January is an exciting month in many state capitals around the country. There are twenty new Governors being sworn in and starting to announce their teams. There are others who were re-elected and recognize that a second term provides a unique moment to be bold with their agendas. Soon, many will need to submit their first budget request and begin the shift from campaign rhetoric to actual programmatic and policy-driven agenda setting.
We have seen the good, the bad, and everything in between in how these leaders – well, LEAD. Some will seek to lead in a hands-on way, meeting with key constituents and helping to manage the daily agenda of the government. Others will choose to rely on the talented people they hire to carry out the vision.
Most are in agreement that the economy of their state – jobs for residents, happy employers, outsiders interested in moving in – are all important to their political futures. They recognize that a healthy economy makes the other tough issues they must deal with easier.
So how do they ensure economic success?
Think Beyond Transactions
It’s hard to argue against wanting the press release and the photo op with the big scissors or golden shovels. The announcement of an expansion, a new housing development for millennials, or a major infrastructure project, all attract interest and ‘show’ that things are getting done. I’ve seen too many economic development leaders focus on these wins and ignore what’s bubbling beneath the surface in their communities.
The announcement of these transactions must be accompanied by an understanding of the short and long term consequences. Often these broadcasted wins fall short of the excitement promised. Economic forces change the narrative and project scope as the growth ramps up; or worse, the face-value excitement is for a deal that will strain the community fabric. For example:
Community Win: Job creation!
Community Loss: All of the jobs pay below the community’s living wage.
Too many communities are losing with this rhetoric, and trust in leadership is lost as excitement deflates.
Announcing improvement in areas like place, investment, diversity, sustainability, and talent are the wins that leaders should aim for to create a lasting impact and to maintain trust and excitement about local development.
The Fourth Economy Community Index is a great resource for economic development officials to start looking into key indicators, like those listed above for each county in their state. The Community Index is a free resource that profiles almost every county by using 19 indicators that we think illustrate what is needed for success.
Quality of Place Drives Economic Development
For years now, I’ve been preaching that the best tool for economic development is a vibrant community that supports diverse lifestyles. There are a lot of people who get paid to tell you how bad your tax system is, why you should throw truckloads of incentives at companies and that your red tape is ‘crushing business’. Our research has shown that in a vibrant community those issues become footnotes and not the lead story. People want to be in communities that have culture, recreation, good education, and a welcoming environment. If you have those things people will stay or move to be there and the jobs will follow.
A few years back we researched the most transformed places in the country and found the quality of place to be the common thread. The message and results of that research are stronger than ever.
Power Comes From Collaboration
The history of governors and economic development leaders is filled with those who have tried the Command and Control approach, and those that pursue Collaboration.
The command and control leaders think that the path to success can be dictated. They fail to recognize that economic development is a team effort that can sometimes involve hundreds of organizations and leaders.
The Collaborative crowd recognize this and use their positions to rally, to leverage, to inspire those in their network to pursue a shared vision. The collaborative leaders will have a longer-lasting positive impact. They are the ones that collect awards and are well-regarded by their peers and communities they serve.
These are my three pieces of economic development advice to our newly-elected officials:
- Don’t get caught up in flashy announcements
- Pursue quality of place for all citizens
- Work collaboratively with organizations and local leaders.
Governors that uphold these standards will set themselves, and their state, apart from the rest. I hope that all leaders, not just governors, can use this advice to help chart a better course and support vibrant communities in their state.
I recently participated in the State Science and Technology Institute annual conference. These conferences are always a great chance to connect with peers around the country but also to reflect on what is ahead for us all. It was exciting to see a diverse group and a significant number of first-time attendees. This is a great demonstration of new energy in the organization and the network of people looking to make a difference.
As I traveled home I started to reflect on three takeaways that I want to explore more as I reflect on the past year and look to 2019.
First, we are not doing enough! There was a healthy amount of commentary and discussion on the reality that while some of the simple economic indicators are positive, the vast majority of the underlying data – especially the indicators used to look at the future – education attainment, indebtedness, net financial worth, poverty rates, climate change, etc. are all really bad. We can not get distracted by the soundbites of economic strength, we must focus on the economic stresses that exist at some level in every one of our communities.
Second, we need to collaborate even more! The stresses that our communities face are too much for any one organization to address, but many try. Whether it is the human nature to compete or a sense that financial support for mission-driven organizations is a zero-sum game, I continue to see a lack of collaboration.
Leslie Smith from Epicenter in Memphis and I hosted a breakout session on Network Leadership where we asked participants to role play. While some enjoyed the opportunity to get out of their own persona, many struggled to put themselves totally in the perspective of their role. It is not easy to relate to others, especially when their views about the past and future of a community differ. Our default is to often go back to our comfort zone of peers and own organization. By collaborating more, we gain the perspectives of others, resulting in stronger leadership and better solutions.
Third, we should get together more! In the early days of Fourth Economy, we created this image to represent the drivers and assets of the fourth economy. In many ways, we have been pioneers in ‘preaching’ the virtues of broad-scale collaboration. What I’ve come to appreciate even more is that the People asset can be the greatest, but it can also be the most difficult barrier. If people are not able to build trust, empathy for one another, and a shared understanding of the past and vision for the future, we will not be able to do better. We will see some ride the economic peaks while many more become further from the opportunity. We will question what we could have done to prevent the next economic downturn or to help those in our community.
I’d rather not wait and will look for opportunities to push myself to get together with people in the communities that I work, live, and play to increase my own understanding of their vision and needs. I hope you consider doing the same.
We see the Fourth Economy Community Index as a starting point for communities, providing a baseline to help understand where they are doing well and see where there is room for improvement.
We envision using the information:
- When developing an RFP to create specific strategies to improve your community
- To lead community discussions about areas of relative strength and weakness
- To inform presentations to stakeholders about the state of your community
- To compare your community to top ten communities of the same size
The Index model incorporates twenty different indicators in the areas of Investment, Talent, Sustainability, Place, and Diversity. While we know there is no single recipe for economic success, we also know that these five areas are critical ingredients in vibrant communities everywhere.
What do we mean by each of these?
- Investment: active businesses, access to capital, and investment in physical infrastructure
- Talent: a growing workforce with education and job skills, equipped to excel in high-wage opportunities
- Sustainability: transportation, land use, and environmental conditions that promote healthier lifestyles and a healthier planet
- Place: affordable housing and transportation options that provide access to recreational and cultural amenities
- Diversity: personal and professional interaction across lines of race/ethnicity, age, and wealth
Top 10 Mid-Sized Counties in the US (50K – 150K)
- Minnehaha County, SD (Sioux Falls)
Minnehaha County, South Dakota, has strengths in Place, Investment, and Talent, and has experienced a whopping 8% growth in population over the past five years. Along with the increase in the population of Minnehaha and the Sioux Falls area, the county also has a robust business community and has seen increasing development to meet demand, as illustrated by the blossoming communities around Sioux Falls.
The end is near…the year end of course.
Like most of you we’ve been reflecting a little and recognizing what an exciting year it has been. We wanted to share some of our highlights:
We began the year talking about our newly announced partnership with the 100 Resilient Cities Initiative, powered by the Rockefeller Foundation. Our Region’s Business, a Southwestern Pennsylvania new program featured Chelsea and Rich discussing their role as a Platform Partner and what it means for our work and the Pittsburgh region. You can check them out HERE.
Fourth Economy completed a Pay for Success feasibility study for Enviro Social Capital to assess the potential for green infrastructure to be supported by this innovative financing model. The Fourth Economy team developed a financial model for a potential transaction, identified key stakeholders who would need to be engaged, and modeled three scenarios based on our analysis. This work is currently being used by the project team in continued conversations with stakeholders.
Completed the business district analysis and projections for the Homewood business district for Operation Better Block (Pittsburgh, PA).
Also in March, Fourth Economy partnered with Mongalo-Winston Consulting on a public engagement process for the Pittsburgh Land Bank’s Policies and Procedures, which must be completed before the Land Bank can be fully operational. You can read the full report on public feedback here.
Not to let a little weather get in the way of some team fun, we participated in our annual Pirates baseball Opening Day outing to PNC Park. The impressive snow squalls that kept rolling in did not deter us, but may have caused us to think that maybe Spring training would be a better outing next year.
This month we supported the University of Pittsburgh in the launch of the inaugural Life Sciences Week. Our team helped create the website and materials for a variety of presentations. During the week our sector analysis, Life Science Opportunity Analysis was published and provided a base for ongoing conversations in the community.
We hosted our first Agents of Change meetup event for community leaders from a variety of backgrounds to get together in a free form conversation about how we can achieve greater impacts in the region. To join us – sign up here!
Our team was selected to serve as the inaugural One Stop Operator for the Pittsburgh/Allegheny County CareerLink. This new position was created following changes to the federal Workforce Innovation Opportunity Act. This is a big responsibility and an awesome way for us to help advance this critical community network. To date, we’ve worked with the seven partners who provide services through the CareerLink to create a common vision and mission, and to establish goals and related working groups to enhance collaboration and service delivery.
Fourth Economy kicked-off our engagement with the Indianapolis MPO. Since then we’ve engaged hundreds of stakeholders throughout the 9-county region to help the MPO determine how they can best support other regional planning needs, such as economic development, water quality and supply, land use, and housing.
The team completed a strategic planning engagement with Interise. This engagement opened our eyes to the world of small business training programs and how important they are for growth and resilience in our urban centers. Interise licenses their Streetwise ‘MBA” to partners who deliver it through their own locally branded programs. This training provides small business owners with the knowledge know-how, and networks they need to achieve scale. We strongly encourage our economic and community development friends to look into Interise to see how you may partner.
We joined 500 practitioners in New York City for the 100 Resilient Cities – Urban Resilience Summit. Fourth Economy is the only domestic community and economic development platform partner for this the 100 Resilient Cities Initiative.
Fourth Economy completed the market analysis and business plan for University of Pittsburgh’s GRID Institute.
Building on five years of modeling, Fourth Economy released the 2017 Fourth Economy Community Index. The Fourth Economy Community Index highlights counties that are poised to achieve sustainable growth in a 21st-century economy. We examine five areas: Investment, Talent, Sustainability, Place, and Diversity because we know they cultivate better communities and stronger economies. We believe the right metrics identify responsible and resilient growth, and you can read more about the great economic development stories that the data unearthed here.
Chris Ellis contributed to Robert Wood Johnson Foundation’s inaugural volume of a publication series intended to catalyze discussion, engage new partners, and inspire action to build a Culture of Health in America. The book is titled Knowledge to Action: Accelerating Progress in Health, Well-Being, and Equity. The chapter focuses on public, private, and nonprofit partnerships and examines the impact of these partnerships by highlighting Utah’s Pay for Success transaction that expanded access to high-quality preschool services for low-income children.
The Indiana Regional Cities Initiative received a Silver Award for Cross Border Collaboration by the International Economic Development Council. The Fourth Economy team supported the Indiana Economic Development Corporation in the development of this initiative. “Fourth Economy supported our vision with a creative and engaged planning process that allowed us to launch the Regional Cities Initiative on solid footing and achieve quick success.” –Eric Doden former CEO for the Indiana Economic Development Corporation.
Also in September, we recognized a few of our Fourth Economy Community Index Top 10 Communities while we were all participating at the IEDC conference.
Rich Overmoyer, presented at the Talent Infrastructure Summit in Evansville, Indiana. Rich presented a response to the question “Does place matter and why should we invest in it”. The Summit led by the Economic Development Coalition of Southwest Indiana was a rallying point for community leaders to think differently about their community, the recruitment of talent and the risks and opportunities ahead.
And finally, Emily was one of two presenters at a two-day IEDC training course in Frostburg, Maryland entitled, “Economic Development for Local Leaders,” covering strategic thinking, revitalization, and workforce development for a group of about 35 leaders in the western Maryland region.
Completed a market analysis report for Ascender, a hub for Pittsburgh’s starters and builders that provides programming, insight and connectivity. This coworking space is part of a growing movement that we are seeing around the country. For more information on the way that coworking is being discussed see here.
This month we traveled to Gary, IN to kick-off their comprehensive plan. We are super fans of the team in Gary and the innovative approach that they are taking to this process. Read more about it here.
Fourth Economy has been working with Rhode Island’s Polaris Manufacturing Extension Partnership for several years to design and launch the Innovation Center for Design and Manufacturing. As part of that, we helped to develop a Design Readiness Assessment to help manufacturer’s assess their capacity to use design to enhance innovation in their company. This month marked the 50th company who participated in the Design Readiness Assessment process.
Rich and Chris authored an article that was published in Green Building Alliance’s annual publication, Viride. The article is titled Social Change: Refinanced and discussed the potential of impact investing.
Rich spoke at the Inspire Speaker Series event focused on Social Impact and Investing. Fourth Economy is a multi-year sponsor of the Inspire Speaker Series, as it aligns well with our mission to bring together different groups to collaborate on community transformation. You can learn more and sign up HERE.
Fourth Economy hosted a Lunch and Learn with Majestic Lane, Deputy Chief of Neighborhood Empowerment for the City of Pittsburgh to learn about his involvement with PlaceLab and how that will influence “Ethical Redevelopment” in Pittsburgh.
The Franklin County Energy Study was released for public comment. The study provides a data-driven assessment of energy use and production across key sectors of the economy in order to establish a baseline and identify issues and opportunities.
The Lancaster Economic Development Company began its efforts to increase informed decision making in the region with two new reports from the Center for Regional Analysis prepared by Fourth Economy. More than 400 regional leaders were on hand at the annual meeting to test their knowledge of the region and the role played by agriculture and manufacturing.
Fourth Economy and Palo Alto Partners worked together to support Just Harvest and Economic Development South in planning for a fresh foods market in Clairton, a community outside of Pittsburgh. Providing a need and opportunity assessment, market analysis, site and market feasibility study, and business planning, the team identified what it would take to transform the community’s vision for fresh foods into a reality. The report is being used by the community to make strategic decisions as the market comes closer to fruition.
We began working with Lawrenceville Corporation, a local community development organization, on their Community Land Trust (CLT). A CLT is a powerful tool that Lawrenceville Corporation is using to help preserve housing affordability in their neighborhood, and Fourth Economy is helping the CLT assess long-term financial planning options.
Jerry served as a member of the technical assistance team and the National League of Cities Equitable Economic Development Fellows on the Nashville site visit.
Jerry worked with a 14-member technical assistance for the National League of Cities Equitable Economic Development Fellowship to advise Nashville on strategies for affordable housing, economic inclusion and promoting urban manufacturing. Recommendations were delivered to Mayor Megan Barry and city staff on December 8.
This week, children all over the country go knocking on doors in the annual ritual of Halloween, trick or treat. In many places, this day is one of the few when you get to meet your neighbors as we go door to door, shuffling along and bumping into friends not seen in some time.
Amazon HQ2 is that kid who ignores the rules, that senior in high school who just wants the candy. Amazon HQ2 did not wear a costume and knocked early when, on September 7th, 2017, it announced its intentions to locate a $5B second headquarters and a 50,000 person workforce somewhere in North America. In a reversal, Amazon pulled a neat trick by getting potential suitors to send elaborate proposals on what treats they had to offer, thus sparing the company the drudgery of actually visiting the communities.
Amazon has always been an industry disruptor, and this latest campaign is either pure genius or a Trojan horse: a trick or treat experience that by my estimate cost North American communities well over $119 million in staff time, and professional fees for video production, print media, research and economic analysis and more to create their responses. In its mailbox, Amazon received 238 proposals in response to its detailed request for proposals.
There are so many lessons to learn and points to consider in what ensued over a six week period that I plan to make this an Amazon HQ2 series over the next year. As I dwell on the HQ2 lessons learned, I’d love to hear your thoughts and feedback. To get that started, please take the companion survey here:
In this posting I cover: Trick or Treat? 5 Experiences of HQ2
Treat: Quality of Place
The criteria that Amazon published in their RFP is straight from our (link to Fourth Economy Quality of Place pdf) Consulting Playbook. While we hope that all of the bidders can cover the basics of labor force, location, and incentives, it is the areas that cover cultural community fit and community/quality of life attributes that make the RFP a treat. These are the areas that, we believe, can make any community a success. Amazon notes variables such as a diverse population, strong higher education systems and local government that will work with them. Under quality of life they mention daily living and recreational opportunities.The real treat will be if all 238 cities actually spent time considering these factors and while putting their best forward also identified opportunities to invest in making their quality of place better.
Trick: A proposal is not a plan
My professional guess is that very few of the cities that submitted a proposal actually had an economic development strategy in place that guides how they will attract and retain new jobs, let alone how they will handle 50,000 over a short period of time. On the other hand, the communities that do not have such a strategy but did submit a bid now have a lot of great information collected in one spot that they can use to advance a plan that goes beyond this one opportunity or if Amazon delivers less than promised.
Treat: Dare to Dream
In many communities, the thought of 50,000 new jobs in a relatively short period of time is exhilarating. This is especially true in Rust Belt cities that lost a lot more jobs that that over the past two or three decades and have struggled with starting the growth engines again. The exhilaration is of course tempered a little when one starts to look at what Amazon’s growth has done for Seattle’s housing prices and other cost of living factors. The resulting conversations are good though as these are the scenarios that communities should be considering with any plan for growth. I am hopeful that the 238 dreamer cities all use the time between now and Amazon’s next step in the process to have honest conversations and plan for what’s next in their communities.
Trick: All That Information
Amazon now has a lot of information on 238 communities and as a company built on data mining they are going to have a field day slicing and dicing. They ask in the RFP for a great deal of information that is readily available via the web. Locations with 1 million people, proximity to an international airport, crime statistics, stable business climate. All of this information could have been found through a simple request to Alexa. Or just start with the New York Times, CNBC, Brookings and more who all crunched the numbers and provided their ‘Top’ lists of communities that meet the criteria. The style points of how the proposers are pitching their communities must have been the reason to ask for Amazon to have them to do their homework for them. So the trick is that as many as 237 communities did a lot of work and may still get a failing grade.
Treat or Trick: Place Your Bets
The idea that there are betting sites now offering odds on which city will be chosen is probably both a treat and trick. A treat in that we can all continue to play along in the speculation and if we guess right make a few bucks in the process. A trick because the notion that people are literally betting on communities opens up a strange channel of conversation about their future.
In June 2017, I think we can all say that our world is at a minimum just different than it was in June 2016. There are issues and ideas that we are dealing with that we may not have expected, but “deal with” them we must. The challenge we live with is that civic leadership is messy at a time when people want it to be simple.
In recent months, we have been working with many communities who are watching the CNN (and FOX) stream just like us, trying to gauge the direction of this country. At the same time, we see a path forward as we support the actions our civic leader friends are trying to accomplish: creating a fresh food incubator in Buffalo; a renewed theatre in Fort Wayne, Indiana; a design and manufacturing space in Providence, Rhode Island. These are the investments with exciting short-term gains and significant long-term impact of community building.
And that’s that catch: long-term impact that learns and delivers beyond the political cycle and can sustain a community is not always easy. This is where civic leadership is more asset than virtue, and where it matters the most. The challenge we live with is that civic leadership is messy at a time when people want it to be simple. Civic leadership is not born in 140 characters or through anonymous posts. Civic leadership is created in meeting rooms, in coffee shops and craft breweries, and these days on the lines of protests. My hope is that 2017 becomes the year we realized that we all need to communicate a lot more so we can understand where we want to be as neighbors.
Here are the four key skills that we see exhibited by the best community leaders with whom we work:
Listen: In every community, there are conversations occurring that can tear apart or strengthen the community fabric. Leaders must listen to all of those thoughts to understand their context and to allow for the development of empathy for one another.
Research: There is no such thing as the status quo, or a community that is exactly as it was in the old days; instead, communities are constantly heading in new directions. Leadership is about doing the research needed to understand what that direction is. Often times, data and fact-finding will provide a view that is not expected and at times painful to deal with, but it is critical to be able to communicate what is not working in order to build a case for improvement.
Create: Leaders need to create an inclusive vision. Where do we want to be in five or ten years? What do we want the rest of the world to know us for? What do we want to leave for the next generation? The vision should be bold and inspirational, and maybe even something that some people doubt achievable.
Act: Between the vision and action, there must be great planning that goes on to detail who or what is responsible for making the vision a reality, setting clear goals, and making sure the capacity to act is in place. While great planning bolsters success, it does not guarantee action. Only by recognizing the people in your community—the civic leaders who are brave enough to act—will the vision be achieved.
Let me know what you think are skills needed by civic leaders by sending a note to email@example.com.
The Fourth Economy team has had the pleasure of supporting the University of Pittsburgh as they look to advance the life sciences cluster in Pittsburgh to the next level. Our work included researching the predicted next generation industry advances, analyzing the region’s research capacity and influence, location benchmarking, profiling the current cohort of life sciences companies, and discussing what is needed to build on the growing success of the sector.
We were able to provide the life sciences community with specific recommendations and a website to tell their story. The take-aways from our findings for this project are not necessarily unique to this sector in Pittsburgh and should be considered across any industries that a local community is looking to support.
#1: Sustained Leadership is Vital
Cluster development takes a vision and a level of sustained leadership that is able to evolve over a significant time horizon. Even when a region has a strong research base, it takes concentrated efforts by a community-minded intermediary to build a robust industry cluster. This cluster must provide collision points for local and out-of-region industry sector players to build relationships and find opportunities for collaboration. The output of this type of leadership activity cannot be measured in deals or investment, but creates the environment for those things to happen. We see many clusters fail because success is expected overnight, and leadership is not sustained long enough to build the necessary community infrastructure.
#2: Public, Private, and Philanthropic Investments Work
The important work of cluster development requires collaboration between the public, private, and philanthropic sectors to achieve the greatest leveraged impacts. At a time when questions swirl around the sustained commitment of federal research and development funding, it is critical to look at the models that many communities, including Pittsburgh, have demonstrated. Over 15 years ago, the state government, in collaboration with local philanthropy and the region’s research institutions, made a significant commitment to the emerging life sciences industry. The impact of those investments can be seen in the growing portfolio of companies and the position that the sector is in now.
#3: Regional impacts are Spurred by Neighborhood-Level Concentration
Industry clusters are often spread throughout a region both in terms of the location of firms and their employees. As firms mature and grow, they look for their own space, often in locations outside an urban core. But that urban core is vital to creating the density and culture of collaboration needed, especially in research and development-intensive industries. As the current generation workforce has made it known, they are looking for dense urban environments with ample amenities. In turn, the firms that are emerging will look for these locations as hosts for their employees. The Brookings Institute has advanced the notion of Innovation Districts to describe this phenomenon.
At Fourth Economy, our team has consistently looked ahead to see what will impact our clients in the coming years and made sure that we have the right set of capabilities and partners to help mind our clients’ needs. While many of our clients have expressed a great deal of uncertainty, we believe that we are well equipped to handle whatever is sent our way. Continue reading “4 Names to Know”
Recognition: rekəɡˈniSH(ə)n/, noun, the action or process of recognizing or being recognized.
Fourth Economy has now turned six! Thanks to you, we’ve had a chance to put our ideas to work and make an impact – and people are noticing.
You may hear this week about our national recognition for being an Inner City 100 company (#53) as determined by the Initiative for a Competitive Inner City. We are big fans of the organization, which has been championing strategies to rebuild our most vital communities. Hanging out with them for two days and taking home a plaque commemorating our achievement was pretty awesome! Continue reading “6 Years of Equipping Change Agents”
It’s All About the Distance. Or is It?
Sure, power contributes to your ability to hit a home run, but it’s also the mechanics of how you swing that can take the ball farther. Many community and economic development initiatives throw a lot of money (power) at an issue without an understanding of the underlying issues and opportunities. A better approach is to use community input combined with real-time data to better understand the current local mechanics and what forms of investment (money and time) it will take to support change. Continue reading “5 Lessons From the MLB All-Star Game for Economic Opportunity Pursuits”