Volume 1, Number 2 – August 2004

Ending Turf Wars?

“We have met the enemy and he is us.”  That old line from the Pogo cartoon can certainly apply to us in the economic development profession. I am constantly amazed at the huge number of organizations that claim to “do economic development.”  In some sense, that’s a testament to our entrepreneurial drive. But, it also creates great challenges as money is frittered away on organizations that can’t reach scale and in battles over turf. 

Many regions struggle with this challenge, but fixing it is easier said than done.  In Kansas City, more than 100 organizations have collaborated to create KCSourceLink (www.kcsourcelink.com), an excellent on-line source for local business development resources and information.  In some ways, KCSourceLink is not much different from a typical “one-stop shop” or web-based information clearinghouse.   But, KCSourceLink is more than a static web page.  It also provides referrals (with follow-ups) to local service providers so that the region’s entrepreneurs can get face-to-face help if they so desire. 

The Entrepreneurial League System (ELS) is another model that seeks to reduce fragmentation among service providers.  This system was developed by Gregg Lichtenstein, a private consultant, and Tom Lyons of the University of Louisville.  It seeks to create a hierarchy of service providers who focus on different needs/levels of business assistance, from the start-up micro-entrepreneur to the high-growth venture capital-ready firm.  This approach is being piloted in several locations (Asheville, NC; Huntington, WV).  To learn more, visit http://www.ruraleship.org/content/pdf/Entrepreneurial_League_System.pdf

While the Kansas City and ELS examples are interesting, the Cleveland Ohio area may offer the most interesting model for consolidating and streamlining fragmented regional development efforts.  The Cleveland approach is interesting because it recognizes one key reality.  Some fragmentation is due to bureaucratic competition between economic development organizations, but the lack of collaboration among funders is a more important cause.   So many economic development organizations exist because there are so many independent and uncoordinated funding streams.  The federal government’s economic development programs are instructive.  Overall, more than 400 federal agencies “do” economic development and each agency has its own local networks of economic development districts, community development corporations, or small business centers.   Throw in thousands of state, local, and  privately-funded programs and the result is a mish mash of well-intentioned organizations doing important work without the funds and infrastructure needed to succeed. 

A recent survey from Wisconsin is instructive (available here:  http://www.uwex.edu/ces/cced/documents/econdev_survey_03.pdf).  Nearly 900 organizations support local economic development in Wisconsin; their average budget is $235,000 with an average staff size of 2.8.  Extrapolating from this data, the researchers project that local spending (excluding state and federal resources) on economic development in Wisconsin could exceed $200 million.  If used effectively in a collaborative manner, $200 million could support a lot of economic development in the state. 

Cleveland’s leaders are seeking to address this problem through a new coalition called the Fund for our Economic Future (www.futurefundneo.org).   The Fund was initiated by local philanthropists (led by the Cleveland Foundation) and it now includes 56 partners.   Its mission is to support a common regional development agenda that will transform Cleveland’s economy.  It is pursuing many interesting strategies around entrepreneurship and cluster development, but its real innovation is the organization itself.  In this case, the funders have created a single pool of funds (now at $26 million) to invest in a small group of organizations. 

Northeast Ohio is a very fragmented place.  Cuyahoga County alone has 57 cities (including Cleveland) within it.  Thirty-one major economic development organizations serve the region.  Instead of providing grants to all relevant players, the new Fund has opted to invest in four:  BioEnterprise, JumpStart, NorTech, and Team NEO.  Each of these grantees will receive roughly $2 million, a funding level that should allow them to develop sufficient scale to effectively serve the region.

It’s too soon to determine whether this experiment is going to work, but the Fund for our Economic Future team deserves credit for taking a direct approach to dealing with some of the primary flaws in our current economic development system:  fragmentation and turf wars.  What’s the bottom line from this experience?  Excellent economic development outcomes result when excellent economic development organizations focus on the mission.  And, excellence will not occur in an environment where 1-2 person operations struggle simply to make ends meet.  If we are to succeed, we must “scale up” so that we can effectively tackle pressing development challenges.  Preferably, we would scale up thanks to an influx of new investment from private and public sources.  If this source is not available, consolidation, streamlining, and the elimination of ineffective organizations have to be considered.  As Cleveland’s leaders are finding, this is tough medicine. But, it is needed medicine if we are truly serious about promoting economic development.  As the old saying goes, physician, heal thyself.

FORTHCOMING:  This article discusses several regional strategies for dealing with “turf wars.”  In our next issue, we’ll look at some other interesting approaches coming out of the philanthropic community.

The Curse of Scenic Beauty

I had the pleasure of visiting Jackson Hole, Wyoming this summer and I was awed by the beauty of that place.  At the same time, I was depressed by the high cost of housing and the challenges that creates for us non-millionaires, some of whom may live and work in places like Jackson Hole or Aspen, Colorado.  Call it rural gentrification.  I’m in the process of compiling stories, best practices, and the like of how similar communities can effectively respond when they are “discovered” as a rich person’s playground.  If you have tips or suggestions, send them to me at epages@entreworks.net. Look for more on this topic soon. 

Miscellaneous Plugs

In our travels around the world and around the web, we regularly find some very cool stuff that might interest our readers.  We’ve been spending a lot of time in the Northern Great Plains and Mountain West lately, so this edition of EntreWorks Insights includes some great resources from that region.

Montana Associated Technology Roundtables (www.matr.net):  MATR is a network for entrepreneurs in Montana and the surrounding Inland Northwest Region.  It’s an excellent local network, but, for those of us who don’t reside in Montana, its electronic newsletter may be more interesting.   We read dozens of these newsletters each week, and MATR’s offering (developed by Russ Fletcher) is among the best.  If you want to learn about what’s happening in the region (and the world), the MATR newsletter is a great resource.

Pioneer Entrepreneurs (www.pioneerentrepreneurs.com):  We regularly plug Pioneer Entrepreneurs, but it never hurts to do it again.  This organization, based in Bozeman, Montana, works with entrepreneurs across the country to help them make better business decisions and grow their companies.  Its founder, Dave Bayless, is one of the more interesting thinkers about what makes entrepreneurs tick and how to help support them in growing new ventures. 

Prairie Business Magazine (www.prairiebizmag.com):  Not all the good stuff is in Montana. The Dakotas also have some great resources.  We’ve become big fans of Prairie Business magazine, which covers business happenings in North Dakota, South Dakota, Minnesota, and Manitoba.   If you want to understand the challenges of rural development and also learn about lots of innovative ideas and people, check out Prairie Business.   We can especially recommend the monthly column from editor Rick Killion. 

What’s Happening at EntreWorks Consulting

Besides hitting the beach and enjoying the summer, EntreWorks has recently been back to school with many community colleges.  We have been facilitating an Education Department-funded project with 12 community colleges from across the US and overseas.  The purpose?  To get community colleges more engaged in supporting business and economic development.  We are doing this through the development of new teaching tools that tie entrepreneurship training to targeted industry clusters.  So, instead of teaching basic entrepreneurship class to community college students, we will now teach a class with a specific focus on entrepreneurship in the food business, or manufacturing, or creative arts.  The purpose is two-fold:  help students learn about how to start new ventures, and also link these ventures to a wider community development strategy.  To learn more about the project, visit www.clusterhubs.org

Several new articles are posted in the EntreWorks Library (www.entreworks.net/library).  These include the following:

“Communicating Up:  Selling New Development Strategies,” by Erik R. Pages,  Agenda for Local Economic Development (UK), Issue No. 69, July 2004.

Understanding the Environment for Entrepreneurship in Rural North Carolina, by Erik R. Pages and Deborah Markley.  North Carolina Rural Development Center, 2004.