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 Economy | Knowledge Economy | Creative Molecular Economy |
| Jobs | Knowledge Jobs | Knowledge Jobs/1099 Employment |
| Transporation, land, sewer, water, power | Broadband | Universal access to broadband infrastructure at a minimum of 100mbs and, preferably, 1Gb; mobile communications; intelligent communities |
| Workforce skills: Specialized production line, mechanization, management | Workforce skills: Math, science, technology, knowledge | Workforce skills: Capacity to innovate, collaborate at a deeper level and be able to adapt to constant change |
| debt and equity | venture capital, angel investment, patient start up capital | crowdfunding |
| control and hold knowledge | intellectual property protection - patents, copyrights, etc. | open/continuous/collaborative innovation; crowd sourcing |
| sectors, unions, trade associations | clusters, technology and innovation associations | multiple interlocking networks |
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