Technology Based Economic Development

“We can’t solve problems by using the same kind of thinking we used when we created them.”

– Albert Einstein

New Thinking for a Battered Economy

Old school economic development still rules the discussion and the dollars. The focus remains on making Tampa prettier than the other cities so that companies will relocate operations to be near our sandy beaches and sun filled skies (oh and let’s not forget the numerous monetary incentives).

Even in healthier economic times these tactics provided more of an aesthetic win than a measure of true economic growth, but this type of “job creation” makes all the committees and commissions feel good about their efforts and the process continues year after year. But now more than ever with medium and large companies just trying to survive, economic development efforts need to shift focus and recognize the real job & wealth creation machine – startups.

I’m not suggesting the investment of public funds directly into private companies, but communities do need to view themselves as more than the sum of their infrastructure, housing and educational ecosystems. They need to consider whether they are virtual incubators for new business generation. Do they have the right resources and workforce to support the next generation and growth of new ventures or are they so risk averse in their thinking that they can only stomach name brand companies and “safe” business models. If your strategy is to recruit more financial services, call centers and manufacturing, you may be stuck in an ecodev strategy that is a few decades out-of-date.

Embracing a new model means abandoning some of the rules and religion of old school ecodev:

  • Target industries
  • Minimum # of employees
  • Average income based on % of state averages
  • Tax incentives (property, income, corporate)
  • Commercial real estate development
  • etc.

Other cities and states have broken the code and realize that their future is tied to the creativity, innovation and skill sets of the individual worker and small startup enterprise. Publicly funded incentives should be enablers for those new ventures vs. trying to prop-up or relocate low growth, cost shedding companies or industries.

Background Rant

For ever city that has a consistent flow of innovation and growth, there are hundreds of wannabe cities that are obsessed with becoming the next Silicon Valley or 128 Loop. State and local governments thrive on the notion that with enough infrastructure build-out and enough positive spin in the press, brand name corporate giants and others will flock to their community making it the next tech or life sciences Hub. “Look at our great schools, ample supply of affordable housing, industrial parks and all of our generous tax incentives” is the usual battle cry. Well I guess that used to work for Florida and others, but no more.

Most traditional economic development initiatives are directed by groups of big company execs, retired athletes or pay-to-play organizations like the Chamber of Commerce. Their budgets run deep, but their vision is shallow. Year after year they play the game of zero-sum economic development; this is the illusion of growth in one community by the relocation of a company or division away from another community. Whopping sums of money and other incentives go to lure some project, call center, distribution facility or lab to our home turf so that the EcoDev folks can pat themselves on the back and proclaim the new company a major contributor to the local economy.

Look at the numbers, does this make sense? Thirty million dollars in incentives to create a hundred “new” jobs? Do these new companies really add to the economy or boost the local image when their HQ is still firmly entrenched in Massachusetts or California? What does it say about our local economy when our leadership’s only strategy for growth is importing small slices of already established companies? As a community are we projecting an image of strength and innovation or one of weakness and insecurity. If our leadership really feels that our best prospects for economic growth are hand-me-downs from another community, just pack your bags, game over, we are done! We are saying to the world “we only know how to survive as a tourist destination and when there is a construction feeding frenzy”…”we have no local innovation and our people completely lack the ability to generate new ideas or create new ventures.”

Not pretty? Hate seeing you baby called ugly or told the emperor has no clothes? Well folks this is the essence of old school economic development and that is where your tax dollars are being spent. Policies suited for the 70’s, but still very much in favor today. Strategies dreamed up by institutes and committees full of people that have never created a company or launched a new product. Ideas that are so out of touch with the market and the economy that they repeatedly try to lure venture capitalists to town or try to match funds in their own mini-stimulus package not realizing that you can’t wish innovation and wealth creation into existence by simply mimicking the scenery of a successful tech city.

We are in tough economic times and old school ecodev just isn’t going to deliver what we need when we need it. If we really want economic evolution, then we need to look to the growth generators. Decades of research all point to small companies and start-ups as the creators of the majority of new jobs. Let’s at least partially embrace a new form of economic development. Look to the grass roots innovators and entrepreneurs that are creating things locally and encourage them not with tax incentives or infrastructure, but with resources like incubators, flexible office space (coworking), education, services, BarCamp type events, healthcare and tax-free employees.

Detaching economic development agendas from the current political machine is difficult but essential to creating meaningful initiatives that will actually contribute to the local economy and grow the area. The fact that Tampa has outsourced ecodev strategy to a third party pay-to-play organization makes this task even more contentious, but they have had their chance and look where we are. Some cities have broken the code, others are at least trying new strategies. It is now up to us to take back control of this run away train and chart a new course for our future. It is up to our economic and political leaders to lead, follow or at least get out of the way.

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