Economic recovery from the COVID-19 pandemic is uncharted territory, and none of us really know how, when, and if things will return to “normal.” I’m on the hunt for any type of lessons learned from past experiences, from history (such as the 1918 Spanish Flu pandemic) to more recent events. An interesting new Harvard Business School report, “Why Japanese Businesses are so Good at Surviving Crises,” looks at how Japanese firms dealt with the impacts of the 2011 earthquake and tsunami.
Japanese firms must be doing something right, as they are long-lived. In fact, the five oldest companies in the world are all Japanese. The oldest, Kongo Gumi, a construction firm, got its start in 578CE. In these case studies, Japanese companies pursued strategies advanced disaster relief and recovery, and strengthened their companies along the way.
In 2011, successful and resilient Japanese firms exhibited the traits known as “toku,” which refers to having a moral purpose in running a business. In our terms, Japanese firms are community minded or are pursuing a double or triple bottom line. The report authors discuss the model of “wise leadership” as driving the business response in 2011 and beyond. Wise leadership is not a complicated concept; it simply refers to a business focus on building both economic and social value. This is a welcome shift from an exclusive and maniacal focus on shareholder value, which is still embraced by many US corporate leaders. The pandemic seems to be changing this perspective, and there are many promising signs that “wise leadership” thinking may be gaining traction here. As these Japanese examples show, this approach not only supports business longevity, but it also helps with economic recoveries as well.
Back in a previous life (early March), my wife and I were preparing for a nice long weekend in Boston where, among other things, I was going to do a presentation at the International Business Innovation Association’s (InBIA) annual conference. Like so many other events, this one is now virtual and it’s happening this week. While we won’t have the in-person networking or Boston’s sights or good food, it will still be a great event. There are lots of great panels on key topics like ecosystem building, supporting minority entrepreneurs, working with special sectors like food and manufacturing, and many more. I’ll be part of a panel, with my colleagues Cathy Renault and Jocelyn Sterenchock, on Thursday, June 24, at 4:45PM. We’ll be discussing trends and effective practices for working with rural entrepreneurs. Hope to see you virtually this week.
I’ve long written and spoken about the important role of independent and gig economy workers as part of a region’s core base of entrepreneurs. While many of these workers are simply pursuing additional income, a large share are building businesses too. Yet, for a variety of reasons, they may not show up in the data, and thus we don’t fully understand their potential impacts on local economies. A new National Bureau of Economic Research paper offers a good look at these impacts. “Launching with a Parachute” investigates how the introduction of gig economy platforms affects business startup rates. (The researchers use the excellent Startup Cartography Project for their data. Check the project website for other useful work as well.) They find that the introduction of the gig economy to a community increases the local startup rate by around five percent, and also increases local lending to new businesses. The authors suggest that supplemental income from gig economy work offers “insurance” and additional resources that provide a “parachute” for those considering business startup. In effect, the gig economy work provides income and perhaps a test bed for business ideas and concepts too. The authors also find that these effects on startup rates are most pronounced in areas with lower incomes and higher credit constraints. As we continue to slog our way out of the current economic crisis, we may find that gig work will have an even larger impact on future startup activity.
We’ve just produced a new issue of our regular e-newsletter, EntreWorks Insights,. This issue offers suggestions for community talent attraction strategies as the worst effects of the COVID-19 pandemic weaken. We welcome your input and ideas! You can also subscribe to our newsletters here.
I’ve developed something of a tongue-in-cheek “formula” for what communities should consider doing to help spur recovery after the pandemic: T + I + E + BRE = R. Communities that invest in Talent, Infrastructure, Entrepreneurship, and enhanced Business Retention & Expansion programs will likely have the best potential for economic Recovery. If you want to learn more about the E in this recovery equation, you may be interested in an upcoming training opportunity from the International Economic Development Council. On June 18 and 19, I’ll be co-teaching an on-line version of IEDC’s Entrepreneurship and Small Business Development course on-line. My co-presenters will be Carol Lauffer of Business Cluster Development LLC and Tom O’Neal of GROW Florida. This course also provides credit toward IEDC’s Certified Economic Developer credential. Hope you can join us. (FYI—I’ll also be teaching a similar version of this class for the North Carolina Basic Economic Development Course in early August. Watch this space for further details.)
Our shambolic response to COVID-19 presents us with many bitter and painful lessons. One set relates to scenario planning. We’re obviously not very good at it, and, when we actually do advance scenario planning, we ignore the results. It probably behooves us—or at least those of us working in community development—to take a look at a useful new Lincoln Institute of Land Policy book, Scenario Planning for Cities and Regions, by Robert Goodspeed. This excellent guide is something of a one-stop-shop on scenario planning. I know a little about scenario planning processes, but I learned a lot here and was also reminded of many good ideas and techniques that I’ve forgotten over the years. I expect that I’ll use it regularly as a future reference guide—it would also be useful for student and newcomers to the field. It’s also an easy read, and relatively jargon-free—at least for us policy wonks! It’s well worth reading.
On Tuesday, I led a National Association of Development Organizations webinar on the topic of “The Long and Winding Road to Economic Recovery.” A recording of that session, and copy of my presentation, is now available here. Please be forewarned of an audio glitch (from minute 41:30 to 43.10). My presentation made a big pitch about investing in infrastructure, especially broadband, and lo-and-behold, my power at home went out at this point in the event. I quickly rebooted, but I guess I made the case–unintentionally!! I welcome your feedback on these thoughts and ideas. Thanks to NADO for supporting this work.
I remain convinced that our post-COVID world will place a heavier emphasis on local ownership and local connections. I’m excited about these prospects, but also realistically concerned about how we’ll pay for this at the local level. Outside support, from revised and expanded state and federal programs, will likely be part of the puzzle, but the real solutions will need to begin at home. And, we’ll need money to support local business and other locally-focused initiatives.
These thoughts led me to dust off an early 2020 report that has been on my “to-read” list for a while: Community Investment Funds: A How-To Guide for Building Local Wealth, Equity, and Justice. This work, from the National Coalition for Community Capital, is an excellent introduction to the budding field of local investment funds. The report profiles a number of new-ish funds, such as the Vermont Community Loan Fund and the Boston Ujima Fund, that are testing new models that use the investments of local people to build community. The report also includes a useful how-to guide on the legal and regulatory steps required to establish these funds. A quick summary? This is not an easy task, and we’re still learning about what works. But, these interesting experiments deserve greater attention, and, hopefully, more communities will develop these funds and create an effective roadmap for future success.
I’ve had the pleasure of working for many years on economic resilience and recovery projects with my colleagues at the National Association of Development Organizations (NADO). This work has dealt with lots of economic shocks such as factory closings, military base closings, and natural disasters. Now, we hope to use lessons learned from this work to support COVID-19-related economic recovery. I’ll be talking about this work in an upcoming webinar entitled “The Long and Winding Road to Economic Recovery.” The COVID-19 crisis is unprecedented, so we certainly don’t have all of the answers. But, there are some useful lessons from past experience with economic resilience and recovery efforts. We’ll discuss how and whether to apply them to COVID-19 recovery efforts. If you’re interested in joining this discussion, you can learn more and register here. The event will be held next Tuesday May 19 at 2PM Eastern. Hope to see/hear you then!
We’ve learned a lot of lessons—most of them painful—during the current COVID-19 crisis. In the policy-making world, we’re certainly learning that we need to do a better job in developing, using, and sharing data, research, and analysis. While we’re now rightly focused on issues related to public health data, we also need to think about how to address other data challenges as we move toward economic recovery. The lack of good data on rural America is one pressing challenge that deserves more attention, and has rightly been called out in a new Aspen Institute report, “In Search of Good Rural Data: Measuring Rural Prosperity.” The report highlights a series of challenges that I deal with on a regular basis when EntreWorks is working in rural regions—the quality and availability of economic data is very poor. A variety of factors is at work—it’s hard to get representative samples in rural areas, some rural data is “suppressed” for privacy reasons, and we have varying definitions of what is rural. What this means is that, to a certain extent, we may be flying blind when trying to understand rural economies. We know a lot about economic trends in big cities, but less about what’s happening in smaller places. We know that good policy depends on good data, so if we want better rural policy, we need better rural data too. This report offers a number of very useful ideas on how to close this gap, and is well worth a look.