Wednesday, April 17, 2013

Blue Oceans; It’s not just for coastal cities anymore.

The mantra of economic developers currently stresses the idea of cluster development combined with a marketing pitch designed to lure companies to a region in order to create jobs. Companies should want to locate here, they say, because our area is business-friendly and we have a high quality of life. Then there are those who support Richard Florida’s idea of the creative class. They believe that where artists congregate will be the next center of investment for a city. These two ideas mean that cities and regions will constantly be competing for the same economic stimuli.

There is a non-mutually exclusive strategy that local economic developers, in partnership with municipalities, can adopt. In business, the Blue Ocean Strategy stresses changing the rules of the game in order to make your competitors irrelevant. It calls for not comparing your organization to that of your competitors and fighting over the pie of fixed size but of enlarging the pie by breaking off into “unexplored territory.” The City of Pittsburgh can strategically position itself to take advantage of new ideas and people coming to the region.

Before you start joking about the Steel City having only brown oceans, I propose that the City of Pittsburgh adopt a different, long term strategy. Rather than a “race to the bottom,” the strategies advocated by “business-friendly” types (as if there are no strategies for attracting and retaining business other than bribery), the leadership must account for the following long-term demographic and political trends:
          1. Greater interest and widespread “quality of life” strength of an area:
Pittsburgh has ranked highly and sometimes highest in terms of quality of life. Over the past decade, many other municipalities have adopted a similar strategy to attract knowledge workers who can go anywhere. Within the next decade, this strategy will become obsolete and so cities will need a new way in which to differentiate themselves. Pittsburgh advantage as a first-mover in the quality of life measure positions it well to make the next first move.

      2. A national push for immigration reform based on the growing recognition that current policies dampen economic growth:
Governments at all levels are beginning to recognize that our current immigration policies stymie and dampen economic growth. People with brains and skills are going elsewhere since the USA is not so attractive for non-Americans. We are losing the opportunity to have an important population contribute to both national and global growth. Smart people with good ideas and skills want to come here but are barred. The times, they are a-changing. Those working in economic development, local politicians, and some national leaders including the President are moving toward comprehensive immigration reform.

          3. Greater federal, state, and university support for entrepreneurship and small businesses:
The federal government, state governments (including Pennsylvania), and many universities (including Carnegie Mellon University and the University of Pittsburgh) have incentive programs and policies in place to support the growth of entrepreneurs and small businesses. Universities, especially, are incubators for entrepreneurial developments. While these can certainly improve, leaders recognize the importance of new and growing businesses and are willing to back them.

Given the need to begin refocusing economic development strategy (1), the opportunity presented by the highly probably immigration reform (2) and especially the strengths and attraction of Pittsburgh’s universities for entrepreneurship (3), Pittsburgh will soon have the opportunity to implement a Blue Ocean strategy of its own. By preparing the policy groundwork to welcome immigrants and support their entrepreneurial ventures, Pittsburgh can continue to offer high quality of life and still make their competition for immigrant brains irrelevant. By ditching the self-defeating “race to the bottom” strategy and re-organizing our policy framework, Pittsburgh can offer higher value that other cities and regions will be slower to adopt. Pittsburgh and her universities should be prepared to welcome immigrants and support their entrepreneurial ventures when the national immigration reforms come into effect. But when will that happen? How can our city reach out to other cities around the globe? Where should we focus our attention? How can we ensure that the immigrants will live in the city rather than the suburbs? What kind of local culture should we develop to be more welcoming? What is the role of the universities, international institutions in Pittsburgh, and multi-national companies?

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