Why I Hate "Economic Development"

“Economic development” is one of the most misused and misunderstood terms within the civic arena. While I don’t hate interventions in the marketplace that result in increased and more inclusive economic growth (my definition of the term “economic development”), I do hate how the term has lost all meaning as it is used to describe nearly anything that resembles economic activity.

For example, a colleague laments that the mayor of his community is fond of ribbon cuttings where he can announce that the opening of a new car wash or some other service business as “economic development.” My friend, who I would describe as a true economic developer, observes that no additional cars are being washed as a result of this “development.” More than likely there’s a car wash down the street that recently went out of business or one that is about to see its customers wash their cars elsewhere.

Another friend gets very frustrated when politicians tout the relocation of a business that merely crossed a municipal boundary. This is tax base development, not economic development.

A third goes bonkers when physical developments (casinos, stadiums, museums etc.) are touted as economic development. Unless these developments are actually able to attract large numbers of people from outside your economy to visit (or better yet, move), they really don’t do much for the overall economy. They may make your community a better place to live, and that can have a long-term positive effect on the economy; but it’s a reach to call such investments economic development.

Each of these activities may be good for the economy, but they don't necessarily mean the economy is outperforming the competition. And the more civic leaders are able to pass off such activities as "economic development," the odds increase that sustained, inclusive economic growth won't occur.

Bob Weissbourd of RW Ventures in Chicago cuts through all the noise when he notes “neighborhoods don’t have economies, they have assets.” I would go farther and say cities and counties don’t have economies either, they too have assets. Strengthening and connecting those assets to the regional economy (or metropolitan economy, if you prefer) is what will result in increased economic activity and opportunity within the neighborhoods and communities we care about. Strengthening and connecting assets is at the root of economic development.

Imagine how differently a city’s “economic development” department would operate if it was called the “asset development” department. Every city’s number one asset is its people, and perhaps all city halls would focus more on effective workforce solutions. The second biggest asset is a city’s existing business base. An “asset development” department would make sure those companies have what they need to grow -- including providing access to workers.

I don’t expect there will be any “Asset Development Departments” formed in the near future, but I sure do hope we see less misuse of the term “economic development.”

Is the Temperature Right for Collective Impact?

Collective Impact advocates need to check the weather first to see if the conditions are right to push for the establishment of a backbone to coordinate the type of collaboration necessary to sustain positive community change.

More often than not, advocates will find that the temperature is too cold for effective collaboration. You know it's too cold when key stakeholders either are resistant to working with others or are insistent on CMW, "Collaboration My Way." Organizations can be resistant to collaboration for many reasons, not the least of which is it consumes precious resources and the "payoff'' -- or "shared value" -- is less than clear.

Sometimes, the climate is actually over-heated. This uncomfortable condition occurs when a funder (or funders) puts a large pot of money on the table and make it clear that the only way to get the pot is if stakeholders collaborate. This can result in organizations working up a sweat to win a grant without reaching shared understanding of what they will do together, what value they will generate and what responsibility they will assume to produce that value. Collaborations built on winning a grant rather than shared understanding, value and responsibility are likely to fall apart before the money runs out.

Under the best of conditions the climate for collaboration is heating up. Collective Impact advocates know the temperature is moving in the right direction when stakeholders acknowledge that despite their best efforts, projects alone aren't generating the degree of change they want to see in the communities they care about. And when funders are requiring more consistent measures of success. Advocates can help turn up the temperature by using data-driven narratives to build broader shared understanding of the opportunities to accelerate positive change.

As readers of my Steel Pursuit fishing blog know, a single degree increase in water temperature can turn moribund trout into aggressive feeders. Sometime the same is true when it comes to the conditions for collaboration. A change of heart by just one reluctant stakeholder in a complex system can send the temperature rising and make the climate right for a collaboration capable of generating Collective Impact.

Local Systems and Regional Economies

Our economies are regional. Our civic systems are local.

This reality means that reversing a region’s economic decline demands an extremely high level of collaboration among diverse stakeholders who are, more often than not, required to compete with each other. Talk about a high degree of difficulty to get the civics right and to achieve collective impact.

Defining an economic region is no easy task -- either with words or lines on a map. But ample research has shown that even in the Internet age economies are organized around regions as businesses locate and grow in places where they have have access to regional assets, such as capital, markets, supply chains and talent. Some argue that the boundaries of an economic region are determined by the commuting patterns of its residents -- which at least puts a 45 minute to 60 minute commute circle around most metro areas. Here in Northeast Ohio, one could reach six different MSAs within that circle, depending on where one is located (and how fast one drives).

While someone who lives in the Canton MSA may commute to suburban Cleveland for work -- or may drive north for a dinner and a show -- that same individual will rarely encounter a civic institution that reflects their personal “regional footprint.” While this challenge is exacerbated in a “multi-metro region,” the same reality exists in economic regions dominated by a single metropolitan area. Civic infrastructures simply aren't designed to match up with economic boundaries.

Indeed, the civic organizations that are critical to shaping a region’s economic competitiveness (systems that govern education, workforce, transportation planning, business development, innovation, governance etc.) are almost all designed to serve local markets. Those systems were established when the economy was less global and less regional, and their base of power (constituent support) is derived from serving local constituents. In those rare instances when civic infrastructure might extend beyond a single county line it’s not uncommon for them to be designed in ways that exacerbate the challenge of creating regional alignment. For example, two counties that partner on workforce development may well be in different transportation planning districts. Good thing people who need workforce training don’t use roads or public transit to get to work...

This disconnect between our civic structures and our economic regions results in systemic dissonance. Systems designed to be local shouldn’t be expected to understand what needs to be done regionally, nor are they capable of acting regionally. Instead, local institutions must have the capacity to collaborate to address the opportunities that they cannot do on their own. And as noted earlier, regional collaboration is an unnatural act among non-consenting adults.

Creating an environment where local institutions can develop both shared value and shared responsibility in regional collaboration tests all of the skills of the regional physicist.

Trained for Projects, Not Complexity

In my ongoing journey to understand complexity and its role in our civic infrastructure I find myself reading and enjoying books with titles that are more than a little imposing. Today's example: Complexity and the Nexus of Leadership; Leveraging Nonlinear Science to Create Ecologies of Innovation.

Technical yes, but so far it's been like visiting with a wise friend. Early on the authors capture a vexing reoccurring reality: "A complex system can adapt, whereas a piece of machinery cannot."

Most civic work is at the project level and projects resemble "machinery" -- there are inputs, outputs and outcomes on most projects. The problem with this static approach, as Eddie Obeng delightfully points out in his Ted Talk on the rapid pace of change, is the world is changing too fast to keep up. We need to be able to adapt to that persistent. The only way to keep up is to spend less time designing civic machinery (projects) that cannot evolve as the world changes and more time designing highly effective collaborations that engage and empower stakeholders within complex systems that can evolve.

Most of us focus on projects because we know how (we've been trained) to get them done. We are intimidated by systems and complexity. Recently, while speaking to a group of corporate, public and non-profit leaders I was struck that none of the 40 or so leaders had attended a single class or course in complexity. I'm willing to bet none are trying to wade through "Complexity and the Nexus of Leadership" either, yet they are all being asked to lead change in their communities or organizations. I don't begin to claim that I fully understand how -- as the authors insist -- that complexity science empowers small groups to make a major difference that goes beyond any of their individual capabilities.

But I do know that I and others who care about our communities must better understand how complex systems work if our projects have a prayer of achieving the change we want.

Alignment Without Influence

Sustained positive change in the communities we care about -- the kind of change that meaningfully alters the quality of life, vibrancy and appeal of a community -- is achieved either by serendipity or alignment.

Serendipity -- Bill Gates and Paul Allen both attending the same school in Seattle or John D. Rockefeller's mom moving to the outskirts of Cleveland -- cannot be influenced much by those of us who work within our respective community's civic infrastructure. But we can influence the level and quality of alignment achieved. Indeed, in many communities a base level of alignment of diverse stakeholders is so common that we often don't notice that it's been achieved. We don't notice this alignment because it isn't accompanied by influence -- the ability to change behaviors in ways that will result in sustained positive change.

A city official recently brought this de facto alignment to my attention by recalling how she had walked into a meeting of civic leaders within a vibrant, mixed-use neighborhood who were exploring workforce needs. Nearly everyone in the meeting was also part of an effort to better align workforce efforts across the entire county. Throughout the meeting no one connected the two efforts. Instead they talked as if the neighborhood's workforce needs were somehow disconnected from the surrounding neighborhoods, and somehow weren't dependent on the possible solutions being explored at the county level. The city official said the clout in the neighborhood meeting was likely sufficient to shape the county's workforce efforts. But that wasn't going to happen because even though the stakeholders were aligned, no one was seeing the opportunity for influence.

Similarly, a coordinator of a workforce collaboration inquired how she might get a local chamber of commerce engaged in their effort to increase its ability to influence policy and behaviors. Since the workforce collaboration was employer-led this shouldn't have been a challenge. And since the CEO of one of the employers involved is chair of the chamber, it should have been even easier. Alignment had been achieved. But influence remained elusive. And change was minimal.

Most civic leaders wear multiple hats -- corporate hat, committee hat, non-profit-board hat, political contributor hat, etc. But rarely do they wear their hats simultaneously; rather they wear each one separately -- reflecting the silos that make up the community's civic infrastructure.

Connecting those silos -- and getting leaders to identify the opportunities for influence that are possible through this de facto alignment -- are key roles for those of us who strive to strengthen the civic infrastructure of our communities so that we can achieve collective impact.