Searching for a New Dynamic: Rethinking Economic Development

A CREATIVE MOLECULAR ECONOMY

The recent economic recession has raised questions among economists regarding how long will this downturn continue and when will we recover.  For economic developers however there is a more fundamental question: “when recovery occurs will we be back to business as usual or are the core dynamics of the economic system changing?”  Our answer to this question is that we are in the midst of a systemic change.  The idea of developing a new type of economic resiliency in our communities and society is at the core of preparing for a different kind of economy that will need to adapt to constantly changing conditions. To add to the complexity over the next twenty years is the fact that there are three different types of economies that are in churn and mixed together for the first time in the history of the world.  The first is the very last stages of an Industrial Age Economy based on hierarchies, economies of scale, mechanization, and predictability.  The second is a transitional economic phase known as the Knowledge Economy which started around 2000 and is based on knowledge creation and diffusion.  The third is the emerging Creative Molecular Economy (CME) in which biological principles will form the framework for how the CME will be organized and operate.

A WORKING DEFINITION

As with any emerging system, there is, at present, no firm definition and no concrete set of factors for the CME since the concepts and structures are in the process of forming. With this in mind, we offer the following working definition:  

“an economy based on the integration of emerging technologies, with creative individuals, small groups and companies organized in interlocking networks, connecting and disconnecting constantly in rocesses of continuous innovation.” 

The working definition is meant to be a starting point for dialogue. Networks of economic developers, planners, policymakers, entrepreneurs, workers, and as many interested citizens as possible are needed who believe it is necessary to seed new ideas and new knowledge about a Creative Molecular Economy.  

KEY CONCEPTS

There are six key ideas that, when connected, will form a new framework for a Creative Molecular Economy.  They are as follows:

1) Regional & Global Innovation Networks

21st Century entrepreneurs will need to develop networks of deeply collaborative people and organizations able to interact in creative ways whether developing a research and development project, finding new sources of start-up capital, establishing a social network marketing approach, or developing production and distribution partners. Only interlocking networks will have the capacity to provide adaptive thinking and action at a pace and scale able to take real-time advantage of new ideas, products, services and processes. An example of this kind of economic network is found in the work of Ed Morrison and his Strategy-Nets that “emphasize the importance of developing talent, open networks of collaboration and new disciplines of "Strategic Doing."

2) Crowdsourced and Continuous Innovation

A Creative Molecular Economy will require communities to create a culture that is open to totally new ideas and supportive of continuous innovation. A system of methods that insure constant innovation will be required. Idea Factories, 21st Century Neighborhood Academies, and Futures Institutes will all be needed. Of particular interest to communities will be the concept of crowdsourced innovation such as developed by Enventsys, Inc in Charlotte, NC. As a local community decides what assets and vision it has that are aligned with a Creative Molecular Economy, it will begin to see its economic development strategy as connecting to those organizations able to access people from throughout the world who will provide ideas for products, services and transformational processes needed to insure the vitality and energy of an economic and social culture able to adapt constantly to changing conditions. This concept will take innovation beyond what is characterized in the current knowledge economy because not only is innovation an integral component of this economy but how innovation is developed – in open and interlocking networks - is integral as well.

3) Future Forward Workforce

In this time when three different types of economies are in “churn” (mixed together), all local communities will need to realize that a traditional approach to workforce development will not provide enough skills and capacities to allow individuals to be able to adapt to the needs of the varied requirements of each economy.  Obviously, participants in any of the three economies will require constantly updated computer and technical skills…especially for the remaining jobs in the manufacturing sector. For the Knowledge Economy and Creative Molecular Economy, the capacity to be creative is a key as well. In addition, the dynamic nature of the Creative Molecular Economy will require additional skills and capacities. These include:

a) Thinking Connectively: Connect three “idea spaces” that seemingly are not connected and develop a viral marketing campaign that links the three into a new product, service,  solution and revenue stream.

b) Distributive Intelligence: Utilize Web 2.0 and 3.0 social networking software to develop a demand for new products and services.

c)  Self-Organizing Collectives: Build collaborative networks that identify and create and market a local business venture seen as leading edge

d) Rapid Innovation: Foster imagination using virtual reality.  

e) Entrepreneurship of the Future: Design interlocking Networks for Branding New Products and Services  

f)  Communication of the Future / High function sourcing of talent: Create a “generation matrix” of reactions to change in order to promote understanding and identify the ramifications of demographic shifts  

g) Future Finance: Accessing capital in a new way to envision changing economic models

h) Trend Identification: Envision the development of and capacities needed to develop a new “creative cluster” in the local area based on emerging weak signals.  

4) Crowdsourced Start-up Financing

Over the last two years, a new approach to “startup financing” has emerged based on the use of the Internet to open up interest in innovative ideas, products and services on the part of anyone who is connected to the Web. Kiva.com and Kickstarter.com are two different approaches to funding support from individuals located anywhere in the world. Kiva.com is based on paying a higher rate of interest than can be gained from other investments. Kickstarter.com offers in-kind products and services in return for initial funding support.   The current system can be characterized as having a few gatekeepers to resources for supporting innovation. This traditional system is stifling to creative entrepreneurs without considerable management and start-up history.  This new method of funding breaks down the existing barriers to entry that the current hierarchical system presents for start-ups and entrepreneurs by expanding the potential to anyone connected to the web, potential partners, customers, and the citizen at large.

5) New Technologies Transforming Production

The methods and system of producing goods and services are rapidly evolving.  The importance of being large to take advantage of economies of scale and relying on proximity to physical assets and resources are giving way to distributed collaboration and innovation, value-added production networks, and emphasis on the niche.  Examples of how this is playing out in the early CME are through direct digital manufacturing and synthetic biology.

a) Direct Digital Manufacturing

Direct digital manufacturing, sometimes called rapid, niche, instant, or on-demand manufacturing, is a manufacturing process which creates physical parts directly from 3D CAD files or data using computer-controlled additive fabrication techniques without human intervention, also called 3D printing or rapid prototyping. When a small low cost device is used it is also called desktop, or personal manufacturing. Products can be brought to market faster and sometimes cheaper by using 3D printing rather than traditional processes such as castings and forgings. Since no special tooling is required, 3D parts can be built in hours or days.  What this means for economic development is that smaller, value-added, niche manufacturers can survive where large mass production manufacturing has declined.

b) Do-It-Yourself Genetic Engineering (Synthetic Biology)

“Synthetic biologists imagine nature as a manufacturing platform: all living things are just crates of genetic cogs; we should be able to spill all those cogs out on the floor and rig them into whatever new machinery we want. It’s a jarring shift, making the ways humankind has changed nature until now seem superficial. If you want to build a bookcase, you can find a nice tree, chop it down, mill it, sand the wood and hammer in some nails. “Or,” says Drew Endy, an iGEM founder and one of synthetic biology’s foremost visionaries, “you could program the DNA in the tree so that it grows into a bookshelf.” It is this last use of synthetic biology that has so much potential for a Creative Molecular Economy.  Among other things what this means for economic development is that manufacturing is no longer solely tied to close proximity to natural resources and low cost labor.   

6) Identifying Weak Signals

Weak signals are those emerging ideas, new discoveries and inventions that are just beginning to appear on the radar screen and have not impacted the thinking and action of many people in the early stages of evolution. An example is an understanding in 1993 that the Web/electronic infrastructure would become a key economic development factor by 2000. In 1998, an economic development weak signal was the need to introduce the concept of creativity into the culture and workforce of local communities. In 2007, the emerging Creative Molecular Economy was (and still is) a weak signal. Today, few economic developers realize how important will be the impact of mobile technologies on the idea of creating and facilitating interlocking networks of innovation in support of generating new streams of wealth.  In a time of constant change, those local communities that prepare their culture to identify weak signals and create networks of 21st century electronic entrepreneurs will be able to build vital and sustainable economic development processes.  For economic developers what this means is that traditional strategic planning must be adapted to allow recognition of weak signals that can have a dramatic impact on the economic future. With this in mind, it is expected that the concept of “adaptive planning” will replace strategic planning as the key method for long term planning within a decade.

AS A RESULT…A NEW APPROACH FOR ECONOMIC DEVELOPMENT

With three different types of economies interacting simultaneously, local economic developers need to realize that they must design and work with three different types of economic development simultaneously.  The context for this is as follows:  

1) Economic Development for an Industrial Economy

Until the past decade, nearly 100% of the activities of a local economic developer focused on making a local area attractive to the recruitment of business and industry from other parts of the country and world and helping existing companies attract, retain, and grow jobs and property investment.  To do this, economic developers used the tools of state and local programs and incentives to lower costs, provide or improve infrastructure, provide access to debt financing, and train workers.  This strategy will still be important as the last phases of the industrial economy continue, but should take no more than 30% of the time of most economic developers as the tools and techniques required to support new entrepreneurs and new systems are changing.

2) Economic Development for a Knowledge Economy

After Richard Florida’s book, Rise of the Creative Class was published in 2002, economic developers incorporated a new idea into the tool kit of economic development….developing  a culture and infrastructure that would appeal to and attract creative people, especially young talents who want to  connect with each other as an emerging network of 21st  Century Entrepreneurs.  Also fueling efforts to support a knowledge economy were the work of Michael E. Porter, Clusters and the New Economics of Competition, on industry cluster development with emphasis on knowledge creation and diffusion leading to locational advantages, and Robert D. Atkinson on the importance of information technology and measuring the knowledge economy most notably in his annual New Economy Index.  Within this knowledge economy focus on the physical factors that impact location and investment decisions and lowering production costs give way to focuses on the digital economy, highly educated and skilled workforce, research and development, intellectual property protection, technology transfer, venture and angel capital and commercialization.

3) Economic Development for a Creative Molecular Economy.

Key ideas for economic developers adapting to the emergence of a Creative Molecular Economy as discussed above are developing innovation networks of collaborating entrepreneurs, spotting weak signals and their impact,  crowdsourcing initial funding and constant innovation, developing a Future Forward Workforce, supporting new technologies for new production systems, and building “distributed intelligence” as an economic development concept of interlocking networks of 21st century entrepreneurs. To take advantage of these new ideas within the emerging CME requires developing a local workforce able to adapt to any of the three economies. We call this type of adaptable workforce a Future Forward Workforce. In the past there has been a separation of the traditional approach to workforce development and economic development. In the future, the two needs are integrated and will be viewed as parts of an interdependent systemic approach to economic development. Only through the use of parallel processes will a community prepare itself for a real-time economy that is global and interconnected.  It will also require economic developers to challenge old approaches and learn new tools.  These three different (yet overlapping) types of economies require innovative capacities to be developed and balanced….thus the title of this article, Searching for a New Dynamic: Rethinking Economic Development. No longer will an economic developer be able to focus only on recruiting business and industry to a local area or retaining existing jobs through incentives. Economic developers will need to learn how to forge connections among diverse people and organizations to create a culture conducive to constant innovation. Adding to the diversity of the profession will be the ability to be a connector of 21st century entrepreneurs and an accelerator of ideas and processes in support of real time response. Identifying weak signals and developing interest and support for a broadband infrastructure able to give individuals pools of ideas and access to at least 100 MBs will also fall within the umbrella of a 21stcentury economic developer.

RETHINKING THE FUTURE OF ECONOMIC DEVELOPMENT WITH QUESTIONS OF THE PRESENT

As a result of the emerging reorientation of the profession of economic development, questions related to existing ideas need to be answered from the perspective of an emerging “futures context.”  

1) Is cluster theory short-lived due to its focus on geographic concentration and confinement to industry employment and occupation definitions?  Or are there underlying characteristics which allowed clusters to succeed and will also be part of the CME?

2) Can localities, regions, and states target/pick industries, sectors, and clusters for growth….and be effective and successful in the emerging economic environment?  Or, is the economy changing too rapidly and targets become outdated once defined and understood?  

3) Do location-based economic development incentives really work? They may be the norm today, but do they and will they continue to matter?  With their focus on lowering land development and production costs will they be relevant to future entrepreneurs?  What are the services that will support individuals and businesses in the CME? 

4) What is the role of the economic development professional and organization in this large complex system?  Where do they fit if at all?

5) What are the future tools for information sharing and participation?  If networks are complex and global how is the local community engaged?  How does economic development move beyond simple “yes/no” go/no go winner take all decision making? How do we transform strategic planning processes to consider weak signals, global networks, and open processes?

6) How is short, medium and long term progress toward success determined for a Creative Molecular Economy? What are the metrics that will identify and measure success?  

 

CONCLUSION

As is true with any period of transition, there exists today and in the future great ambiguity and uncertainty. One of the most important challenges for economic developers in the future will be the ability to work in deeper collaboration with other leaders and organizations at the local, regional, state, national and global levels to identify and take advantage of emerging opportunities to build a just and equitable approach to wealth creation in a dynamic and constantly changing environment.

No longer will economic developers find it to their advantage to work in relative isolation. A set of increasingly important skills will be necessary never before seen as connected to the function of economic development:  

1) Bringing people and organizations together in “futures generative dialogue” to create a culture supportive of continuous innovation.

2) Accelerating the connection of ideas, people and processes in interlocking networks which will lead to new income opportunities.

3) Build interlocking networks that provide a foundation for emerging ideas, products, and weak signals to have the potential to become economic assets in any local community.

4) Bring “thought leaders” to the community in collaboration with community colleges, chambers of commerce and other local organizations.

5) Understand how to build support for the expansion of a broadband infrastructure to allow access to 1 gigabit by 2015.

What is beginning to be understood by those at the cutting edge of economic development is that there is a great need to develop a dynamic balance of skills, capacities, actions, processes and events to establish a connective community culture that deepens the collaboration of multiple points of view, diverse people, and organization in a constant birth of economic creativity. Economic developers who learn to build new professional and personal capacities aligned with the emerging Creative Molecular Economy and Organic Society will best serve their communities as facilitators of a just, thriving and sustainable economy.

 ***

This article was co-authored by Jim Damicis, Senior Vice President, Camoin Associates and Rick Smyre, President, Communities of the Future.  Jim can be reached at jim@camoinassociates.com and Rick at RLSMYRE@aol.com.  

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