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Agility, Part II May 31, 2006

Posted by Tom in Economic Development, Innovation, Workforce.
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I’ve been struggling to understand the behavior of communities during this wrenching economic shift away from the manufacturing-dependent world that the Midwest has known. One of the most insightful community planners I know suggested that I read Jon C. Teaford’s “Cities of the Heartland: The Rise and Fall of the Industrial Midwest,” a history of the (more or less) Great Lakes states from the times of the earliest settlers in the original American Northwest Territory.

The book has been a somewhat slow read (more a reflection on my life than the book, which is pretty good), and I just reached the early 1900’s and the rise of the then-new auto industry. This particular paragraph struck me, especially in light of the many discussions about transforming the northeast Indiana’s regional manufacturing competency/dependency in the world of auto parts suppliers:

Automobile production took root in the Midwest largely because the region’s industrial heritage was particularly conducive to the manufacture of motor vehicles. During the late nineteenth century thousands of machine shops and foundries operated in midwestern cities, many of them fashioning steam engines. Traditionally less reliant on waterpower than the Northeast, from the steamboat days the Midwest had specialized in fuel-dependent mechanisms. Thus it had an abundance of experienced mechanics and metal workers who could readily adapt to the demands of the new industry and fashion the parts necessary for automobiles. Moreover, Detroit specifically had taken a lead in producing gasoline engines for motor launches on the Great Lakes, and consequently that city enjoyed a headstart in mastering the technology of the internal combustion engine. (p. 104)

Fascinating – I’m a Michigan native and never learned why the auto industry “chose” Michigan until now. This paragraph makes the alignment that took pace at the turn of the 19th century so simple to understand – there was a ready workforce ready to ply their trades in this new direction, one where rampant economic development was taking place because entrepreneurial, agile communities were making it happen. With a small innovation – putting a gasoline engine on a wagon – the region had developed a killer application (note Wikipedia’s reference to autos as the killer app of gasoline engine technology).

Stepping forward in time to today, one has to wonder what the next killer app will be in the industrial Midwest. Logic dictates that it will be tied somehow to manufacturing – our workforce is so heavily aligned in this sector that to overlook it is illogical. In northeast Indiana, I know that the more visionary thinkers are looking to expand the region’s capacity in orthopedics industry and even develop a new niche in aviation parts (SATS, specifically). At face value, both seem like logical extensions of the current industry base.

But there’s more to the equation than just finding an industry to latch onto. As my post on making a Silicon Valley explained, a ready workforce is only one component. Just as important is ready access to capital. I’ll expand further, adding the spark of innovation to the mix. Bright, energetic, visionary entrepreneurs can harness the local capacity and transform a community. And communities need to demonstrate their agility and focus attention on entrepreneur development in the mode of Huntington County, Indiana’s VentureWorks program, an innovative application of economic development resources to home-grow the people needed to take the killer app to market. (Another great source of entrepreneur development knowledge is the Edward Lowe Foundation of Cassopolis, Michigan.)

When all of these elements are aligned, you’re onto something special. And, in many cases, the industrial Midwest can’t realign itself fast enough.

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Entrepreneurs, meet WIRED May 30, 2006

Posted by Tom in Economic Development, Research, WIRED, Workforce.
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Many thanks to Kevin Thompson of the US Department of Labor Employment and Training Administration‘s Office of Workforce Investment, who read the piece on the Kauffman study of entrepreneurship in America and forwarded me a map overlaying the Department of Labor’s WIRED initiative with Kauffman’s recent study.

Whether intentional or not, WIRED is well-distributed among around the nation from an entrepreneurial activity point of view – from the most entrepreneurial to the least. It will be fascinating to see how WIRED’s infusion of workforce planning monies will impact these states. Will WIRED make high-performing states be even more entrepreneurial? Will it lift low-performing states up? And what will WIRED’s effects be on middle-performing states like my own Indiana?

WIRED is a bold experiment in workforce planning as we move further toward a demand-driven system. Entrepreneurship is only one area where this experiment will play out, but it’s a very significant one.

A different twist on “convergence” May 30, 2006

Posted by Tom in Community, Economic Development, Innovation, Stronger Organizations, Workforce.
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ED Pro, in his (her?) fantastic weblog, brings a fascinating example of alignment between workforce and economic development to light – one that doesn't necessarily involve the use of government funds. He summarizes the article links with this apt statement:

Creating stronger civic networks of all types — young professional networks, angel capital networks, entrepreneurship networks — strengthens the regional economy and creates the sense of excitement and opportunity that keeps smart people around.

The best way to address the brain drain challenge is to build more connections within a region.

You have to appreciate the innovation and ingenuity of the many community partners inattempting to fix the problems of brain drain and entrepreneurship in one fell swoop. Two very distinct elements of workforce and economic development, working together to address the challenges of a community. More power to them.

The other side of the coin May 30, 2006

Posted by Tom in Community, Economic Development, Education, Workforce.
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Don Iannone of ED Futures blog relays a recent article from the Northeast Mississippi Daily Journal regarding a speech given at an economic development event in that region:

Through his research, [Stephen] Weiler [(an economist for the Center for the Study of Rural America and an officer of the Federal Reserve Bank of Kansas City)] has a good idea of what works – and doesn't – for a region's economic development.

"Education is a critical foundation for success," Weiler said. "It's quite clear that the more educated the people are, the more a community will better develop."

With some 40 percent of Mississippi's ninth- through 12th-grade students dropping out of school, the effects are devastating, [Mississippi State Economist Phil] Pepper said.

"There are social and economic costs related to an uneducated people," he said. "While we focus on the benefits of being educated, many look over the costs of not being educated."

Pepper said Mississippi's dropout rate costs $4 billion in lost wages annually. Lost local tax collections total $1.1 billion. Economic development clearly depends on investing in its most valuable resource, its people, or what Pepper refers to as "human capital."

"It's necessary to have industrial sites and tax incentives, but it's not sufficient," he said. "It's also necessary to have human capital. But that's what we're missing. That's the one thing that will determine whether we grow or not."  

Excellent points.  We often talk about the desire to improve our communities from a forward-thinking, achievement orientation.  What we don't do is look at the perspective of lost opportunity if we do not align our workforce and economic development efforts…if we continue to foster a low-skill, low-wage workforce. 

Quote of the Day: Why We Fight May 30, 2006

Posted by Tom in Community, Economic Development, Opinion, Workforce.
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Smart City Memphis excoriates its Industrial Development Board for what it deems to be questionable incentive packages. Most interesting to me, however, is the core philosophy of what this anonymous blogger deems important about economic development:

The heart of our economic development policy should be increased opportunity, better jobs and bigger paychecks. Tax incentives should be aimed at achieving all three objectives, because if government is a party to a process that puts its own citizens in low-wage, dead end jobs, it is not just bad public policy. It is the most cynical kind of public policy.

An excellent summation of how alignment between workforce and economic development should work!

Two determinants to be a Silicon Valley: Finances and workforce May 30, 2006

Posted by Tom in Community, Economic Development, Education, Technology, Workforce.
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Kudos to Tory Gattis at Houston Strategies, who referenced the Kauffman Foundation Study on Entrepreneurial Activity in America (which is worthy of its own analysis by someone more informed than I…).  In Tory's post, he took the discussion of entrepreneurship further when he referenced Paul Graham:

On a related note, Paul Graham, who writes amazingly insightful essays on technology among other topics, recently released one titled "How to be Silicon Valley." It's his thoughts on what it takes to be a tech startup hotbed.

I think you only need two kinds of people to create a technology hub: rich people and nerds. They're the limiting reagents in the reaction that produces startups, because they're the only ones present when startups get started. Everyone else will move.

The rich people are for venture capital, of course. And Houston has plenty of rich people (although much weaker on formal VC). But we're a little weaker on the young college nerds – Rice is too small, and UH is still trying to get to Tier 1 status. Austin and Seattle seemed to do just fine without that many rich people (at least when they started), and Chicago hasn't done all that well with plenty of rich people and nerds (Northwestern, U.Chicago), so the theory's got some weaknesses.

He goes on to discuss the elements needed in several sections:

  • not bureaucrats (government programs)
  • not buildings (tech office parks)
  • top universities (purchasable for a mere half-billion)
  • personality (attractive to the creative class)
  • nerds (how they're a distinct subset of the creative class)
  • youth (inc. tolerance/liberalism and an "intact center"/core)
  • time for it all to ferment

I suppose the financial part is intuitive – you can't start a company without startup cash or a viable venture capital network to get you over the initial hump.  But the workforce side is counter-intuitive for some who think that location, infrastructure and cash incentives are all that it takes.  Graham (followed by Gattis in his own analysis) suggests that not only is the question that of building a workforce via a potent educational infrastructure but also that of creating a community that will foster a vibrant workforce.  Graham basically is channelling Richard Florida's creative class theories. 

Coming back around to the Kauffman studies, the study shows that the six traditional Great Lakes states (Illinois, Indiana, Michigan, Ohio Pennsylvania and Wisconsin) are all in the bottom half of the study in terms of entrepreneurial activity in 2005.  They're all strong higher education states, but they have had a devil of a time with brain drain to other regions.  Bright young people start companies.  Some of them are our bright young people.  Problem is, they largely aren't starting those companies here in the old Rust Belt.  

One of the most pressing issues for these states to tackle is the exporting of their top human capital.  That's what makes Indiana Governor Mitch Daniels' "Hoosier Comeback Tour" – part of the Indiana Economic Development Corporation's new strategic plan – such a fascinating concept to observe.  Indiana has realized that its future depends in part on the success of far-fetched concepts like this. 

Great recent Convergence-related articles May 30, 2006

Posted by Tom in Community, Economic Development, Education, Innovation, Media, Technology, Workforce.
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I'm back from a long holiday weekend and found a number of fascinating discussions of alignment-related issues.  Take a look at these articles and post your thoughts on them in the comments:

Ulster's Economy Needs Innovation and Imagination

"We need to be very sure that we are skilling our workforce in the correct way " in a way which directly relates to the work of the venture capital and research and development arms.'

"If we could create a channel linking that venture capital to the manufacturing potential created by research and development advances in our universities, then we would have achieved something worthwhile for Northern Ireland PLC.

"If we backed that business creation model with an appropriately skilled workforce then we would be taking the first step to reversing the decline of manufacturing.'

3 more articles after the break…

(more…)

Agility May 30, 2006

Posted by Tom in Community, Economic Development, Innovation, Workforce.
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In a preview article for a Racine, Wisconsin economic development event, the Milwaukee Journal-Sentinel writer interviewed the evening's keynote speaker, Jim Carroll.  Carroll's message for Racine: We all need to increase our agility.  At the community level, the organizational level and even at the personal level.  

Carroll isn't talking about the physical ability to scale a wall or touch one's toes. He's talking about agility in thinking, managing and manufacturing methods.

"One great word is agility. That's what we need, that's the trend, the capital we need. How do we develop the agility to deal with the future that is coming at us faster than ever before so that we can shift on a dime?" Carroll said.

Communities like Racine have to continue to look ahead and to build on the community's attributes, he said. For Racine County, the attributes include things such as location, easy transportation, lifestyle and workforce, he said.

Specific mention was later made of the need to continue to compete with the likes of China on manufacturing through targeting the high-skilled manufacturing areas – which require skills enhancement programming.  

I don't know Carroll at all, nor have I read his book, but his core message rings true.  The ability to be agile, to adapt to change, is what has defined economic winners and losers throughout history. 

But Carroll's comment about skill development as an outcome of an agile society immediately had me thinking of convergence between economic development and workforce development.  

An agile community will recognize its skills deficiencies quickly, develop innovative programming to fill the skill gaps, implement the new skills in the regional workplace, and use the skills as a marketing tool in both internal and external economic development.  

The “American Competitiveness Initiative” May 25, 2006

Posted by Tom in Economic Development, Education, Innovation, Technology, Workforce.
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As I keep digging for information on the alignment between workforce and economic development, I am constantly amazed at what already is in the works. If 50 percent of the concepts being promoted see the light of day, we will have an amazingly competitive economic development position that leverages the potential workforce to its fullest extent.

Case in point, the "American Competitiveness Initiative," which was discussed by US Department of Labor Deputy Secretary Steven Law in Casper, Wyoming:

The "American Competitiveness Initiative" commits $5.9 billion in fiscal year 2007, and more than $136 billion over 10 years, to increase investments in research and development; to bolster math, science and technological education; and to encourage innovation. The measure currently is working its way through Congress.

Discussions of our colossal national debt aside (which I acknowledge makes the entire discussion of this concept difficult), this is an fascnating idea and one worthy of serious Congressional consideration. A proactive investment in these workforce/employer initiatives could yield rewards that would place America back in a position of relative strength in the global economy.

Rethinking higher ed – As a way to promote alignment May 25, 2006

Posted by Tom in Economic Development, Education.
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Doug Rothwell of Detroit Renaissance placed a far-reaching op-ed in yesterday's Detroit Free Press called "Graduate to smarter university funding."  In it, he delivers the message that the way in which government approaches higher education is a reflection of its priorities toward growth, development and global competitiveness:

As Michigan's leaders contemplate how to jump-start our economy, they might consider looking at states with a long history of positioning higher education as a cornerstone of their economic development strategy.

North Carolina, for instance, heavily invests in its universities, especially its flagship research universities. In turn, the universities diversify the state's economy by increasing the number of college graduates, building research parks to incubate new companies and partnering with state and local development programs. The result is relatively low tuition, one of the nation's best business climates and a model of economic transformation.

In Michigan, the model is quite different. We treat higher education as an expense rather than as an investment. We view it as an annual appropriation competing for state resources rather than an integral part of a statewide economic growth strategy.There isn't a partnership between our universities and the state. There is competition.

He then wraps up with:

Michigan needs to take a new approach to higher education. Our mind-set should shift from an appropriation to an investment-based model. We should make higher education a key platform of our state's economic development strategy. In particular, we should nurture the growth and development of our research universities, especially in the innovation-based sciences that are critical to our future economic growth. In return, universities should fully embrace their role in leading community-based economic development.

The whole article is a very good read, one that workforce professionals, economic developers, educators and state officials should read carefully.  Rothwell shows how North Carolina leveraged its universities into some impressive prosperity in the last couple decades.  Other states, whose research capacity arguably is stronger than North Carolina's, could look at this as a best practice and unleash their higher education capacity toward the goal of community and economic development.  

And, to accomplish this goal, the schools will have to train (or retrain) the workforce.  Which brings us back to the alignment.