Ed Morrison's Garage

Everything you know about entrepreneurship is wrong -- or is it?

Sun, 20 May 2012 07:17:00 -0700

Scott Shane is an academic based in the economics department at Case Western Reserve University who specializes in entrepreneurship. I got to know Scott when I was heading up the Center for Regional Issues at Case Western Reserve. A friend recently sent me Scott's article -- Everything you know about entrepreneurship is wrong -- and asked me to comment.

My response:

Scott's views are grounded in basic Economics 101. The only problem is that few markets function this way. The hard categories he is suggesting are not that clear in the real world. Markets are not mechanisms. They function as open networks where various actors make investments based on risk/return calculations. These calculations are based on imperfect information and made by people who are not the "rational actors" with whom economists populate their models.

Government investment in start-ups does not work well because governments do not do a good job structuring their investments. (Solyndra or the more recent bomb in Rhode Island are good examples.)

The challenge is to structure these investments with more rigor. This is very hard to do, and that's why I don't really recommend it. Few government employees have the skill to structure these investments.

Generally, I'm skeptical of any government program that does not structure investments in individual firms as co-investments. Formula loan guarantees are generally foolish. They push the risk off to government investors without any compensating upside. The risk profiles of individual investments are ignored. (In contrast, the auto bail-out, structured by some administration experts with deep backgrounds in corporate finance, seems to have worked out well.)

Scott is correct in saying that government programs become captured. Agency capture is an old problem that is very difficult to solve. Just consider the problems of writing sensible banking regulations, even in the wake of the JP Morgan-Chase bet gone bad.

To avoid this problem in regional economic development, local and state governments can forget about funding individual companies and instead focus on funding the civic infrastructure -- the networks -- needed by entrepreneurs. That's the economic gardening idea. With economic gardening, local and state governments invest in a public good that does not generate sufficient private returns to induce private investment.

Government programs can be structured to respond progressively to market signals, even though they may be weak. The best example, perhaps, is the SBIR program, originally designed by Roland Tibbets at the National Science Foundation. In the absence of a structure to guide investments along the risk/return continuum, regularly sunsetting these investment programs is a good idea as a default.

My guess is that Scott's contrarian views are grounded in a misinterpretation of government data. Scott's problem with interpreting small business data comes in his inability to distinguish among different types of small business start-ups.

To be fair, government data is not organized this way. Yet, understanding the strategic dimension of small business development is critical to crafting sensible public policy. Not all small businesses are the same.

Strategically, a company that manufactures vinegar in Cody, NE is different from a family farm producing strawberries. (These two examples come from my trip to Nebraska this week.) The vinegar start-up serves a national market (a lot of good money); while the family farm serves only a local market (increasing the velocity of neutral money, mostly).

Scott doesn't take into account these strategic differences, but they exist and they are important. Here's a paper I wrote over 25 years ago on the issue. More recently, here's a paper from the UK on these high growth companies.

What's missing from Scott's argument is that government investments in start-ups are peanuts, compared to the government incentives to move companies from here to there. A recent book estimates these incentives total $50B to $70B. These investments are wasteful, and they need to be restructured.

The Pew Foundation recently produced a report on the lack of accountability for these incentives. If you want a target for stupid investment, this is it. We would be far better off with a broader tax base, lower rates and a simpler code. (In contrast, I would be surprised if government investments in start-ups total more than $3 billion nationally.)

Finally, I find his argument about multipliers as just odd, and his point about Eaton is, well, nonsensical. To my mind, Scott lacks a strategic perspective on small business development, so he comes up with some pretty goofy hypotheticals.

The key policy issue is how do we identify, ex ante, the start-up firms likely to grow quickly. They are a small number, but they have a powerful impact.

That's the challenge that economic gardening has set out to solve. It has nothing to do with supporting small firms as small firms.

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Thoughts on strategy in regional economies

Thu, 03 May 2012 16:09:00 -0700

Over the years, I have collected a number of thoughts on developing a regional strategies in a globally connected world.

In a globally connected world, isolation is a choice. If you want to face the turbulence ahead by yourself, go ahead. But that's probably not your best option.
You always have the opportunity to connect. The choice doesn’t disappear.
To build networks, close triangles. You know George and you know Nancy, but they do not know each other. Introduce them with a short e-mail.
Closing triangles is a powerful routine to strengthen a community or region. If you closed five triangles a month, you would close 60 a year. If a 100 people in your community followed your lead, you would have 6,000 new connections in a year.
Open, loosely connected networks can be guided strategically. That’s how open source software development works.
Strategic Doing is a simple discipline to form complex collaborations, manage them toward measurable outcomes, and adjust along the way.
Strategic Doing generates “link and leverage” collaborations across organizational and political boundaries.
With Strategic Doing, we follow simple rules to link, leverage and align our assets, so we can do far more with what we have.
Strategic Doing teaches you how to build complex collaborations quickly and keep them on track with measurable outcomes.
Traditional approaches to strategy -- strategic planning -- can be made more agile by combining these approaches with Strategic Doing. We are not living in an “either/or” world anymore. If you are stuck, try “both/and”.
Strategic planning has difficulty keeping up with the pace of change we face. We need to do our strategic thinking differently.
In a complex world, our strategy is emergent. We learn and shape our strategy as we do.
With collaboration, the soft stuff is the hard stuff. We need simple rules to deal with the hard stuff.
Strategic Doing takes time to develop. It involves building new, collective habits of thinking and doing. Remember how hard it is for you to form a new habit. Now multiply that by dozens of people.

The core skill of authentic connection is the ability to listen. Strategic Doing starts by listening to each other and learning what assets we have to share.
Opportunities are defined by shared value. Through collaboration, we can create something that individually we cannot create on our own. It’s the 1 + 1 =3 (or 5 or 10).
Most people underestimate the challenge of collaboration. It’s an on-going commitment to transparency, authenticity, deep thinking and action.
Collaboration is more than exchanging e-mails. It's more than facial recognition.
Fear undercuts our capacity to connect. The reality is that we are driving down a foggy road at 60 miles an hour looking for the next curve. No one can predict what lies ahead. Fear is a reasonable emotion under our circumstances, but it doesn’t help us much.
The purpose of talking about our fears is to shrink them to a manageable size. Then we can move ahead.
Soreheads pull things apart. It's relatively easy to do. Not much brainpower is required.
Regional development poses the most complex collaboration challenges we face in our economy. Consider the difficulties. We are addressing highly complex challenges in an open network. Nobody can tell anyone else what to do. We normally do not have a strong history of working together. Standard rules fair dealing do not necessarily apply. We may not know whom to trust. Our skill levels vary, and we each carry some emotional baggage that influences what we see and hear. Is it any wonder that regions have difficulty coming together?
Sustainability, adaptation and resilience are closely connected ideas. By building trusted networks in our regions, we are expanding our collective capacity to adjust to the next big shock that’s coming.
The core question of civic leadership is simple: What kind of place do we want to leave for our children and grandchildren?
Strengthening our linkages among us is our best approach to deal with uncertainty. It's not a new idea. That's why we buy insurance.
Strategic Doing guides conversations. It is not "top down" or "bottom up", because we are dealing with networks, and there are no tops or bottoms to a network. We are combining open participation with leadership guidance.
For too long, we have treated civility as an adornment to our democracy. Far from it. If we do not follow some basic rules of civility, we cannot do the complex thinking together that our democracy commands.
Strategy answers two questions: Where are we going? and How will we get there? Strategic Doing answers these 2 questions by breaking them apart into even simpler steps.
When people start to think regionally, they often worry too much about protecting their boundaries. Regional strategies don't work if too many people fall into this trap. Regional strategies work best when we connect our core strengths across organizational and political lines.
Build your region out from a core of “a willing network”. Worry less about boundaries. As you strengthen the cores of your region -- and connect them -- your boundaries will expand.
The first distance we have to travel to build regional collaboration is not very far. It's the distance between our ears.
Exploring our assets begins a collaboration. We need to find opportunities for mutual benefit. These opportunities arise when we take our shared assets and connect them in new and different ways.
Enduring collaborations are forged by the hard work of defining measurable outcomes and then moving these outcomes into action with simple steps, simple commitments.
Visions can work to align and guide an organization. Yet, they do not work all that well in open, loosely connected networks, where no one can tell anyone else what to do. People in our networks are practical. They need clear outcomes if they are going to commit their time and resources. Vision statements often do not provide that clarity.
Within a network, translating a vision or an opportunity into an outcome involves deep thinking about what success should look like. We're trying to describe a complex, multidimensional reality somewhere in the future. It's not easy.
To move people in a network, they need to see pragmatic, measurable outcomes in their own mind's eye. It's only then that they trust the words enough to decide whether they will take action.
Strategic Doing is a process of fast cycle experimentation to figure out what works.
We need to transform our regional economies to meet the new realities of global competition and environmental sustainability. On top of that, our economy is aging, and that trend creates its own set of challenges.
These challenges are unprecedented in our lifetime. If we rely on the same old patterns of thinking and doing, we are driving into the future looking in the rearview mirror.
Our private foundations represent one of the major competitive assets of our economy. Yet, they have been curiously ineffective in their investment strategies for regional development. It's ironic, but foundations may not be our fastest learners.
The federal government has been hobbled by silo thinking, a legacy of our industrial economy. Among federal agencies, the level of sophisticated collaboration is slow to develop. This is odd. Collaboration at the federal level should be quick to form. After all, federal workers only have to walk across the street to meet. In our regions, civic leaders often have to drive for hours.
Officials in the federal government often come to our regions with good intentions. Typically, they drop a load of tools on the table, expecting us to collaborate. What they don't understand is that their tools are not up to the task. Think of it this way. We are working on electronic transmissions, and they are handing us rusty pliers. It's nobody's fault. Most federal programs were designed 30, 40 or 50 years ago, and they were not designed to work together. Today, we need different policies, not old policies wrapped loosely together.
Strategies in complex, evolving regional economies emerge as we translate ideas in action and learn what works. Strategic Doing produces agile strategies that enable us to “run to daylight”.
We each have networks we can mobilize. These networks vary in size, but let's assume an average of 50 people in a personal network. That means when we come together in a small group, we can have an impact far greater than what we see. We are really designing strategies for a network 50 times the size of the people in the room.
Regional development practitioners have a lot in common with molecular biologists. We're both trying to define complex networks we cannot see.
We are moving away from the economy in which business and civic organizations operated hierarchically. These hierarchies work well to manage stable routines in stable times. But hierarchies do not learn or adjust quickly. They cannot keep up with the rate of change we face today.
A new economy based on networks is emerging. Our children and grandchildren will inherit this economy. How much of our left-over junk are they going to have to deal with?
Embarking on the journey of Strategic Doing does not mean starting over. Strategic Doing takes a region's current strategic thinking and moves it to the next level. How? By translating ideas into action quickly so we can learn what works.
We can measure the capacity of our network to do complex work by the number of trusted relationships in the network.
In the network world, metrics play a different role. Traditionally, metrics focused on control. Are our subordinates following our plan? In the network world, metrics play a new role. They speed our learning. In fact, we cannot learn much without them.
In the industrial world, to develop speed you go fast. In the network world, to develop speed, you need to go slowly at first to accelerate later. Intentionally building trusting relationships takes time. As a trusted network develops, you end up going faster than you ever thought possible.

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Changing a culture to support innovation and entrepreneurship

Sat, 07 Apr 2012 17:15:00 -0700

Over on the Economic Gardening Google group, I posted some thoughts changing the culture of a community to support innovation and entrepreneurship. I have updated and expanded the post.

Changing a community's culture -- the patterns of thought and behavior in an organization or community -- seems daunting. Where do we start?

In Economic Gardening, Chris Gibbons introduces the Myers-Briggs framework, and that approach is helpful. As a good friend of mine told me once, "We are all watching our own movie." Sadly, we often forget that simple insight.

Insights from cognitive science

Understanding personal temperaments is one matter. Changing a culture is something different. Here, advances in cognitive science provide a foundation to design these shifts. Aaron Beck is the founding thinker and practitioner in this field. (Learn more.)

Beck pioneered notions that an individual's perceptions and patterns of thought drive their behavior. By becoming aware of these thoughts (he refers to "automatic thoughts") and intentionally changing them, we can shift how we both feel and behave. Beck's work is one important component of Strategic Doing. We are designing experiences to shift people's thinking and their subsequent behavior.

Another important component comes from Appreciative Inquiry, a large group practice pioneered by David Cooperrider at Case Western Reserve University. David was a colleague of mine when I ran the Center for Regional Economic Issues at CWRU. He has figured out that by guiding conversations, we can move large groups of people. As he says, "People move in the direction of their conversations." David's work aligns tightly with Beck's notions. We can change how people think (and behave) if we deliver powerful experiences -- deep, focused and purposeful conversations.

Adding the strategy dimension: Starting with strategic planning

Strategic Doing is a close cousin of Appreciative Inquiry, as well as Open Space, designed by Harrison Owen. Yet, I designed the Strategic Doing discipline to include another component: strategy. To transform our "civic spaces" -- to build complex collaborations needed to spur productive investment -- we need to think and act strategically. We need to make choices and act on those choices to learn what works. How do we do that?

Let's start at the beginning. An effective strategy answers two questions -- "Where are we going?" and "How will we get there?".

Much of what we know about strategy comes from the discipline of strategic planning, initially developed in the late 1950s and early 1960's to guide hierarchically organized, multi-divisional companies. My practical exposure to these models came as I was working for an offshoot of Boston Consulting Group, one of the pioneers in this field. When I left the world of corporate consulting to enter the field of economic development, my initial purpose involved deploying these strategy models to help communities and regions meet the new challenges of global competition.

It didn't work out all that well.

Two root causes of the difficulty: First, strategic planning models assume there is an organizational envelope, defined by a command and control structure. Yet, with economic development, we operate in a "civic space" outside the four walls of any organization. Here, no one can tell anyone else what to do. To be effective in the civic space, we need to forge focused, pragmatic collaborations across political and organizational boundaries. Strategic planning can do that, but only with a lot of difficulty. (This is why most strategic plans "sit on the shelf".)

Second, strategic planning -- a deliberate, linear process -- has difficulty keeping up with the accelerating change brought on by the integration of global markets.

Moving strategy into open, loosely joined networks

By the mid to late 1990s, it was clear that we needed to do our strategic thinking differently if we hoped to prepare our communities and regions for the challenges of global competition.

Luckily, we did not have to travel far to find inspiration.

Open source software development (pioneered by Eric Raymond and Linus Torvalds), social network analysis (pioneered by Mark Ganovetter), complexity science and network-based economics (especially the work of Brian Arthur and Eric Beinhocker), systems thinking (notably the work of Donella Meadows and Peter Senge), and emerging concepts of "open innovation" (pioneered by Henry Chesbrough) opened the door of possibilities for a new type of strategy discipline, a discipline designed for open networks. The field of strategy has also been evolving with the work of people like Kathleen Eisenhardt, Thomas Malone, William Duggan, Willie Pietersen, and Edward Hess.

This work provides a firm theoretical foundation for Strategic Doing. But of course, practitioners don't care much about theory. They need tools and practices that work.

To develop these tools and practices, I have been working in a range of settings, starting with Oklahoma City in 1994. We have continued to build on the success we started in Oklahoma City. Now we are developing a national network of practitioners who are testing these new tools of agile strategy in open networks.

The results are encouraging. We are seeing the we can design and develop clusters. We can accelerate the development of support networks for start-ups and Stage Two companies.

We have a group focused on how the discipline of physical planning -- preparing comprehensive plans -- can be made more responsive, flexible and agile. We have even taken on the difficult challenges of innovating in education and workforce development, with some remarkable results.

Some proof points in a difficult area: workforce development

A few years ago, the federal government invested $15 million to each of 13 regions to experiment with workforce innovations. At Purdue, we deployed agile, network-based strategic models -- Strategic Doing. With 8% of the money, we generated 40% of the results. We designed over 60 complex collaborative experiments. 80% of these are growing after the initial funding.

The reason: They created sustainable value. We designed an Opportunity Fund to invest in promising collaborations. We designed the fund using proven principles of the Small Business Innovation Research (SBIR) program, initially designed by Roland Tibbetts at the National Science Foundation in the 1970's. (As a staff member for the Senate Democratic Policy Committee in the early 1980's, I was lucky enough to interview Roland.)

As part of the investment evaluation for our Opportunity Fund, we designed a stage-gate process to select proposed collaborations that were replicable, scalable, and sustainable. We agreed on a clear set of success metrics. We then launched pilots to validate our hypotheses about how the collaboration could "co-create" value. Most did, some didn't. The successful ones have continued to prosper.

Example: The nation's first "green collar" certification for front line manufacturing workers, which is now deployed in nationally. We also accelerated the adoption of the pre-engineering program Project Lead the Way in our region's high schools, to the point that we now have the the highest concentration of these high schools in the county. (Project Lead the Way recently moved their national headquarters to Indianapolis.)

Equally important, we spotted the failures early, and either redesigned them or cut them off. Each initiative was funded on a 30 day evaluation, so we did not have to wait more than 30 days to pull money out of a failure.

Most impressive, perhaps, we managed the strategy and implementation process of 60+ complex collaborations with over 200 metrics by adding only one full time administrator. That's the power of network-based strategies that focus on linking and leveraging our assets. In open networks, metrics provide an opportunity for learning and control becomes more consensual and distributed.

Using agile strategy to develop regional innovation clusters

Using these agile strategy disciplines, we can develop clusters that innovate.

In 2008, we worked with our colleagues at the University of Wisconsin-Milwaukee to demonstrate how these agile strategy tools could launch a cluster in a matter of months. The result: the Milwaukee Water Council, now a global leader in fresh water technologies.

We have done similar work with a clean energy cluster on the Space Coast of Florida, and we are working with our colleagues at Arizona State to develop a solar cluster. In our home region we are working on an ag-bio cluster and a new cluster based on high performance automotive technologies (remember the Indy 500). In the comping 2 months, we will be working in Alaska, West Michigan, Western Nebraska and Missouri.

These new data-driven approaches work to generate major shifts in the productivity of federal and state investment. We are now build a anchor for these new practices at the Purdue Center for Regional Development.

We are working with others at a wide range of universities across the country, including Michigan State, Arizona State, Northern Illinois University, the University of Wisconsin, the University of Akron, the University of Alaska, the University of Missouri, the University of Southern Maine, Indiana University and others. Using Strategic Doing, we are forming our own network to develop and deploy Strategic Doing nationally.

More proof points: Oklahoma City and Charleston, SC

I began developing this approach to agile strategy beginnning in the mid-1990s with core group opf civic leaders in Oklahoma City. Now some see Oklahoma City as a model for the country. Beginning in about 2000, I began working with Ernest Andrade to build out the Charleston Digital Corridor with "link and leverage" strategies.

Now both Oklahoma City and Charleston rank at the top of the list of cities supporting young growth companies -- right behind Austin.

The message: We can build these innovating networks in our cities and regions. It takes patience, persistence, and relentless strategic focus. Flexible federal funding is helpful, but not essential. (We transformed both Oklahoma City an Charleston without relying on federal funding.)

The federal/foundation disconnect

Sadly, in my view, few people at the federal level or in the foundation community (who are increasingly drawn to making large scale regional economic development investments) have taken the time to learn or understand these new network-based perspectives, theories and disciplines.

I'm not sure why.

Instead, we hear only rhetoric about "regional innovation clusters" or "entrepreneurial ecosystems" with little understanding of the underlying network dynamics at work.

(Example of the superficial understanding: The current wave of multi-agency grants to encourage regional innovation clusters is not much of a policy innovation at all, in my view. The feds have simply bolted together programs that are not really designed to work together -- Here's one. The result: major administrative head aches are shifted to the grantees on the ground.)

One exception stands out: the folks at the Edward Lowe Foundation. They have taken the time to study and learn about both Economic Gardening and Strategic Doing. As an operating foundation, they are unusual: a think tank with muddy boots.

The promising path out of the woods

In the end, our work at Purdue demonstrates that we can design and guide large scale change by following some agile strategy disciplines. These disciplines are not simplistic or easy. They take practice to master.

With Strategic Doing, people are not starting over with yet another tedious strategy process. Rather, they are distilling their current strategic thinking and moving it to the next level.

The good news is that Strategic Doing works because, in the end, people have fun and see results. They enjoy the experience. They meet new people and find new purpose, all by forming complex, productive collaborations quickly and keeping them on track with simple rules.

So, the task of culture change is not so daunting after all.

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Finding a smart way to shrink

Wed, 21 Mar 2012 05:20:52 -0700

Earlier this week, I traveled to Louisiana to participate in some very difficult discussions in North Louisiana and Baton Rouge.

The Louisiana budget is imploding, and higher education has been on the chopping block: 30%+ cuts over the past two years. More to come this year, and still more in 2012.

When economies slow down and budgets shrink, the politics can get really ugly.

In 1994, I sensed this problem and recommended that Louisiana Tech take over the campus at LSU-Shreveport. That would provide some opportunity for LA Tech, a very entrepreneurial and agile research university, to grow.

In 1994, the recommendation went nowhere. (They tried to shoot the messenger, but I ducked.)

Two months ago, higher education consultant, Eva Klein, made a similar recommendation. This time, it's different.

Politics are still ugly, but there's a chance for Louisiana to do the right thing to both strengthen LA Tech and build a more resilient higher education system, in spite of the budget cuts.

I was invited to come to Louisiana to make a presentation about what we are doing at Purdue to build collaborations. I was also able to give some perspective on the situation from my work in 1994.

Using Purdue's formula for managing complex challenges in shifting environments -- thinking differently, behaving differently, doing differently -- I was able to put a different spin on what is potentially an ugly situation. I believe that we made a difference. The North Louisiana legislative delegation was engaged as Dr. Reneau, president of LA Tech, and I spoke.

The strategy involves "linking and leveraging" assets, not taking them over. It's a matter of thinking in terms of networks and abandoning Industrial Age thinking of take-overs.

In the world of networks, strategy is about about strengthening and connecting cores, not protecting boundaries.

This step is still a long shot. The LSU System will oppose any intrusion on their turf. They will characterize the North Louisiana solution as a "take-over" by Louisiana Tech. But, sadly, facts are stubborn things. The campus of LSU-Shreveport has not been growing. As one Louisiana higher education official noted, "If we do nothing LSU-S will become a hurricane shelter, and that's about it."

The focus of the LSU System will always be, as it should be, protecting the flagship campus. That leaves regional campuses, like LSU-S, extremely vulnerable. At the same time the state is pushing up student selection standards, so tuition revenues will not save LSU-S.

Transformation is tough work, but it is important for the future of the people of North Louisiana, where I used to live.

My main point is this, though: We are all facing shrinking budgets. We will all need to find ways to "link and leverage" our assets to do more with less. Building collaborations is not easy. It takes discipline and practice. It's a collective discipline that becomes more effective as more people learn the discipline.

Over the years, this is the approach we have used to transform economies like Charleston, SC and Oklahoma City. The approach works. That's why, at Purdue, we are teaching these disciplines in our new certification for Strategic Doing. To learn more, please contact Peggy Hosea, my colleague at Purdue: phosea@purdue.edu

NorthLouisiana copy.pdf Download this file

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Comparing Strategic Planning and Strategic Doing

Fri, 17 Feb 2012 13:46:00 -0800

Strategic Doing represents an agile strategy discipline that is distinctly different from how most of us learned the basics of strategy. Traditionally, strategy in organizations depends on a mechanistic, linear process which we have come to call “strategic planning”.

This approach does not work very well in complex environments that are continuously shifting. Strategic Doing invites us to do our strategic thinking and action differently. My colleague Laz Kozmon and I came up with the following graphic to explain the difference.

Strategic planning proceeds from the assumption that there is a hierarchical organization in place that can effectively execute on the plans developed. It is no surprise. Strategic planning evolved in the 1950s and 1960s to manage the complicated job of allocating capital across multi-divisional companies. In the 1980s economic development professionals began to apply these disciplines to local and regional economies.

These traditional approaches did not work very well. The reason is obvious. Local and regional economies are not hierarchical. There is no command and control structure in place to carry out a strategy. The mayor cannot tell the school board what to do. The school board cannot tell the chamber of commerce what to do. And the Chamber of Commerce cannot tell the mayor what to do.

In contrast, Strategic Doing is designed for open, loosely coupled networks. It is a simple discipline that takes practice to master. That's the hard part: Strategic Doing is a collective discipline. To be effective, members of the network must develop a sufficient level of trust in order to undertake complex projects and the disciplines needed to design and manage them.

These trust levels take time to develop. They start from doing small, relatively simple tasks together. As a level of trust within the network grows, members of the network can take on increasingly complex work together. In my experience, it takes about a year for a network to gain a sufficient level of mastery that it can sustain its strategy.

We can contrast strategic planning and Strategic Doing in another way. The role of metrics and the process of accountability are fundamentally different. In strategic planning, metrics are set by the small group of people who develop strategic plan. The metrics provide a measuring rod to make sure that people lower in the hierarchy––the people charged with the responsibility of executing––are following the plan. Accountability comes from reporting against these metrics: command and control at work.

In Strategic Doing, metrics play a different role. We use metrics to facilitate learning. Whereas strategic planning is a deductive process of thought and action, Strategic Doing using inductive reasoning. We learn as we do. Metrics provide a convenient tool to accelerate our learning. With them, we figure out what works. Without them, we would be lost. Accountability in Strategic Doing comes through transparency and the mutual interdependence embedded in the relationships of the network. Forget command and control. It does not work in open networks. Mutual trust becomes the fuel for economic transformation.

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Strategic Doing at the Alaska Dialogue: Moving Deliberative Democracy into action

Wed, 15 Feb 2012 07:39:38 -0800

Last September, I traveled to Alaska to participate in the Alaska Dialogue, an annual event that gathers about 200 leaders from across the state. Sponsored by the Institute of the North and launched by famed former Alaska governor Walter Hickel, the Dialogue helps explore and set a strategic agenda for the state. The dialogue is build off the model of Deliberative Democracy. Jim Fishkin of Stanford University (and my older brother's college roommate) is perhaps the strongest promoter of this approach to rebuilding our civic dialogue. He leads Stanford's Center for Deliberative Democracy.

This year, we designed and guided guide their conversations with the agile strategy discipline, Strategic Doing.

The Institute invited me to summarize the session, and in my article I explore the connection between Deliberative Democracy and Strategic Doing. You can see from the break-outs that the participants in this year's Dialogue generated focused agendas.

The challenge, of course, is to keep moving. Leaning forward is not enough.

What's still missing in Alaska: a process for keeping the agenda on track. That stretches the model of the Alaska Dialogue from deliberation to action. An open civic system needs a feed-back loop to refocus. This last step in Strategic Doing, which hopefully will develop in Alaska, uses metrics, measures and transparency to generate accountability, trust and agility.

Institute of the North Alaska Dialogue Strategic Doing September 2011 1.pdf Download this file

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Purdue Certification in Strategic Doing launches

Fri, 03 Feb 2012 10:12:00 -0800

This week, the Purdue Center for Regional Development launched our 1st professional certification class in Strategic Doing. The class included professionals and downtown development, entrepreneurship, nonprofit management, workforce development, healthcare, and regional economic development. All of these professionals see a need to build their skills in designing and managing complex collaborations across organizational and political boundaries. Strategic Doing is a simple discipline that enables professionals perform these collaborations quickly.

My colleagues at Purdue -- Peggy Hosea and Scott Hutcheson -- as well as my colleague Kim Mitchell from Sutton, Mitchell, Babin and Beebe (SMBB) architects formed the teaching team.

Purdue has become the anchor institution for building out a national network of colleges and universities teaching this new discipline. SMBB has become the national leader in applying Strategic Doing to physical planning. Kim has joined with us at Purdue to design a new approach to physical planning that is more agile and responsive to citizen engagement.

During the course of the class, we shared the stories of how we used these frameworks to guide the transformation of Oklahoma City and develop the Charleston Digital Corridor. Both economies proved these new network-based approaches to economic development are fast and agile. (Both Oklahoma City and Charleston are now ranked in the top three metros -- along with Austin -- in small business vitality rankings.)

Building complex collaborations quickly...Guiding complex collaborations toward measurable outcomes

During the class, we explored how to deploy Strategic Doing to address complex challenges including building community health networks, revitalizing downtown districts, and forging a collaboration for regional economic development.

Each of these collaborations, to be successful, needs to build trust quickly in order for the members to undertake complex projects and see measurable results. Purdue is working with our partners at Indiana University and Ivy Tech to make our region a hotbed of these new approaches. That's why we concentrated our first class on working with professionals in our own backyard.

We have already used agile strategy disciplines to become a region with the highest concentration of Project Lead the Way high schools in the country, a region that launched the nation's first green collar certification in manufacturing (now in over 20 states), and a region that has become a leader in university commercialization through Purdue's Discovery Park and the Purdue Research Park. (And, of course, now, it's the region that has the highest concentration of economic and workforce development professionals skilled in Strategic Doing. Success builds on success. Because of our work focusing on pre-engineering education in our high schools, Project Lead the Way moved its national headquarters to Indianapolis.)

Developing regional innovation clusters with Strategic Doing

We are riding the growing excitement that has built around the country for Strategic Doing. Here's an example of how people react to a Strategic Doing workshop. We conducted this workshop in the wake of the NASA Shuttle Shutdown. Weeks later, we launched a new clean energy cluster on the Space Coast. With Strategic Doing, people don't wait around to get stuff done. They don't ask permission. They build off the strategic thinking they have already done to link and leverage their assets into new opportunities. In this way, they add new strategic insights and open new growth opportunities.

We are working with our colleagues at Arizona State to build out their statewide solar cluster. Our next step here is a second Solar Summit to be held in late March. We are working to build collaborations to promote improved utility regulation, distributed generation policies and grid parity, and the build-out of regional transmission capacity.

Our work in clusters started in July 2008, with our work with the Milwaukee Water Council. This workshop launched the cluster, so that now the Water Council is now recognized as a world water hub. We generated this energy and focus by linking, leveraging and aligning assets across organizational and political boundaries. Four months after our Strategic Doing workshop, our colleagues at the University of Wisconsin Milwaukee drew this map to illustrate the linkages that had formed.

Building Strategic Doing out nationally through a national network of colleges and universities

Over the coming year, we will roll out the Strategic Doing certification––a four-day course followed by fieldwork––across the country. We are working with our university partners, including Michigan State University, Arizona State University, Virginia Tech University, Northern Illinois University, the University of Missouri, and the University of Akron to launch a national network of colleges and universities teaching the skills to accelerate collaboration.

Strategic Doing is a simple framework that takes practice to master. We developed it with insights from a variety of different sources: open source software development, complex adaptive systems, Appreciative Inquiry, agile product development, social network analysis, and strategic planning.

We have incorporated these concepts into a powerful experience that leaves people focused and excited. Take a look at some of these reactions to Strategic Doing from Hawaii, Illinois, Maine, and North Carolina.

The popularity of Strategic Doing is spreading. Here's a map of where I've been in the last two years or so. These speeches and workshops have developed by word of mouth. People call Purdue and are asking us about how to learn more.

Stay tuned. We'll announce the first open enrollment of Strategic Doing certification in the coming weeks. Right now, we're headed back to the Garage to fine tune the curriculum based on the advice and guidance from our inaugural class.

If you are interested in the next Strategic Doing certification class, please e-mail Peggy Hosea at Purdue: phosea@purdue.edu

Practical agile strategy workshops for your regional leadership

In addition to the four day certification class for professionals, Purdue is working with a number of regions to provide a two day workshop designed for civic leaders in your region. This workshop introduces you to the concepts of agile planning. At the same time, we use your existing strategy and show you how to get it moving through Strategic Doing. This workshop is particularly useful for regions that are stuck. To discuss this option, contact Peggy Hosea at Purdue: phosea@purdue.edu

Practical training for how you can engage your university

We have incorporated Strategic Doing into another curriculum designed for regional leaders who want to develop a strategy for engaging their university in a regional strategy. Developed by our colleagues at TRE Networks and Virginia Tech University, this training is valuable for regional leaders who want to accelerate the engagement of their university. This training will be held at Virginia Tech on May 21-23. You can learn more here.

The pathbreaking work of Edward Lowe Foundation

Another shout-out goes to our colleagues at the Edward Lowe Foundation -- Mark Lange, Penny Lewandowsi, Dino Signore, Shannon Jennings -- who helped me start figuring out how to teach this stuff.

For those who do not know, the Lowe Foundation has become a national incubator for new approaches to economic development. The foundation is the base camp for Economic Gardening and the focus on Second Stage Companies. Check out the Your Economy site to learn more about Second Stage Companies.

The national launch of Strategic Doing is directly tied to my experience in a Lowe Foundation Entrepreneurial Support Organization retreat. It was during this retreat, that I started to design the outlines of a national network to support this new strategy discipline. Dino Signore led our group in a PeerSpectives roundtable that propelled the idea.

One more thing: if you do not have a Companies to Watch program in your state, it's time to start one.

Our workshops are pragmatic, focused and "hands-on". We use the "fishbowl" to observe and critique students, as they learn how to design and focus strategy in loosely joined networks. Below, students are learning some of the basics of managing complex adaptive systems. (Tip of the hat to Dino Signore, who taught this to me.)

The Lowe Foundation has shown us how to make executive education engaging, reflective, powerful and fun.

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Linking and leveraging university assets to strengthen regional economies

Fri, 27 Jan 2012 06:52:44 -0800

On Sunday, we are launching our week-log Strategic Doing certification course at Purdue. The first class -- 23 economic and workforce development professionals -- draws from Indiana. We are focused on making our 14 county region around Purdue a hot spot for intensive collaboration using the new strategy disciplines for open networks.

Extending collaboration has been a focus at Purdue since former President Martin Jischke appointed Vic Lechtenberg to lead the effort. Purdue has launched Discovery Park, an expanded Purdue T echnical Assistance Program, and the Purdue Center for Regional Development, among other initiatives. The process continues. Last week, Purdue announced a new Innovation and Commercialization Center.

Strategic doing provides a disciplined framework for extending these collaborations, a kind of core technology to designing and managing complex collaborations in open, loosely connected networks.

We are building a national network of universities committed to this new discipline. So, for example, Michigan State is using this discipline in its engagement activities and Arizona State has used strategic doing to design its initiatives to build a solar cluster in Arizona. Virginia Tech is collaborating with Purdue to incorporate strategic doing in a new executive education course on regional engagement, through its Engagement Academy. The Virginia Tech course -- scheduled for May -- is designed to help regional leaders link and leverage their university assets to strengthen competitiveness.

The University of Akron is collaborating with Purdue, Michigan State, Arizona State and the University of Michigan, among others, to create a platform to explore federal policies to support extended collaboration among higher education, business, government, and non-profits. The discipline of strategic doing sits at the core of this new network focused on Transformative Regional Engagement.

In the coming months, we'll be announcing details of a national initiative to bring the disciplines of strategic doing to national scale. Michigan State, The University of Akron and Arizona State have been at the core of this effort.

One of the important opportunities comes in transforming the Great Lakes economy, where we have the highest concentration of colleges and universities in the country. In an important paper, James Duderstadt, past president of the University of Michigan, has explored this core strength of the Great Lakes economy.

In the most recent issue of Michigan State's Engaged Scholar magazine, I explore the possibilities of the practical dimensions of how we can build collaborations across organizational and political boundaries with a common strategic framework and a simple discipline to manage this complexity.

A Master Plan for Higher Education.pdf Download this file

Strategic Doing Engaged ScholarWEB 2011.pdf Download this file

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Forming a new creative media cluster in Shreveport by following some simple lessons

Fri, 13 Jan 2012 04:15:48 -0800

We have been hearing a lot about regional innovation clusters lately. The Obama administration, bolstered with policy work by Brookings and the Center for American Progress, have been integrating federal programs in an effort to promote these clusters. The Economic Development Administration has launched a new website designed to connect clusters and create a new type of "infrastructure" to support this strategy. At Purdue, we have done a lot of work developing interactive tools to identify and analyze clusters. You can check them out on our regional innovation web site.

Yet, when it comes to actually designing and launching regional innovation clusters -- "activating" clusters -- we are at a very early stages of developing a professional practice. We have just now started the work of developing protocols, disciplines and frameworks in order to make these practices replicable, scalable and sustainable.

We should not be discouraged that our work in activation lags our advances in analysis. Activating regional innovation clusters -- designing and launching them -- represents a formidable challenge. We need to integrate insights from large group intervention practices (like Appreciative Inquiry, Open Space, the World Cafe and Asset-Based Community Development) with new strategy disciplines (Strategic Doing), lessons from open source software development, new tools (like social network analysis), and traditional financial, marketing and project management. While we're at it, we need to throw in a few insights from the rapidly evolving field of complex adaptive systems (one of my favorite books on the topic -- Managing the Unknowable -- describes the fog in which we must operate). Is it any wonder that there are cynics in the grandstand? In truth, as a recent analysis out of Europe demonstrates, most cluster initiatives do not work very well.

This weak record of accomplishment does not mean that developing clusters is not a worthy policy. No, the path is just fraught with difficulties.

For the past year, I have been working on the Space Coast in Florida promoting the development of a clean energy cluster. That experience has helped me understand how we can use the disciplines of Strategic Doing to accelerate the development of regional innovation clusters.

Here are some simple lessons.

The most effective approach to designing and launching regional innovation clusters is privately-led and publicly-supported, not the other way around. (When the public sector tries to lead cluster development, the result is usually a mess.) This principle carries significant implications for how initial meetings are structured and how conversations are framed and guided.

Company executives who initially engage in cluster development are impatient. We are dealing with tight time constraints, usually no more than 2 hours. Within that window of opportunity, we need to demonstrate the tangible value that can come from sharing non-proprietary information and building new collaborations from shared assets.

We can illustrate this point with that example from creative media cluster that is beginning to form in Shreveport, Louisiana. My colleague, Kim Mitchell, led an initial meeting of a new creative media cluster yesterday. He saw how government representatives and staff from economic development organizations can, without some guidance, take over the conversation. They can quickly move it in a largely irrelevant, confusing direction.

By inserting himself into the conversation, Kim was able to steer the focus back to defining new market opportunities. In Florida, to deal with this problem, we adopted the practice of bi-furcating our meetings. In the first half, industry members sat around the table and support organizations observed. In the second half of the meeting, support organization representatives joined the conversation to address the agenda items outlined by the private sector representatives.

Here's another lesson. Among the different collaborations that can arise, we want to select those that have a relatively large potential impact and that are relatively easy to do. As we demonstrated in the Arizona Solar Summit, we can use these two dimensions to select priorities quickly.

Finally, we need to work with a thirty day time horizon. If we cannot accomplish tangible progress in the thirty days after a meeting, no one will come to the next one. The good news in Shreveport: the founding members of the cluster agreed to come back together again in two weeks.

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The role of universities in promoting new strategies of transformation

Fri, 13 Jan 2012 03:01:30 -0800

The folks at Michigan State have become big supporters of Strategic Doing. The Memorandum of Understanding between Purdue and Michigan State sets the groundwork for a national network of colleges and universities committed to teaching this discipline.
We are moving faster than we anticipated in establishing this network. Right now, over ten universities have expressed interest in anchoring this network. While we were initially focused on the Great Lakes, our network has grown nationally. We will be announcing more details in the coming months.

To set the stage for developing the network, Michigan State asked for an article on Strategic Doing for their Engaged Scholar magazine.

Morrison Engaged Scholar WEB 2011.pdf Download this file

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Hoosier innovation: A brilliant, simple idea to support young entrepreneurs

Tue, 20 Dec 2011 18:15:00 -0800

Here is a simple idea for accelerating the development of networks needed to support young entrepreneurs.

With legislation recently passed by the Indiana legislature, Indiana communities can elect to offer incentive packages to attract young entrepreneurs. It's both a competition and a matchmaking. The young entrepreneurs will evaluate different bid packages before deciding where to locate their business

The initiative is targeted at entrepreneurs who are in an Indiana college or university pursuing a major, minor or certificate in an entrepreneurial program. The initiative also includes Indiana graduates with a major, minor or certificate on the turnaround program who completed their studies within the past 3 years.

The process starts with a business plan. So far, this isn't much different than most business plan competitions.

But here's the twist. Communities compete with incentive packages to attract the best entrepreneurs. The communities come up with the reward.

Instead of chasing the next company moving from Michigan the Mexico with incentive deals, participating communities design incentive packages to attract these promising young entrepreneurs.

My Purdue colleague, Scott Hutchison, is in the middle of the team implementing this initiative statewide. He's promoting the program to communities by encouraging them to think broadly about the different incentive packages that they can put together.

So, for example, a local health system to provide low-cost or no-cost health insurance to employees of the new company. Real estate developers could offer real estate packages that include both live and work spaces. Local restaurants could provide vouchers for free or reduced price meals. The downtown association could provide "shopping cards".

Accounting and law firms could offer reduced rate or free services. Local governments could offer a concierge service to help the new company navigate government regulations and programs. Community banks could band together to provide attractive financing packages. Angel investors could come together to mentor the new company. The local YMCA could offer free memberships.

The list goes on.

This initiative doesn't cost the state government a dime. At the same time, it redirects local economic developers and civic leaders to the real source of future prosperity in their communities.

Brilliant.

Young Entrepreneur Program.pdf Download this file

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Why incivility destroys innovation and prosperity | Shreveport's Choice Neighborhood as a case study

Sun, 18 Dec 2011 08:51:00 -0800

Incivility destroys a community's capacity to generate wealth.

Here's why.

In a networked, knowledge-driven economy, collaboration drives wealth creation. And collaboration can only thrive in a stable environment of trust. The corrosion of our civil society –– the alarming growth of incivility and pervasive lying –– undercuts our economy's productivity and our capacity to innovate.

Incivility -- fraudulent concealment ("hiding the ball"), lying, manipulation, and associated behaviors -- can work well to redistribute wealth. We see almost endless examples from MF Global to the subprime mess. Yet, these behaviors do not generate wealth. Indeed, they erode capitalism's capacity to generate wealth. That's why corruption slows economic growth and why trust is associated with higher rates of economic growth.

We have moved into a new economic era with new rules for prosperity. Increasingly, knowledge embedded in products and services creates the value leading to wealth. This knowledge is generated and managed through collaborative, loosely joined networks.

Our capacity to prosper depends on our capacity to collaborate and innovate in these open networks. To innovate, we must learn how to design and manage complex projects without relying on "command and control" dictates, which don't work. Trust becomes a key element in the effectiveness of these networks. Ethical habits are crucial to innovation and the generation of wealth in open networks. (For those interested in diving deeper into this topic, you might read Francis Fukuyama's Trust: The Social Virtues and the Creation of Prosperity.)

This all sounds abstract. Let's get practical.

Bringing innovation to inner city Shreveport

How do you transform the economy at a neighborhood level? That's the challenge that a colleague of mine, Kim Mitchell and his firm, took on with a HUD Choice Neighborhood grant in Shreveport, LA. Kim is a member of our Strategic Doing Design Team that meets twice a year to advance the disciplines of agile strategy with Strategic Doing.

In this Choice Neighborhood grant, Kim and his team proposed a new approach to rebuilding the economies of devastated inner-city neighborhoods. The Purdue Center for Regional Development has been assisting the team. You can see some background work and documents on the project web site here.

We know this much: billions of dollars of federal money over the past four decades have not changed the dynamics within these neighborhoods. Each of these well intended federal programs has been designed to fix a specific problem. They do not change the underlying dynamics within the neighborhood. As a result, they fail. In the case of HUD, the agency's categorical programs have done little to change the dynamics of neighborhoods like Ledbetter and Allendale in Shreveport.

A promising strategy developed in Shreveport offers hope of a new approach. Community Renewal International views neighborhoods as a series of interconnected, complex networks. As a shorthand, they refer to the “village structure” of the neighborhood. For a number of years Kim and I have been working with Mac McCarter and his team at CRI to explore how we might integrate the CRI strategy framework with the new discipline of Strategic Doing, incubated at the Purdue Center for Regional Development.

This video introduces CRI:

Strategic Doing represents a fast way to design and manage complex collaborations by following simple rules. (For more background, see the article in the most recent issue of Michigan State's Engaged Scholar magazine, p. 33) This video introduces Strategic Doing with work we have been doing on the Space Coast in the wake of the NASA Shuttle shutdown:

The CRI approach promises dramatic improvements in the productivity of federal investments in these devastated neighborhoods. So, for example, in Allendale, CRI has shown dramatic improvements by focusing on what matters: the core, intentional relationships that build the neighborhood.

Strategic Doing focuses on building these strategic relationships quickly.

Our partners at Michigan State are now using this discipline to address opportunities and challenges in neighborhoods in mid-Michigan through the "Power of We". With Michigan State, Purdue is launching a national network of colleges and universities to teach this new discipline in order to accelerate our nation's civic innovation. Arizona State, Indiana University, the University of Akron, the University of Alaska, and Northern Illinois University are just some of the campuses joining this effort.

Accelerating civic innovation is vital to our economy's economic transformation. We have shown that with Strategic Doing, we can dramatically boost the productivity of federal investments by “linking and leveraging” these investments across organizational and political boundaries.

With the Choice Neighborhood grant, Kim and his team proposed to use the Ledbetter/Allendale neighborhoods as a testbed for new approaches to revitalizing inner-city neighborhoods by combining the insights of Community Renewal International and Strategic Doing.

This work is difficult, complex and exciting. Open innovation pushes us in new directions. At its base, however, it requires a commitment to civility among the members of the team. By “civility” I mean the capacity to treat each other with mutual respect and honesty. Civility means not withholding relevant information from one another, not lying to one another, and not personally attacking one another.

The Shreveport Choice Neighborhood innovation implodes

Unfortunately, the City of Shreveport and the local council of governments could not uphold their end of the bargain. A week ago, they issued a letter demanding that Kim and our team cease working on this project.

This letter came from an attorney after local government officials undercut the project with a pattern of unacceptable civic behavior. Rather than confront any disagreements with our team openly, the City and the council of governments elected to first attack our work behind the scenes and then run to a lawyer.

I'm disappointed, but not surprised.

Civic innovations like the ones we were designing in Shreveport disrupt bureaucratic organizations. These innovations propose a new way of doing business that can be threatening to the established order.

The incivility we encountered fits a pattern long established in Shreveport, where I have been working since 1984. When I first arrived in the city to work on an economic development strategy, I encountered a public debate touched off by a Methodist minister. He accused the city's leadership of being unable to collaborate to lift the city's sights. Rev. Hull called this civic pathology "Shreveportitis". Amplifying Rev. Hull's comments the same year, I wrote about the political challenges facing Shreveport in a strategy report that the American Economic Council awarded the first Arthur D. Little Award for Excellence in Economic Development.

I pointed out in that report that Shreveport's evolution politically would ultimately define its economic horizon.

Almost a decade later, on November 3, 1993, I gave a speech to the Shreveport Rotary, "The Politics of Personality: The Biggest Economic Challenge Facing Shreveport and What To Do About It." In the speech, I diagnosed Shreveport's problem bluntly: "The political dynamics of Shreveport...are mired in a ditch." I pointed out that as economies slow down, the focus of politics inevitably narrows. The game turns into zero sum, and local "leaders" focus too much on personalities and not enough on issues of common concern. They lose a sense of direction. Politics becomes a soap opera, an endless loop of shallow intrigue and innuendo.

In my 1993 remarks, I set out some simple rules to guide Shreveport toward a more healthy and productive civic process: Shreveport's leaders "must be willing to to exclude from the process those people who insist on promoting their own hidden agendas to the detriment of others. Those who insist on manipulating and withholding information to their own advantage. Those who refuse to respect others and the spirit of collaborative discussion."

Twenty-seven years after Rev. Hull and I pointed out the challenge of civic leadership in Shreveport, and 18 years after my speech to the Rotary, Shreveport's leadership has been unable to develop more healthy civic habits. Shreveportitis still infects the body politic.

The challenge for HUD: Move beyond project management

Sadly, the agency staff at HUD has proven itself not much help to get the Choice Neighborhood project underway. One of the challenges in moving HUD toward new models of sustainable development involves training staff new ways of thinking and behaving, new approaches that foster collaboration. The HUD staff is well-versed in project-based management. Yet, these approaches are too rigid, too linear, too bureaucratic to support the agile, integrated and open strategies that provide the foundation for sustainable development. Sustainable development invites us to cross boundaries, not defend them.

I am finding with my conversations with other development professionals across the country that the HUD staff has a very difficult time understanding how to manage promising new pathways to sustainable development. These approaches are inherently more agile and flexible. As HUD moves forward, they will need to examine how to retrain their field staff to promote more collaborative approaches to sustainable development. (The same is true for the staffs of the Employment and Training Administration, as well as the Economic Development Administration.)

Where do we go from here? We will continue to develop and deploy new approaches to agile strategy and sustainable neighborhood development. We will also explore how these models can be embedded, replicated and scaled across regions through our emerging university network.

In our last Strategic Doing Design Team meeting, we discussed the fact that not all communities or regions have the civic maturity to undertake these more sophisticated approaches to building wealth in a networked world. We will be writing up the case of Shreveport to gain some insight into the civic behaviors that must be in place to transform an economy through open innovation in loosely joined networks.

Shreveport's Choice Neighborhood initiative has provided us a valuable lesson in what to avoid.

Where does Shrevport go from here? My guidance to my friends and colleagues in Shreveport was passed on to me by one of my mentors, Dick Pogue, former managing director of the Jones Day law firm.

In guiding me, Dick told me he was passing on advice he received years earlier from his mentor, the legendary Erwin Griswold, former Solicitor General of the United States.

When I confronted opposition to deploying these new approaches in Cleveland, Dick told me, "Press on, regardless."

Sage advice.

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What happens when trust builds: Seeing inside a regional innovation cluster

Wed, 14 Dec 2011 05:40:10 -0800

On the Space Coast this week, working on new development strategies for regional innovation clusters. Clusters that accelerate regional innovation are not simply agglomerations of like-situated firms. Instead, regional innovation clusters form around an ethic of open innovation.

With open innovation, the presumptions on information sharing are reversed. In the old world of our grandfather's economy, regional actors presumed that information was confidential unless they took steps to release it (hence, the "press release"). In a world of open networks, we presume to share information unless we take affirmative steps to protect it (hence the proliferation of passwords).

Shifting this presumption is important. It leads to collaborations that form more quickly, as well as collaborations that can evolve to higher levels of sophistication. At it's core, the shift involves changing patterns of behavior that are often deeply engrained in a region. In places where the old industrial mindset is still dominant -- Detroit, Cleveland and Shreveport, LA come to mind -- information is not widely shared. Trust levels among civic leaders are relatively low, and the adaptation process slows.

In contrast, some older industrial cities are moving along a new path. Milwaukee, WI; Rockford, IL; and Holland, MI come to mind. These are places where regional innovation clusters can more quickly form: the water cluster in Milwaukee; the aerospace cluster in Rockford; the electric battery cluster in Holland.

To illustrate the complexity that can quickly arise in a regional innovation cluster, I developed this drawing. The challenge, of course, comes in moving a regional economy in this direction. We have found that old strategy constructs -- strategic planning -- do not work well in these open networks for a variety of reasons. That's why we have designed new strategy disciplines expressly for meeting the challenges of designing and managing open, loosely joined networks.

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STEM, loosely joined networks, and open innovation

Sun, 11 Dec 2011 08:08:06 -0800

With the publication of the National Academy's Rising Above the Gathering Storm report, our attention has been increasingly focused on the connection of STEM education (Science, Technology, Engineering, and Math) and our national competitiveness.

Knowledge provides the new basis of wealth creation, and the STEM disciplines form that core of an economy's capacity to generate and apply new knowledge. U.S. leadership in these disciplines has begun to erode. The National Academy's report called for a "comprehensive and coordinated" federal effort to restore U.S. pre-eminence in these areas.

As mandated under the America Competes Act, last week the Federal government released a report that provides an inventory of all federal STEM initiatives. It is the most comprehensive inventory of federal STEM initiatives.

The federal government invests about $3.4 billion in STEM initiatives.
$1.1 billion of the total to focus on the needs of demographic groups that are under-represented in the STEM disciplines.
$312 million goes directly to improve teacher effectiveness. (Other initiatives have a secondary goal of improving teacher effectiveness.

You can read more here. You can download the report here.

To learn more about STEM disciplines and why they matter, visit the Change the Equation web site.

A federal effort can only go so far. The real challenge of transforming STEM education lies elsewhere.

Innovation in the STEM disciplines is grounded in regional economies. At the regional level, we have the concentration of assets -- K-12 education, higher education, business clusters, philanthropy -- needed to innovate and transform how teachers teach and students learn these disciplines.

This innovation will be driven by "open source" disciplines, like Strategic Doing, to create new, innovating networks. These regional networks take time and discipline to form. The regions that focus their efforts on developing these new, innovating networks will be more competitive. They will learn faster, spot opportunities to innovate faster, and act faster. They will build the collaborations capable of tackling the complex challenges of education transformation.

In our rapidly evolving global economy, wealth will concentrate in these new hubs of open innovation. (Tom Friedman has an interesting commentary that touches on the topic.)

At Purdue, we are part of a broad STEM initiative in Indiana. Five years ago, we set out to increase the concentration of Project Lead the Way high high schools in our region. We now have the highest concentration of these high schools in the country. Our commitment was part of the decision to move the PLTW headquarters from New York to Indianapolis. A week-long series of events starts this coming week.

PLTW is part of a broader network of innovation taking place in the STEM disciplines in Indiana. The I-STEM Network in Indiana represented an unprecedented collaboration to accelerate Indiana to national leadership in STEM innovation. The network is anchored by regional lead institutions.

In the past year, I have been working on the Space Coast and Central Florida. We have been deploying "open source" models to accelerate regional collaboration and cluster activation. Florida has been also moving on statewide STEM initiatives. Here are two reports that are guiding their efforts. The challenge in Florida -- as in other states -- will be driving the statewide initiatives to a regional level. Modeling the Indiana network approach is a good place to start.

Florida STEM Strategic Plan 2011.pdf Download this file

State of STEM in Florida.pdf Download this file

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Memories of Oklahoma City circa 1993

Thu, 08 Dec 2011 15:02:00 -0800

Years ago, when we started working on the transformation of Oklahoma City, I would come into town and stay at the one downtown hotel, The Medallion. There was one one Mexican restaurant that was open at night a couple of blocks away. When I would walk to it, I'd pass no one on the street.

Walking to Bricktown, to the one restaurant there, The Spaghetti Warehouse, was a bit dicier. You had to be willing to walk a bit farther and pass through an unlit tunnel under the railroad tracks.

Worse still, I suppose, when I would come down for breakfast in the morning, I would often be the only person there. Think of that for a minute: the only person in the only downtown hotel in the capital of Oklahoma.

We started the transformation of Oklahoma City with about 8 people, a few years before the bombing. When that tragedy struck, we shelved our plans for a number of months. But soon, we returned to the task of transformation.

Evidence of our work began appearing a few years later. By 2000, I had left Oklahoma City behind, but the job of transformation continues.

I just came across this video through my Twitter feed. The story of Oklahoma City is inspiring a new generation of leaders. Charles Van Rysselberge, the chamber president who spurred Oklahoma City's business community and I are now in the process of writing the story of the transformation. It's a story with plenty of lessons for leaders in cities and regions facing the challenge of a rapidly shifting global economy.

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New York: Strategic coherence at a regional scale

Sun, 04 Dec 2011 16:12:00 -0800

The major advantage of New York's focus on building regional strategies comes in fostering coherence at a regional scale. You can see this emerge in the presentations made last week.

This discipline of preparing a regional plan has a few significant advantages:

The leaders go beyond vision statements. In a world of complex networks, coherence is more important than vision. By their nature vision statements are grand and somewhat fanciful. They are idealistic. In putting them together, the tendency -- to build consensus -- is to get more vague with out language, not more precise. Irnically, in seeking consensus, we get washed out rhetoric that fails to move people.
Leaders focus on building coherence through clear narratives. Coherent narratives -- story-telling -- provides meaning and guidance. In developing these narratives, regional leaders move toward their assets and draw links among them. The noted child psychologist Erik Erickson wrote in his classic Childhood and Society, that "We are who we are never not". The same is true for regions. Discovering who we are never not provides the basis for strategy, and good strategy, after all, is good story-telling.
Leaders understand the importance of linking and leveraging. No one project will transform a region. It's only when projects link and leverage the assets within the regional economy that transformation becomes possible. Linking and leveraging is all about the discipline of co-creating value. Understanding how to design and manage networks that co-create value has become the essence of regional strategy.

New York would do well to figure out a way to keep this regional process moving forward with continuous state support. State (and federal) policymakers often fall into the trap of thinking that progress will be made when regional leaders "get their act together". True enough, but the thought neglects the equally important job of redesigning state and federal policies to support regional innovation.

Most of our economic and workforce development policies are 30, 40 or 50 years old. They are categorical programs designed to define (sometimes) carefully targeted problems. With few exceptions (SBIR comes to mind), they are not policies designed to stimulate us to pursue opportunities.

Simply bundling old programs together (as the Obama administration did with is Jobs and Accelerator grants) is not the answer. These policies need to be redesigned to encourage and invest in the collaborations we need to innovate. That means tackling the underlying statutes. At the same time, we need to be training state and federal professionals in new, network-based models of regional development. Developing strategy in networks involves abandoning "top-down" or "bottom-up" thinking. (Networks have neither.)

Rather, professionals within our regional development systems need to learn the skills of collaboration. How do you design complex collaborations quickly and manage them to generate learning by doing? The answer has more to do with understanding open source software development than with writing or following tight government regulations.

In all the blather about what government can do to create jobs, this is an agenda that has been too long neglected.

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Rockford moves to transform its schools

Fri, 02 Dec 2011 16:51:00 -0800

Yesterday, Rockford launched its Readiness Rocks: 5 initiatives designed to transform its school system.

Rockford schools will be using Strategic Doing to forge the collaborations needed to implement these initiatives. They include: extending the school day; creating better learning environments; pre-school for all; a Rockford Promise to invest in college for high school graduates; and innovations for career and college readiness. You can read more about the proposals here.

Robert Willis, the Superintendent, focused his comments on the need to collaborate to achieve these goals. In my presentation, I explored the meaning of Dr. Willis' phrase, "Together we can".

Rockford Readiness Rocks.pdf Download this file

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Lessons of regional leadership: An early look at Julia Taylor and the Greater Milwaukee Committee

Wed, 30 Nov 2011 07:43:32 -0800

The lessons of regional leadership are somewhat different from the typical leadership lessons you might read in a management book. Not much has been written about regional leadership -- how civic leaders can develop and manage complex projects in the open, loosely joined networks of our civic economy.

My Purdue colleague Scott Hutcheson has started an important conversation within the Purdue Center for Regional Development on the topic. He starts by looking closely at a valuable case study: How Julia Taylor and the Greater Milwaukee Committee has begun to change the development dynamics in Milwaukee and seven counties of Southeast Wisconsin -- the Milwaukee 7 region. Scott then applies insights from the academic literature on organizational change and leadership.

Some important proof points on the power of the GMC approach to leadership: In only a few years, Milwaukee has vaulted to a global leadership position in fresh water technologies, a large and growing market, with the Milwaukee Water Council.

As I read through Scott's analysis of Julia's work, here's how I would characterize the guidance Julia provides.

1. Influence builds as leadership develops the habit of translating ideas into action quickly

2. Influence builds as members of the network share recognition for their accomplishments

3. Influence builds as members of the network gain a sense of alignment and connection

4. Influence builds as members gain an appreciation of the power of networks to move quickly in a strategic direction

5. The Metcalfe curve matters: As a network becomes larger, more sophisticated and more capable, new opportunities for co-creating shared value emerge

6. Influence builds as leaders make clear their personal agenda and what's in it for them

7. Lean into the sharp points of potential opposition: Invite potential opponents to appoint members to an advisory team

8. Use this advisory team to overcome political obstacles to regional collaboration; rely on them early and often

9. To build trust, start small and build off early gestures of good will

10. Press on, regardless, to build leadership networks with strong cores and porous boundaries

More will follow as we distill what is going on in Milwaukee and how these lessons can be shared with other regions. It's a fascinating start to what is likely to be an important new field of study: Team leadership in regional economies.

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Strategic Doing: An Update

Tue, 29 Nov 2011 15:49:07 -0800

Here's an update on our Strategic Doing activities over the past two weeks or so.

Tampa Bay Partnership

The Partnership, with the assistance of Stanford Research Institute, has completed a large strategy document that outlines options for the region. The Partnership is not developing an implementation plan, and they have turned to Strategic Doing as a framework to guide their next steps. On Friday, November 18, I conducted a workshop that introduced the concepts of strategy and open networks to about 20 civic leaders who have agreed to guide the 6 working teams. During the workshop, we explored how the disciplines of this Strategic Doing could be used to keep each working team on track, as well as define a common language across working teams.

After the workshop, we adjourned to a much larger annual meeting of the Partnership. About 480 people filled the ballroom. During a 15 min. presentation I emphasized how a relatively small group of people, working together and in a disciplined way, can transform a regional economy. I used Oklahoma City as my example. I also used our work in the Charleston Digital Cord or to explain how a city can develop and “entrepreneurial ecosystem” by using our portfolio model of civic innovation. You can download a copy of my presentation slides here.

Lake County, Florida

Lake County is a rural county on the northwest edge of the Orlando Metro region. A new economic development director pull together the 1st economic development summit in the County. About 100 people participated who represented a wide range of leadership in the County from schools and universities to local government officials and private business. The format of the meeting was a bit stiff, as it consisted of a series of speakers providing the leadership with an overview of economic development in central Florida. My presentation on Strategic Doing represented the last session of the day. Nevertheless, we got a good response from the audience. Here are the slides.

Linda Fowler and I have been working in the Space Coast––the eastern edge of the Central Florida region––and we have experienced the difficulties of establishing collaborations within the Central Florida region. I mentioned this problem in my presentation, and several people remarked afterwards that they appreciated my candor. It's always interesting to me how an outsider can point to such an obvious failing that no one in the region feels comfortable talking about.

Space Coast Clusters

Linda Fowler and I spent a day last week outlining the final report for our work with Space Florida and building clusters on the Space Coast. We are working with EMSI, who completed the data analysis of the Central Florida region. An interesting insight is emerging from this work. Analysis of existing clusters represents a look backward into an economy as its strengths have evolved. We are finding on the Space Coast that new opportunities are emerging as these established clusters overlap. So, for example, a new opportunity is emerging for defense firms in cyber security and health IT.

We are now finishing up some workshops that we will conduct in mid December and early January.

Our big success has been developing a new cluster in clean energy. The Space Coast Energy Consortium formed after a strategic doing workshop. You can watch a video to see how this cluster begin to form. You can download a presentation that Linda and I put together that explains how this cluster formed. It is another example of how we can use the disciplines of Strategic Doing activate new clusters.

Arizona: Solar Cluster

Todd Hardy at Arizona State University provided an update on their Arizona Solar Summit. You can see their website, which includes some videos. The Solar Summit presented participants with both panel discussions and active conversation around strategic options. Coming out of the summit, Arizona State University's team organized 4 working groups: supply chain and workforce development; applied research collaborations and pilot projects; policy and finance; and building a stronger narrative.

We used a participant's workbook that was delivered to each registrant prior to the event. I think it's a good practice that we can develop. I've used this workbook as a template to develop a similar workbook for the Wisconsin Rural Summit that will be held this Friday.

Todd indicated that ASU is providing the backbone organization to keep these working groups focused. 2 or 3 volunteer leaders have assumed leadership of each focus group. In addition, a large number of the participants at the Summit volunteered to join a working group. The working group leaders are now organizing their activities. They hold regular check-in calls every 2 weeks to keep each other informed of their progress.

Shreveport: Choice Neighborhoods

Kim Mitchell is continuing his work on the Choice Neighborhood grants into inner-city neighborhoods in Shreveport. The work is very difficult, primarily because the civic environment in Shreveport is so poor. He is facing continuous efforts to slow down or tear down the process that is building. Nevertheless, he's persevering. Last week, he conducted a successful training for civic leaders with our partner, Community Renewal International, who will help guide the process of defining and implementing collaborations within the neighborhoods. It is apparent to me that Kim is having some success. Otherwise, the established powers that control the city would not feel threatened by this work.

You can keep up with what is happening on his project web site here.

Kim and I are continuing to develop concepts of agile planning that provide the next generation of strategy frameworks for physical planning. Traditional planning models, which are rooted in the 1920s, treat the planning process as linear and fixed. In contrast, we are defining a discipline of physical planning that is agile and adaptive. This new approach changes the traditional role of the planner from the “expert draftsman” to a person who actively participates in community strategy development and provides guidance and resources to the residents of the neighborhood as they plan their future. Kim and I hope to have the next draft of our agile planning document ready for review in the next week or so.

Rockford

Janyce Fadden has been spearheading three separate initiatives underway in Rockford. Some weeks ago, we began a strategy process with the board of the Rockford Area Convention and Visitors Bureau. In addition, Rockford is undertaking a major transformation in its education system based on 5 key strategies. Tomorrow, they will announce the launch of these efforts. I will be providing the context of why education transformation is so critical 21st-century competitiveness.

Finally, the Mayor of Rockford has launched an impressive reform of how economic development and community development organizations in the city are financed. In the past, each organization received funding from separate line items that drew from different funding sources in the city budget. Now, the mayor and council have consolidated these funding sources into a centralized fund of about $3 million. He is asking the groups to come together and develop their own collaborative strategic action plan for the city. Funding decisions will then be presented to the mayor and the council in a unified fashion. This is a big challenge. Next week, in a 2 hour session, we will start the process of building these collaborations.

Wisconsin Rural Partners

Connie Lowden and her colleagues on the board of Wisconsin Rural Partners are designing a one day Summit event that focuses on applying strategic doing to build a stronger networks within Wisconsin. We will also be exploring how the Partnership can strengthen its voice by connecting to other rural networks nationally. You can download a draft of the agenda here.

We will be borrowing an idea that worked well with the Arizona Solar Summit. I have prepared a participant workbook that will introduce concepts that we will be using during our workshop. The participant workbook delivers a couple of important messages. We let participants know that the event they're about to attend is different from any summit they have attended in the past. We also want to use the workbook to capture information and insights. Like a strategic doing pack, the workbook becomes a “knowledge asset” to the network.

Alaska: Institute of the North and CTE

Laz Kozmon is continuing his work in Alaska. Last week he completed 2 milestones. He has been working with the Institute of the North to design a strategy for the Institute that strengthens its position in framing issues and building collaborations across Alaska. In addition, he has been working with the Career and Technical Education system in Alaska to develop an implementation plan for the strategy that the CTE system has designed. Much like Tampa Bay, the leaders of the CTE system spent nearly 2 years in developing a strategy. Once completed, however, they face the daunting challenge of implementation. This is where strategic doing and the disciplines it fosters can help. Laz is outlining how to move forward.

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Update from our Strategic Doing Design Team

Fri, 11 Nov 2011 07:18:00 -0800

Every six months, a group of practitioners from across the country convene in Indiana to advance the discipline and practice of Strategic Doing. This week, about 20 gathered to develop the "infrastructure" we need to advance this discipline nationally.

This new civic infrastructure includes a variety of components: a new professional certification in the discipline; a national network of colleges, universities and others supporting the discipline; a research and evaluation framework to enable us to advance the knowledge of conducting strategy within open networks; the development of new tools to advance the practice; the design of a learning network to accelerate support among practitioners.

Why do we have an expanding core of people committed to this work?

Here's a summary of points that tie our Strategic Doing Design Team together:

With the problems we’re continuing to experience across our country, it has become apparent that traditional ways of solving complex problems in the civic space are no longer effective.
These traditional ways lack a disciplined approach that is firmly rooted in sound strategic thinking.
Strategic Doing brings the missing strategy and execution discipline to the civic space.
The Strategic Doing discipline requires a broader, deeper body of knowledge to support it and ensure that it has predictive value and proves to be both reliable and effective.

We also come together as a team with some common beliefs:

We believe we have a responsibility to build a prosperous, sustainable future for ourselves and future generations.
No individual, organization or place can build that future alone.
Open, honest, focused and caring collaboration among diverse participants is the path to accomplishing clear, valuable, shared outcomes.
We believe in doing, not just talking -– and in behaving in alignment with our beliefs.

We follow the discipline in these sessions to design an agile strategy with clear outcomes for the next 180 days. Not everyone in our design team can meet each time, but Strategic Doing enables us to advance our strategy each session without sliding backwards.

Our design team includes people from the following states: Maine, Wisconsin, Michigan, Indiana, Illinois, Nebraska, Louisiana, Maryland, Iowa, Missouri, California, South Carolina, Arizona, Pennsylvania, Ohio, New Jersey, and Alaska. Purdue and Michigan State are anchoring the initial network. Representatives include private sector companies, economic and workforce development organizations, and college and university professionals involved in regional engagement. We have team members with the perspective of rural communities, multi-county regions, and inner cities.

This week, we organized ourselves into the following teams: research and evaluation; the national network; tools and practices. Here is one group focused on improving the tools we use in Strategic Doing. Janyce Fadden, a former manufacturing CEO and now head of Rockford's economic development organization, leads the discussion.

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