TRENDS IN ECONOMIC DEVELOPMENT

Tennessee Basic Economic Development Course

Rob Bencini, MBA, CEcD

April 28, 2014

Rob Bencini, MBA, CEcD

• Achieved CEcD Designation in 2008

• Author of ED Plans and Policies

• Economic Futurist

• Author: “Pardon the Disruption. The Future You Never Saw Coming”

P

Baseline

• You will hear things in this presentation today that you have never heard before (and may never hear again). Put it in context for your benefit.

• Presentation style– My speech – Interactive/Questions

• I tried to use TN examples where I could. Otherwise, I use NC data to make the point.

• Some of the economic projections are less than cheery. Don’t regard that as negative. Better to be prepared than blindsided.

What Will We Cover Today?

• Basic Economic Development Themes• STEEP Trends Affecting the ED Landscape• View Historic Economic Development

Practices Through the Lens of Current Trends• Your new role you never expected to fill• Developing your Economic Development

persona • Areas of Opportunity

Definition of Economic Development

• Economic development is the application of public resources to stimulate private sector investment.

• Economic development is the intersection at which public policy and the private sector come together for jobs, business and wealth creation.

Definition of Economic Development

• Economic development is the creation of an environment in which communities and their citizens prosper and improve their quality of life.

• Economic development is not simply an event, it is an ongoing community process.

Six Key Economic Development Concepts

• Globalization• Sustainable Development• Regionalism• Cluster Development• Workforce Capacity/Talent• Community

Regionalism

• Benefits– Greater capacity and resources– Economy of scale

• Effective?– Largely meaningless boundaries– Lead city loses recognition to regional “brand”– Unspoken competition still exists

Regionalism

AS LONG AS LOCATION MATTERS…

LOCATION MATTERS!

Cluster Development

1) When companies have the benefit of many or all of the related components of what they use nearby, raising efficiencies and synergies among industry suppliers and, more so,

2) When they are surrounded by like companies, creating a level of shared, yet competitive, expertise and an ever-evolving higher level of competence in that industry. 3) Interdependence is a critical factor.

Cluster Development

• Preferable clusters to consider for increased emphasis is traditionally done through Location Quotient (LQ) analysis.

• WARNING: Be sure that the industry you are considering to develop is in a growth pattern – or have a real good reason why it is being chosen.

Cluster Development

• Cluster Benefits– Focus local and regional resources– Develop local expertise– Develop industrial dominance

• Cluster Downsides– Cluster evaporation– Lack of business diversity– Resources may prove to be badly allocated– Poor understanding of cluster intent

Workforce Development

• Projected in 2010: By 2015, 85% of all jobs will need post-secondary education.

• 40% of all recent college graduates are doing work that takes no more than a high school education.

• Clearly, we are in a period of transition.

• Talent Clusters vs. Industrial Cluster

Workforce Development

• “if you focus on jobs – not talent – you will fail.” - Jon Roberts, TIP Strategies

• If the primary workplace attribute of your citizens is the willingness to show up for work, join 40 million other Americans competing in the same role.

Community

Does Your Community Stand Out?

Demonstration Exercise

Quality of Place

How others, outside of your area, think of you and your community.

(Everyone has a high “Quality of Life.” Just ask them.)

TRENDS

• The trends we are about to discuss may not be in the awareness zone – much less consistent with the belief system – of the leaders you will work with.

TRENDS

• Rise of the Global Economy• Technological Advances Disrupting Old Models• Revolution in Higher Education• Real Estate Woes• Huge Demographic Changes• Urban Migration in the U.S.• Private Sector Aversion to Hiring Full-Time Labor• Rise of the “Proprietor” or “Gig” Economy

Global Trends

Global Economic Trends

• Technological advances have helped “flatten” the world.

• China and India are growing faster than the U.S.

• Europe and Japan are having difficulty maintaining their populations and are experiencing many of the same issues of an aging population as the U.S.

Moore’s Law

Higher Education Due for Massive Change

Massive Open Online Courses

• Khan Academy• Udacity (Thrun)• Coursera (100 partners, including Vanderbilt)• EdX• Saylor• iTunes U• Others (13 and counting)

Key Issues Moving Forward

DEGREEor

KNOWLEDGE?

• How does a potential employer ASSESS what she needs? How about the student?

Real Estate Woes

• Internet sales growing 3x that of storefront operations (more if gas and cars are left out).

• U.S. has 22 sf of retail space per person. #2 in the world is Sweden, with 3 sf/person.

• The U.S. simply has an overbuilt retail presence.• Industrial. Got any empty space?• Housing. Multi-generations in one. Apartments.

DEMOGRAPHIC CHANGES

• The U.S. is getting:– Older– Browner– More Urban

• Millennials (aka Gen Y or Echo Boomers) will dominate the workplace in ten years.

POPULATION MOBILITY

• Since the 2010 U.S. Census, North Carolina has grown by 300,000 people. One half of the population gain has been in two counties: Wake (Raleigh) and Mecklenburg (Charlotte). 50 of the state’s 100 counties have lost population since the census.

POPULATION MOBILITY

• In Tennessee, the state has grown by 150,000 since the 2010 Census. Seven counties: Davidson, Hamilton, Knox, Montgomery, Rutherford, Shelby and Williamson represent 105,000 of that gain. 43 of 95 counties lost population.

Millennials

• Born between 1982 and 2000.• Civic-minded, more liberal, not as money-

obsessed, networked, techno-savvy.• Ditching television to watch on other devices.• Not going to movies.• Not getting drivers licenses or buying cars.• Many still living with mom and dad.• Not getting married and having kids.• Not buying homes.

Data for your First Huge Challenge.Toward a Self-Employed Economy.

Your First Huge Challenge

• The Economy has changed. • The “Job” paradigm that began with the

Industrial Revolution is diminishing.• There is a rapidly rising alternate

“workforce engagement” in lieu of “jobs”.

• You now know this.

Your First Huge Challenge

• And your bosses still adhere to their belief system to “create jobs” – which is most unlikely.

• You must navigate between their virtually unfulfillable demands - and where the economy is actually headed.

• Sail wisely, captain.

Your Second Huge Challenge

Demonstration Exercise

Your Second Huge Challenge

• Your role of Economic Developer will be parts:• Diplomat• Networker• Social media / tech expert• Talent Manager• Teacher• Futurist / Driver of Change

Your Second Huge Challenge

• Community Developer• Talent Developer• Entrepreneurial advocate

• Oh, and then all that recruitment, retention, existing business, site development, project finance, marketing, regional, cluster, branding stuff that’s already expected of you.

Establish Who You Are

• As we enter a new economic era, you will be facing a different set of challenges than your predecessors.

• Your skill set will need to be different – more expansive.

• Most leaders’ expectations are based in the old economy.

• What do you stand for?

Looking Around the Corner: The Future of Economic Development

Changing Practices

This section highlights the changing nature of the role of the economic developer. For example, economic developers will take a larger role in increasing and managing talent in their communities, a skill that is related to demographics. They will be called upon to harness the growing power of technology, especially when it comes to marketing. And they should develop and improve their skills in systems management to facilitate new kinds of incentives in a global economy.

Changing Metrics

In the future, metrics for economic development will not be focused solely on job numbers. This is especially important in terms of understanding the freelancing and entrepreneurial economy. Similarly, typical measurements of human capital, such as number of college degrees, will fade in importance with new developments in education. Sustainability will also become a metric for competitiveness.

Changing Skills

In the future, economic developers will need to take a lead role in leading change, in order to connect their community to larger trends. Economic developers will increasingly be the drivers of change, enabling their communities to identify big trends and take advantage of them, while managing associated risks.

Changing Competition

In a changing global economy, economic developers will need (to) keep their communities needs met, while also scanning the larger scene for opportunities and hazards. The global competition for talent will be fierce, and smart economic developers will build on their communities’ strengths to attract and retain human capital. Education and quality of place are two main strengths to build upon.

Conclusion

• In the next 10 to 15 years, it is probable that the accelerated pace of worldwide development will continue, aided by digital technology and a rising global middle class. These changes in the worldwide economy and structure will impact local economic developers differently. However, EDOs and economic developers can incorporate tactics into their practice to help prepare for the future.

• Cultivating an organizational and professional attitude of nimbleness will keep EDOs ahead of trends and able to adopt. The ability to pivot into different roles ensures that EDOs will stay relevant. And, though it is a cornerstone of economic development today, the ability to collaborate will become even more important on a global scale.

Age of Uncertainty

• We are transitioning from one economy to another.• Technological advances are moving so rapidly we

can’t keep up with them• Old style thinking is trying to regain their footing by

re-affirming the past - with what used to work.• And because of the uncertainty, no one can say for

certain what actually will work to improve conditions, so we succumb to the pressures and the known commodity of the old think setting.

ED Don’ts

• Don’t try to induce a tourism cluster by spending tons of money on an obscure historical site or museum thinking it will generate bill travel dollars. It won’t.

• Don’t undertake an ED planning process with a company that will only encourage the development of a business park. If you can do it, you know it already. Save your money.

ED Don’ts

• Unless you subscribe to the idea that every job is a good job, be careful what you incentivize.

“Incentivize what you want to look like – what you want to become.” - Rob Bencini

• Don’t spend your limited marketing dollars on building a “brand,” DVD’s to mail out, pamphlets or magazine advertising.

Recap

• We are entering a new economic era – one where rapid changes in technological advances disrupt what we are used to.

• The old rules – the old ways of doing things -will apply less and less. And we don’t know what the new rules will be.

• The Job Paradigm is diminishing, largely replaced by the Proprietor Economy.

Recap

• Consequently, the role of the Economic Developer will change, to one that looks to build community, network, focus on entrepreneurial development, developing talent (over jobs), and being a visionary for his/her community.

Green Energy

3-D Printers

Baxter

Coding

Jobs of the Future

• Atmospheric Water Harvesters• Sharability Auditors – People who analyze

homes and businesses for sharable assets.• Super Baby Designers• Drone Traffic Optimizers• Avatar Relationship Managers • Bio-Meat Factory Engineers• Hospital and Healthcare Dismantlers

Reading List

Wall Street JournalThe EconomistWiredThe FuturistGood Morning Silicon ValleyKauffman FoundationThomas FreyNext Big FutureThe Elliott Wave Theorist

• Thomas Friedman– The World is Flat– Hot, Flat and Crowded

• Tom Peters– Re-Imagine!

• Peter Diamandis/Kottler– Abundance

• Rob Bencini– Pardon the Disruption.

The Future You Never Saw Coming.

Thank you!

• Contact Information:

• rbencini@earthlink.net• www.robbencini.com• @robbencini• 336.215-1995

• Futurist advances