are rapidly evolving.  The importance of being large to take advantage of economies of scale and relying on proximity to physical assets and resources are giving way to distributed collaboration and innovation, value-added production networks, and emphasis on the niche.  Examples of how this is playing out in the early CME are through direct digital manufacturing and synthetic biology.

a)   Direct Digital Manufacturing

Direct digital manufacturing, sometimes called rapid, niche, instant, or on-demand manufacturing, is a manufacturing process which creates physical parts directly from 3D CAD files or data using computer-controlled additive fabrication techniques without human intervention, also called 3D printing or rapid prototyping. When a small low cost device is used it is also called desktop, or personal manufacturing.
Products can be brought to market faster and sometimes cheaper by using 3D printing rather than traditional processes such as castings and forgings. Since no special tooling is required, 3D parts can be built in hours or days.  What this means for economic development is that smaller, value-added, niche manufacturers can survive where large mass production manufacturing has declined.



b)  Do-It-Yourself Genetic Engineering (Synthetic Biology)

“Synthetic biologists imagine nature as a manufacturing platform: all living things are just crates of genetic cogs; we should be able to spill all those cogs out on the floor and rig them into whatever new machinery we want. It’s a jarring shift, making the ways humankind has changed nature until now seem superficial. If you want to build a bookcase, you can find a nice tree, chop it down, mill it, sand the wood and hammer in some nails. “Or,” says Drew Endy, an iGEM founder and one of synthetic biology’s foremost visionaries, “you could program the DNA in the tree so that it grows into a bookshelf.” It is this last use of synthetic biology that has so much potential for a Creative Molecular Economy.  Among other things what this means for economic development is that manufacturing is no longer solely tied to close proximity to natural resources and low cost labor.

6)   Identifying Weak Signals

Weak signals are those emerging ideas, new discoveries and inventions that are just beginning to appear on the radar screen and have not impacted the thinking and action of many people in the early stages of evolution. An example is an understanding in 1993 that the Web/electronic infrastructure would become a key economic development factor by 2000. In 1998, an economic development weak signal was the need to introduce the concept of creativity into the culture and workforce of local communities. In 2007, the emerging Creative Molecular Economy was (and still is) a weak signal. Today, few economic developers realize how important will be the impact of mobile technologies on the idea of creating and facilitating interlocking networks of innovation in support of generating new streams of wealth.

In a time of constant change, those local communities that prepare their culture to identify weak signals and create networks of 21st century electronic entrepreneurs will be able to build vital and sustainable economic development processes.  For economic developers what this means is that traditional strategic planning must be adapted to allow recognition of weak signals that can have a dramatic impact on the economic future. With this in mind, it is expected that the concept of “adaptive planning” will replace strategic planning as the key method for long term planning within a decade.


AS A RESULT…A NEW APPROACH FOR ECONOMIC DEVELOPMENT

With three different types of economies interacting simultaneously, local economic developers need to realize that they must design and work with three different types of economic development simultaneously.  The context for this is as follows:

1)   Economic Development for an Industrial Economy

Until the past decade, nearly 100% of the activities of a local economic developer focused on making a local area attractive to the recruitment of business and industry from other parts of the country and world and helping existing companies attract, retain, and grow jobs and property investment.  To do this, economic developers used the tools of state and local programs and incentives to lower costs, provide or improve infrastructure, provide access to debt financing, and train workers.  This strategy will still be important as the last phases of the industrial economy continue, but should take no more than 30% of the time of most economic developers as the tools and techniques required to support new entrepreneurs and new systems are changing.

2)   Economic Development for a Knowledge Economy

After Richard Florida’s book, Rise of the Creative Class was
published in 2002, economic developers incorporated a new
idea into the tool kit of economic development….developing
a culture and infrastructure that would appeal to and attract
creative people, especially young talents who want to
connect with each other as an emerging network of 21st
Century Entrepreneurs.  Also fueling efforts to support a knowledge economy were the work of Michael E. Porter, Clusters and the New Economics of Competition, on industry cluster development with emphasis on knowledge creation and diffusion leading to locational advantages, and Robert D. Atkinson on the importance of information technology and measuring the knowledge economy most notably in his annual New Economy Index.  Within this knowledge economy focus on the physical factors that impact location and investment decisions and lowering production costs give way to focuses on the digital economy, highly educated and skilled workforce, research and development, intellectual property protection, technology transfer, venture and angel capital and commercialization.

3)   Economic Development for a Creative Molecular Economy.

Key ideas for economic developers adapting to the emergence of a Creative Molecular Economy as discussed above are developing innovation networks of collaborating entrepreneurs, spotting weak signals and their impact,  crowdsourcing initial funding and constant innovation, developing a Future Forward Workforce, supporting new technologies for new production systems, and building “distributed intelligence” as an economic development concept of interlocking networks of 21st century entrepreneurs.

To take advantage of these new ideas within the emerging CME requires developing a local workforce able to adapt to any of the three economies. We call this type of adaptable workforce a Future Forward Workforce. In the past there has been a separation of the traditional approach to workforce development and economic development. In the future, the two needs are integrated and will be viewed as parts of an interdependent systemic approach to economic development. Only through the use of parallel processes will a community prepare itself for a real-time economy that is global and interconnected.

It will also require economic developers to challenge old approaches and learn new tools.  These three different (yet overlapping) types of economies require innovative capacities to be developed and balanced….thus the title of this article, Searching for a Dynamic Balance. No longer will an economic developer be able to focus only on recruiting business and industry to a local area or retaining existing jobs through incentives. Economic developers will need to learn how to forge connections among diverse people and organizations to create a culture conducive to constant innovation. Adding to the diversity of the profession will be the ability to be a connector of 21st century entrepreneurs and an accelerator of ideas and processes in support of real time response. Identifying weak signals and developing interest and support for a broadband infrastructure able to give individuals pools of ideas and access to at least 100 MBs will also fall within the umbrella of a 21st century economic developer.


RETHINKING THE FUTURE OF ECONOMIC DEVELOPMENT WITH QUESTIONS OF THE PRESENT

As a result of the emerging reorientation of the profession of economic development, questions related to existing ideas need to be answered from the perspective of an emerging “futures context.”

1)   Is cluster theory short-lived due to its focus on geographic concentration and confinement to industry employment and occupation definitions?  Or are there underlying characteristics which allowed clusters to succeed and will also be part of the CME?

2)   Can localities, regions, and states target/pick industries, sectors, and clusters for growth….and be effective and successful in the emerging economic environment?  Or, is the economy changing to rapidly and targets become outdated once defined and understood?

3)   Do location-based economic development incentives really work? They may be the norm today, but do they and will they continue to matter?  With their focus on lowering land development and production costs will they be relevant to future entrepreneurs?  What are the services that will support individuals and businesses in the CME?

4)   What is the role of the economic development professional and organization in this large complex system?  Where do they fit if at all?

5)   What are the future tools for information sharing and participation?  If networks are complex and global how is the local community engaged?  How does economic development move beyond simple “yes/no” go/no go winner take all decision making? How do we transform strategic planning processes to consider weak signals, global networks, and open processes?

6)   How is short, medium and long term progress toward success determined for a Creative Molecular Economy? What are the metrics that will identify and measure success? 


CONCLUSION

As is true with any period of transition, there exists today and in the future great ambiguity and uncertainty. One of the most important challenges for economic developers in the future will be the ability to work in deeper collaboration with other leaders and organizations at the local, regional, state, national and global levels to identify and take advantage of emerging opportunities to build a just and equitable approach to wealth creation in a dynamic and constantly changing environment.

No longer will economic developers find it to their advantage to work in relative isolation. A set of increasingly important skills will be necessary never before seen as connected to the function of economic development:

1)   Bringing people and organizations together in “futures generative dialogue” to create a culture supportive of continuous innovation.
2)   Accelerating the connection of ideas, people and processes in interlocking networks which will lead to new income opportunities.
3)   Build interlocking networks that provide a foundation for emerging ideas, products, and weak signals to have the potential to become economic assets in any local community.
4)   Bring “thought leaders” to the community in collaboration with community colleges, chambers of commerce and other local organizations.
5)   Understand how to build support for the expansion of a broadband infrastructure to allow access to 1 gigabit by 2015.

What is beginning to be understood by those at the cutting edge of economic development is that there is a great need to develop a dynamic balance of skills, capacities, actions, processes and events to establish a connective community culture that deepens the collaboration of multiple points of view, diverse people, and organization in a constant birth of economic creativity. Economic developers who learn to build new professional and personal capacities aligned with the emerging Creative Molecular Economy and Organic Society will best serve their communities as facilitators of a just, thriving and sustainable economy.