Growing jobs transforming the way we approach economic development

Robust community engagement ensures that the personal values of citizens are aligned with the economic devel- opment strategies, accelerating the rate of growth and creating an environme

“Thomas Tuttle has captured how local elected officials are combining strategic and tive decision making with professional local government management and dynamic not- for-profit partners for policy implementation This implementation is disrupting and improving the status quo, leading to a more hopeful, resilient, and equitable future for com- munities and the businesses and individuals that call them home Robust community engagement ensures that the personal values of citizens are aligned with the economic devel- opment strategies, accelerating the rate of growth and creating an environment that fosters investment in financial and human capital.”

innova-—Michael Van Milligen, City Manager, Dubuque, Iowa

“Creating quality jobs and filling them with a qualified workforce has become the challenge

of our time because traditional strategies to promote economic growth have proven to be a zero-sum game at best In this enlightening book, Tom Tuttle offers an engaging primer on the newest and best thinking for job creation at both local and state levels It is a ‘must read’ for policy makers, economic development professionals, and all who care about America’s economic future.”

—William E Kirwan, Chancellor Emeritus, University of Maryland System

“It is refreshing to see someone work so hard to create a holistic view of what community and economic development is all about Never has it been more important to realize that successful economic development is nonpartisan and requires a powerful public–private partnership Above all, what Dr Tuttle has done is to prove once again that this work is complicated and that it is a ‘team sport.’ ”

—J Mac Holladay, CCE, PCED, LM, HLM, CEO, Market Street Services

“Growing Jobs is a ‘must read’ for local leaders across the country seeking to create good jobs and sustainable communities Dr Tuttle, a widely acclaimed expert on quality and produc- tivity, draws upon decades of experience working with business, education, and government leaders and case studies of Austin, Texas, and Dubuque, Iowa, in this how-to guide, demon- strating that community values and engagement, along with education and business reten- tion, are key strategies for successful, long-term, and sustainable economic development.”

—Charles A Stek, President and CEO, Environmental Stewardship Strategies

“In Growing Jobs: Transforming the Way We Approach Economic Development, Thomas Tuttle accurately assesses how traditional economic development approaches are no longer work- ing Tuttle’s work will help economic development practitioners in developing plans and practices that leverage the significance of ‘place’ and ‘talent’ in driving local and regional economies.”

—Jim Damicis, Senior Vice President, Camoin Associates

“Tom Tuttle approaches the topic of job creation and economic development from the rience that comes from many decades as a professor, consultant, student, and ‘Guru’ of pro- ductivity and quality improvement His optimal mix of intellectual and practical real-world observations brings together, in this book, a very realistic account of the transformation of economic development and job creation approaches to succeed in today’s global competi- tion The recommendations are understandable, implementable, and sustainable and should

expe-regions, and nations.”

—Aris Melissaratos, Dean, School of Business and Leadership,

Stevenson University

“Tom Tuttle has opened the door to the next evolution of local economic development based

on ‘comprehensive community transformation.’ His ability to identify the ‘secret sauce’ of building alliances, deep collaboration, and a shift to entrepreneurial ecosystems reflects his creative insight into a different kind of future that is emerging.”

—Rick Smyre, President, Center for Communities of the Future

“Thomas Tuttle makes compelling arguments for why a transformation is required wide concerning existing economic development practices There are not enough jobs of any kind for those seeking employment, and there is a growing mismatch between new job skill requirements and the qualifications of those seeking employment In Growing Jobs, Tuttle provides compelling and useful examples of ways to consider and implement creative and innovative economic development frameworks.”

world-—Dr David V Gibson, Associate Director, IC 2 Institute,

University of Texas at Austin

“Growing good jobs that satisfy community aspirations is the fundamental challenge facing local and state government leadership Growing Jobs provides a national perspective on eco- nomic development practices with an in-depth look at two success stories—Austin, Texas, and Dubuque, Iowa Growing Jobs provides transformational context and a values-driven pathway to individual and community innovation and productivity.”

—Robert L Hannon, President, Anne Arundel County

Economic Development Corporation

“Tom Tuttle’s new book is a thought-provoking series of examples and findings on some of the most successful community and economic development initiatives from different regions

of the country It highlights the key ingredients of success by showcasing these ‘best in class’ examples The keys include leadership, vision, best management practices, and a set of core community values that tend to drive the transformation to a highly effective system for com- munity building and job growth.”

—Wayne A Mills, Past Chairman of the Governor’s Workforce Investment Board for Maryland and Past Chair

of the Maryland Chamber of Commerce and Leadership Maryland

Growing Jobs

All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical,

photocopying, recording, or otherwise, except for the inclusion of brief quotations in a review, without prior permission in writing from the publisher.

Library of Congress Cataloging-in-Publication Data

Names: Tuttle, Thomas C., author.

Title: Growing jobs : transforming the way we approach economic development / Thomas Clayton Tuttle; foreword by Jean-Claude Lauzon.

Description: Santa Barbara : Praeger, 2016 | Includes bibliographical references

and index.

Identifiers: LCCN 2016005696 (print) | LCCN 2016021673 (ebook) |

ISBN 9781440837227 (hardback) | ISBN 9781440837234 (ebook)

Subjects: LCSH: Manpower policy, Rural—United States | Job creation—United States | Rural industries—Government policy—United States.

Classification: LCC HD5724 T88 2016 (print) | LCC HD5724 (ebook) |

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To Adrian, Cami, Cole, Drew, and Julia for giving me the strongest

reasons to care about these ideas

Chapter Seven: A New Framework for Local Community and

I have worked with Dr Tom Tuttle for the last 28 years in different tions around the world, and it is a distinct honor to introduce this book,which is dedicated to the future and well-being of America

loca-Tom and I have long been associated with the World Confederation of

through Productivity.” For many years, I have acted as chairman of theorganization, and Tom is still today the president of the World Academy

of Productivity Science, which has some 500 distinguished members inmore than 60 countries

In his remarkable book, Dr Tuttle explores new simple, doable, andpractical avenues for creating favorable job opportunities He challengesthe status quo and proposes a clear action plan and great examples of citiesthat have already embraced new ways of defining and implementing eco-

only the number of jobs created but also the quality of said jobs, and thisfollows as the essence of his presentation Dr Tuttle points out that talentaccess and economic development go hand in hand In this respect, ratherthan have a long debate on whether one is the chicken and the other theegg, he focuses on the output and predictable results to be obtained.Good talent has always been and will continue to be the key ingredient ofstrong economic development in any part of the world, and this is very truefor the United States of America Executives and competent professionalsare in high demand today in developed and developing economies, andnow more than ever, these individuals weigh a wide variety of criteria whenconsidering employment opportunities

In my professional career as a global headhunter with Korn Ferry,candidates for top executive positions often asked me about local

conditions—high-quality educational options for their children fromkindergarten to university, a good and reliable health system, ease of localtransportation and accessibility to air transport, security and ethics, andfinally a city with varied and world-class cultural vitality As one spouse

I particularly enjoyed three major statements Dr Tuttle provides: (1)

development is a key ingredient for sustainable and long-term success;and (3) communities and citizens must help to create the kind of economythey want and need His chapter on lessons from the past is an anthology

of best practices and what everyone should be doing despite the manychallenges

In the examples of Austin and Dubuque, Dr Tuttle helps us understandhow his approach works and how collaboration and partnerships with lead-ers in the communities are vital to ensuring strong and solid economicgrowth Hope, an aligned and engaged community, business growth andretention, and partnerships are discussed in great practical detail thatshould stimulate other constituents in the country to replicate thesesuccesses

What I like most is the way Dr Tuttle challenges how state and nationalinitiatives in economic development are far removed from individuals’ realeveryday needs at the local level He argues that the best way to ensurestrong endorsement from communities and business leaders is to shift thedecision-making process and policy philosophy back to the local commu-nity, city, or county He writes:

When citizens can see that their personal values are aligned with the ity’s economic development strategy, the result will be greater citizen owner- ship and support for the economic development process Values alignment acts as an economic and employment development accelerator (p 10)

commun-A job creation process that is values based and that stimulates innovationand productivity will act to accelerate the creation of good and valuablejobs

across the country, but it is all too often deterred by existing bureaucracies

at state and national levels The virtue of this book, therefore, is to initiatethe discussion—as everything else in life, nothing is pure black or white,but rather light gray or lighter gray

Enjoy this unique reading that showcases America’s continuous process

to improve itself and its desire and energy to constantly reinvent itself

Jean-Claude LauzonDelegate GeneralQuebec Government Office in New York

January 6, 2016

2008 recession and the slow response of the economy in terms of ment levels, labor force participation rates, and the extent of underemploy-ment The second was that members of the economic developmentcommunity were questioning whether traditional approaches to job crea-tion and economic growth were working in light of new national and globalforces that were impacting their states, cities, and regions These two sets offacts suggested that the timing was right for an effort to define a new frame-work for transforming economic and community development approachesand strategies However, for me, the preparation for this book began longbefore the second decade of the twenty-first century

employ-Very early in my life I learned to put a human face on unemployment tistics This happened when my dad lost his job after working for over

sta-20 years for a company that abruptly closed its doors and laid him off out notice or benefits Since he was a union official, this was a traumatic sit-uation not only for him but also for other members of the plant populationwhom he represented Fortunately, he adjusted and managed to make acareer change through additional training, several job changes, and the abil-ity to maintain a positive perspective However, a number of his colleaguesnever fully recovered from this job and career tragedy

with-Like most kids growing up, my contact with the world of work wasthrough stories told by my family, friends, and neighbors, and my ownpart-time and summer jobs These included working in a gas station andbeing a bin loader in a warehouse I also had many conversations with

my friends and summer baseball teammates who had jobs ranging from

con-versations, I managed to form some early conclusions about the work

world: there are many different things that people do, and jobs differ interms of many attributes that have a lot to do with whether people are pro-ductive and happy or not For example, in one of my jobs, I realized verysoon that the way I was managed impacted my ability and motivation to

given 15 minutes of instruction on that task and then I was expected torepeat that task over and over After a few days of this, I realized that if Ihad been told what the purpose of this task was, how it related to the pur-pose of the department, and how it impacted the work of other people inthe department, not only the job would have had more meaning for mebut also I would have been in a better position to add value for the companythrough my job performance I vowed that if I ever had the chance to man-age other people, I would never put my employees in this position

I was fortunate to have had positive role models who not only helpedshape my work ethic but who also pointed me toward higher education asthe way to create a better future After college, I was commissioned as anarmy officer and attended the U.S Army armor school followed by flightschool I was then assigned to the Korea Military Advisory Group as an avi-

Korea on their training and advisory missions Living in Korea opened my

different culture It was enlightening not only to learn from my own tions with Koreans but also to judge differences in the ways other Ameri-cans interacted with people in this culture In some ways it was similar tothe differences in the ways my dad and his colleagues reacted to the loss

interac-of their job Some cherished the change and the opportunity to explorethe richness of this cultural experience Others could never escape theboundaries and limitations of their own culture and were constantly asking

Korea, I was largely blind to the fact that my culture determined much of

my behavior One cannot see his or her own culture for the same reason

con-trasting culture to enable you to see yourself and your own culture Oncethat insight occurs, it is impossible to view the world in the same limited,culture-centric manner as before

My deeper understanding of jobs was significantly expanded during mygraduate school experience As an industrial psychologist, I chose a disser-tation topic that involved the study of jobs and a discipline known as jobanalysis Guided by my adviser Dr Bill Cunningham, I and my colleagues

in the group developed methods and tools for analyzing jobs in terms oftheir interest, need, ability and cognitive attribute requirements Our work

was based on the assumption that performance and satisfaction of jobincumbents resulted from a match between the job requirements and theincumbent’s personal attributes Improving incumbents’ job satisfaction andperformance involved helping them choose jobs which had requirements thatmatched their interests, needs, and skills In order to do that, one requirementwas to be able to analyze jobs in terms of the skills and abilities necessary toperform the tasks as well as the interests and needs that would promote moti-vation and satisfaction in doing so Job analysis is a fundamental methodologythat is an essential element of professional practice with respect to vocationalcounseling, employee selection and placement, employee training, job evalu-ation, and assessment of employees for promotion.

Even more relevant preparation for this book was developed during my

26 years as director of the University of Maryland Center for Quality andProductivity This center was created by an advisory committee of the StateDepartment of Economic and Community Development, which was led byJay Jacobs, a visionary executive from the former Black and Decker Corpo-ration Jacobs and his colleagues, including the dean of the University ofMaryland Business School Rudy Lamone, realized that productivityimprovement was the key to improving the standard of living in a stateand country They developed the charter for an organization that wouldfocus on improving productivity in the state of Maryland at a time (late1970s), when U.S productivity growth had declined from its traditionallevel of around 3 percent per year to less than 1 percent per year The sig-nificance of this decline was that at a growth rate of 0.5 percent per year,the time required for the standard of living to double had increased from

22 years (at a 3 percent growth rate) to over 100 years This meant that itwas no longer possible for each generation to leave a world that was twice

as affluent as that which it inherited from its parents’ generation

When I became director of this center in 1978, my learning accelerated.First, I learned about the importance of a group of influential people inbuilding an organization and driving change In my case this was the board

of advisers for the center According to the charter created by Jay Jacobs andhis team, the center would be guided by a board comprising representativesfrom business, organized labor, government, education, and professionalassociations The state’s assistant secretary of economic development was a

with the power of collective action The lesson learned was that wheneverleaders from these various groups could come together and speak withone voice, change can happen—often very quickly

A second key learning came from the fact that even though I was based inthe university, I interacted regularly with state and local economic

development representatives Starting with the fact that the center was ated by the Maryland Department of Economic and Community Develop-

jobs in Maryland.” In economic development jargon, that meant we werepart of the job growth and retention function in economic development.Located in the university, we were able to view the state economic develop-ment department with some detachment From that viewpoint it was pos-sible to determine that the priorities of the department placed jobretention below job attraction In the 1970s and 1980s, there was virtually

no focus on entrepreneurship at the state department level There weresome exceptions to this generalization When the state feared that it wouldlose a high-profile employer, it spared no effort to retain this company.But in terms of the day-to-day focus, job attraction was the number one pri-ority I was biased of course, but I always felt that these priorities werewrong

A third contributor to the motivation for this book came from my riences as a participant in the U.S Conference Board’s Quality Council TheQuality Council was one of a number of learning councils operated by theU.S Conference Board to promote cross-organizational learning amongthe largely Fortune 500 companies that were members of the ConferenceBoard Each council consisted of approximately 20 executives from organi-zations that are not direct competitors The members of the Quality Council

even though their job titles varied I was invited to be one of two universityrepresentatives on this council The group met for two days three times peryear, with each meeting hosted by a member typically at one of the corpo-ration’s facilities Meeting topics varied but fell under the broad topics ofcorporate quality and productivity improvement and organizationalchange

It was through this group that I was introduced to the values frameworkdescribed in Chapter 2 Tom Carter, an executive from Alcoa, brought one

of their consultants, Dr Brian Hall, to a meeting to discuss the topic ofvalues-based management I did not have any idea at the time how thisexperience would shape my worldview and thoughts about leadership,management, human development, and economic development However,this council demonstrated to me the power of group learning and peerlearning Both types of learning require building trust between individualsand among group members because learning involves open and honest

A fourth key influence on my thinking that is reflected in this book camefrom an encounter which led to a relationship with a retired executive from

supervisor in a plant to president of international operations for Corning.One of the stories that Forry shared with me dealt with the issue of execu-tive leadership and the role of the CEO in leading change James Houghton,then chairman of Corning, brought Forry back following his retirement andasked him to lead the total quality management initiative that Houghtonwas about to launch across the corporation Forry stated that he deliberatedfor a day or so over this offer and then went back to meet with Chairman

you choose to lead it, I will help you.” This story illustrates that the role of

quality initiative was about changing the behavior of every manager andemployee in the company in some fundamental ways, leadership of thisfunction could not be delegated Only the CEO could be seen as providingCEO leadership of this initiative

This story provided one of the most significant lessons I have learned interms of managing organizational change There are some things that can-not be delegated in an organization If the goal is to change the cultureand operational practices which was the goal of the total quality initiative,only the CEO can lead the effort That means serving as a personal rolemodel, learning how to ask the right questions of subordinates, learningwhat to reward and what not to reward, and so on This lesson is amplified

in the book in the section on Dr Deming in Chapter 3 and in Chapters 7and 8 where I have focused on the frameworks for transformation of stateand local economic development systems If the goal is to change the eco-nomic development culture of a community, the key leaders of the commu-nity must lead this effort

The lessons following the 2008 recession suggest that the timing is right

many lessons that underlie my perspective on the type of transformationthat is needed This brings me to the issue of what my hopes are for thisbook The noted economist Joseph Stiglitz in his recent book with coauthor

In thisvolume, the authors make the point that most of the increases in standard ofliving come from increased productivity and that productivity improvement

is the result of learning They further define the policy objective as follows:

a focal point of policy ought to be increasing learning within the economy; that is increasing the ability and the incentives to learn, and learning how

to learn, and then closing the knowledge gaps that separate the most

My hope for this book is that it will contribute to moving economicdevelopment organizations to become learning organizations and that amajor focus of economic and community development will be to createthe conditions that will stimulate learning within the communities that theyserve We see considerable evidence of this in the three case examples inthis book—Austin, Dubuque, and Maryland Certainly much of the focus

on job retention involves closing the knowledge gaps between the most

that the ecosystem is about spreading existing knowledge among new and

in terms of its knowledge assets In order to develop and deploy effectivepolicy, it is essential that policy makers focus on increasing learning amongtheir citizens so that citizen engagement will become an even stronger force.Like every book, this book has limitations In the choice of case exam-ples, there are many others that could have been included The emphasis

on state and local strategies does not address national policies andapproaches that can enable and assist state and local development We also

do not address the significant global forces for change that state and localstrategies must monitor and deal with as they develop and deploy theirstrategies Originally a discussion of these forces that are driving changewas presented as a chapter However, it was omitted in order to allow amore complete presentation of the Austin and Dubuque stories This deci-sion was made in part due to the fact that many other volumes haveaddressed these global megatrends

Chapter 1 of this book serves as the introduction as it defines the lem and provides an overview of the organization of this book I inviteyou to read the book and then join the dialogue and learning process thatwill transform the economic and community development policies andorganizations that you are able to influence

A large number of people provided support, wisdom, and assistance duringthe process of deciding to write this book as well as critiquing the proposaland providing input during the writing phase I would like to convey mysincere appreciation for their encouragement and involvement For their as-sistance I especially want to thank R V Bartlett, George Creel, Karl Fooks,

Dr Charles Heller, Dr Michael Hickey, John Kelly, William Liggett, WayneMills, Andrew Sonn, Erin Sonn, and Daniel Walton

Throughout the proposal and book preparation, Robert L Hannon,president and CEO of the Anne Arundel County Economic DevelopmentCorporation, served as a valuable sounding board and friendly critic Anexperienced and respected professional and an exceptionally clear thinker,

he was an effective catalyst throughout in helping me clarify my thinking

We did not always agree but his viewpoints were always valuable

At various stages of the book development I conducted a number ofinformational interviews with key economic development and workforcedevelopment professionals Unfortunately, much of the valuable informa-tion they shared does not appear directly in the book However, these inter-views significantly aided me in the research done in Austin and Dubuqueand with respect to the state-level examples These interviewees were DyanBrasington, Jim Damicis, John Dealy, Jim Dinegar, Don Frye, Stewart Gold,Kirkland Murray, Katherine Oliver, Rob Rosenbaum, J Thomas Sadowski,Elliot Schwartz, Steven Silverman, Martin Simon, Sue Smith, Rick Smyre,Lawrence Twele, and John Wasilisin I am very appreciative for your will-ingness to share your time and wisdom, and your ideas significantly broad-ened my perspective on state and local community and economicdevelopment issues and challenges

For their assistance in the development of the Austin, Texas, case ple, I want to thank John Baker, Scott Sherwood, Lauren Sherwood, and all

exam-of the interviewees who were extremely generous in sharing their time andknowledge The interviewees were Jose Beceiro, Mike Berman, CharisseBodisch, Paul DiGiuseppe, David V Gibson, Julie Huls, Mitch Jacobson,and Joel Trammell

Dr David Dubois was extremely helpful in leading me to discoverDubuque, Iowa Teri Hawks Goodmann, Michael Van Milligen, RickDickinson, and Nancy Van Milligen graciously welcomed me and openedthe doors of their organizations They also participated in interviews andgenerously enhanced the Dubuque story as did Mayor Roy Buol, CoriBurbach, Chad Chandlee, Brian Cooper, Kelley Deutmeyer, Eric Dregne,Sarah Harris, Douglas Horstmann, Maurice Jones, Russell Knight, ChristineKohlmann, Dave Lyons, Dan McDonald, Stan Rheingans, John Schmidt,Byron Taylor, and Tom Woodward Rick Dickinson and Karen Kluesner

of the Greater Dubuque Development Corporation deserve special thanksfor arranging interviews with a number of their board members

For the Maryland state-level case example, I especially appreciate the ticipation of the following interviewees: Richard Bendis, Brian Darmody,and Dr William E Kirwan Robert Hannon also contributed significantly

par-to this case example

Three other interviewees made significant contributions to the bookcontent They are Elva Castaneda de Hall, Aris Melissaratos, and J MacHolladay Thank you very much for your support

Two people were invaluable in the actual production of the manuscript

My long-time friend and valuable colleague Jerry Elprin was a constant porter and adviser as the editor for the project For graphics assistance,Danielle Peterson of Briodesign provided timely and accurate support.Thank you, Danielle

sup-A book without a publisher is a book without value I would like to

Economics and Finance for Praeger/ABC-CLIO Hilary has been extremelyinstrumental in guiding me through the proposal, writing, and productionprocesses and in the publisher’s decision to support this project She hasalways been available promptly when I needed advice and her advice hasalways been spot-on

None of these individuals are responsible for any errors or omissions inthe document as that is the responsibility of the author I accept thatresponsibility Ultimately it will be up to the readers to decide the value ofthis work I welcome your reactions and especially welcome feedback about

how you are engaged in transforming community and economic ment in your place.

develop-Thomas C TuttleAnnapolis, Marylandtctuttle1@verizon.net

The Jobs and Employment Challenge

We are defined by our work Much more than a source of money, a job is ameans of expression and a major source of self-esteem, dignity, and mean-ing in our lives It is not surprising to learn, therefore, that the most signifi-

The Gallup survey also found that not any job will do What people want

from person to person as a result of individual differences, most would

wage Other factors desired from work include a chance for advancement,opportunity to have input to decisions that impact an employee on thejob, the chance to learn new skills, safe and healthy working conditions,support from coworkers, challenging work, and so on

From a policy maker’s perspective, the difference between “creating goodjobs” and “creating jobs” has not always been a primary focus Too oftenpolicy makers have focused narrowly on metrics such as the unemploymentrate and the number of jobs created without including metrics that addressthe quality of the jobs created

We will argue in this book that, from a policy perspective, the differencebetween creating jobs and creating good jobs is the difference between afocus on traditional economic development and a focus on the new para-digm of values-based, innovation-driven economic development

Current Economic Development Model

Traditional economic development has been defined by two principalactivities One is job attraction—the attempt to lure businesses or businessinvestment from outside of the jurisdiction (e.g., state, region, county, city)into the target jurisdiction served by the economic developer The second is

business retention—efforts placed on working with businesses within thejurisdiction to assure they will remain in the jurisdiction and help themgrow and add jobs.

In recent years the job development focus has also included a thirdemphasis on establishing and growing start-up businesses This effort hasfocused on establishing and managing business incubators and accelerators

If one examines the relative commitment of resources to these three mary strategies for job creation, the traditional economic developmentmodel has devoted a disproportionate allocation of resources to businessattraction and much less to business retention and growth and new busi-ness creation This is followed despite evidence that most new job creation

and his colleagues of the University of Maryland argue that most new job

as rapidly growing businesses and they tend to be start-ups and young

There are several reasons for this First, luring a new corporation to thestate or county generates a lot of favorable publicity as well as jobs and taxrevenue Attracting a new plant of a Toyota, General Motors, Siemens, orSamsung brings a defined number of new jobs and significant contribution

to the tax base of a jurisdiction It is also likely to have a multiplier effect inthat a new plant will also help attract suppliers to the new plant and gener-ate revenue for a range of service providers (e.g., restaurants, real estateagents, gas stations, dry cleaners) Second, and perhaps even more impor-

for their efforts to land a number of new jobs for their constituents Jobattraction, when it is successful, produces visible and concrete victories thatelected officials cherish

Business retention—helping existing businesses remain in a jurisdictionand grow—is much less glamorous and produces few headlines To use abaseball metaphor, job attraction is about hitting home runs Business

single, stealing second, bunting the runner to third, and then relying on asacrifice fly to produce the run

with interagency issues that impact businesses such as permits, regulations,inspections, tax issues, and so on In general, it involves those activities that

can also impact business attraction efforts since companies that do theirdue diligence regarding a move or new investment will seek out existing

businesses in the area to ask whether the jurisdiction is a place where it iseasy to do business If the existing companies in an area are not satisfied,they can share that dissatisfaction with potential new businesses and per-haps prevent a deal from getting done.

In the traditional paradigm, it is common for politicians at the state andcounty levels to run for office with promises to improve their localeconomy, create more jobs, and grow the local tax base When they areelected they typically bring to their governing team a key supporter as thesecretary of economic development or a comparable position If the politi-cian ran on a platform that the previous occupant—governor, mayor, orcounty executive—did not do a good job, there is little incentive to con-tinue the policy initiatives of the past Therefore, new policies are neededand usually new people are brought in to implement the new policies If

we assume four-year terms of office for elected officials, every four or eightyears the economic development strategies are reinvented, and any continu-ity of policy from one administration to the next is lost Often, knowledgecapital is also lost with the replacement of staff

The elected official typically brings her vision for economic ment Since elections in a democracy create winners and losers, the newadministration comes into office with a substantial minority of citizenswho do not share its vision The professional economic development staffowe their allegiance to the elected official and therefore spend most of theirtime and effort on implementing the short-term promises made by theelected official during the campaign and implementing the vision of the

develop-“boss.”

This system is dysfunctional for two primary reasons First, economicdevelopment is a marathon, not a sprint It is necessary to systematicallycreate the building blocks that underpin a strong economy This involvesstrategic planning, strengthening workforce skills, encouraging entrepre-neurship, building the ecosystem—physical, social, and institutional—andsupporting growth of the existing business base This long-term perspective

time horizon

The second reason the current system is dysfunctional is that sustaineddynamic economic development requires that the entire communityincluding citizens, businesses, and the nonprofit and educational sectors

as well as all government entities, not just the economic development office,must be engaged in the effort Obtaining broad-based community engage-ment requires the leadership of individuals and institutions that are outside

of the political process Certainly the elected leaders can be helpful in thiscommunity engagement process, but the focus and ownership must reside

in the community institutions, not in the individual who happens to holdelective office.

zero-sum view of job development, has produced a great deal of dysfunctionalbehavior by states and counties The dysfunctionality of the present systemcan provoke strong reactions from those who are participants in the system

An example comes from an individual who has seen this system from arange of perspectives He has been a corporate executive of a major corpo-ration and a secretary of economic development at the state level and now

is a business school dean In my interview he was very candid when ing on the current system:

reflect-The norm in this country of trying to steal the next guy’s company is pletely a zero-sum game There was talk a few years ago about legislating it out of existence, at the federal level, but it never happened There is this

penny out of any government body, whether it is state, county or ity, as an incentive to bring that company there Now if I am on the company side, and I was for many years, I felt that it was my civic duty to help the local economy I hated it when corporations tried to get training dollars out of local government and that sort of thing .

municipal-The only real strategic investment for any region to make is an investment

in education You have to produce a workforce and it is a workforce that

As the quote points out, the bitter competition among states for businessrelocation or new business investment has enabled the site selector to pitstates against each other in a bidding war to win the deal As a result, poli-

pub-lic resources in the form of subsidies, tax incentives, and regulatoryexemptions in order to improve their odds of winning the battle Oftenthe true costs of these arrangements are hidden from the public in order

to disguise their true cost per job gained The gains achieved coupled withloss of tax revenue are often outweighed by the loss of services whichdetract from the community quality of life needed to attract and keep thetype of workforce required to support high-quality job growth

Another type of dysfunctional behavior the traditional paradigm has duced is raids by one state on another in an effort to lure the other state’sbusinesses without necessarily involving a site selection consultant Thenegative impact of this behavior can be amplified by its partisan political

pro-overtones as Republican governors have openly targeted states with Democratic

the GOP chief executives try to lure

this may be good politics for the Republican governors in their home states, it ishardly good for the overall U.S economy Not only is this behavior generatingbacklash from states that are being targeted, but it is also leading GOP governors

to attempt to outdo each other as job raiders

The dysfunctional mind-set the win–lose paradigm breeds can be seeneven within states at the county level When counties view economic devel-opment as a win–lose competition with other counties, we see behavior that

is negative for the larger economic system, that is, the state and the nation.For example, there are anecdotes about an economic development profes-sional in one county, who is showing a prospect sites in his county, driving

to the county line and dropping the prospect off rather than delivering him

to the office of the economic development person in the adjoining county.Competition of this sort destroys cooperation and alliance-building whenthe view is that if the other jurisdiction wins, I lose

The current situation has driven organizations such as the International

The pressure to change is driven by a number of forces IEDC identifiesthe major drivers of the need for change as demographics, climate change,shifting global roles, and technology expansion The NGA lists the majorchallenges facing states as the rise of global competition, structural ineffi-

crunch There appears to be increasing agreement that the current paradigmand strategies for economic development are insufficient to meet the chal-lenges that states and the nation face

How should economic development strategies and processes change?The IEDC report points out some of the implications for current practicebased on its analysis of the challenges Some areas of needed change by eco-nomic development agencies and by individuals include changing practices,changing metrics, changing skills, and changing competition—the need tocompete for talent by improving education and the quality of place TheNGA report identifies three areas in which state-level economic develop-ment strategy change is needed These are: (1) the need to engage and sus-tain private sector involvement; (2) the need to create mechanisms toencourage collaboration among business, academic institutions, andgovernment agencies; and (3) the need to institute a quantitative evaluationsystem—similar to the IEDC call for new metrics

The Job Creation Challenge

The need for a more effective economic development system is alsoobvious when we consider the magnitude of the job creation challenges that

we face This challenge for the United States has been highlighted by the

U.S economy will need to create 21 million new jobs during the decade2011–2020 The authors analyzed six sectors they regarded as the mostpromising for job growth in the economy for this decade The sectorsselected account for 65 percent of the forecasted job growth They arehealth care, business services, leisure and hospitality, construction, manu-facturing, and retail Using the data from these sectors the authors createdthree scenarios for job growth across the sectors—high growth, moderategrowth, and low growth Only in the high-growth scenario could theeconomy create enough jobs to reach full employment by 2020

Even if the economy creates a sufficient number of jobs, the authorspoint out that there will be considerable mismatches between the jobrequirements and the education and skills of the workforce For example,their analysis forecasts a shortage of up to 1.5 million workers with bache-lor’s degrees or higher in 2020 and they estimate that nearly 6 millionAmericans who lack a high school diploma will not have a job They alsopoint out that students who attend college and vocational schools do not

weld-ing, and nurse’s aides in addition to the fields of computer specialists andengineers that other analyses have identified

Finally, the choices made by students regarding courses of study suggestthat the labor-market information system is not providing information tostudents and other workers who may consider retraining that enables them

to make wise and informed choices regarding future career opportunities

As the authors point out, business as usual will not help the U.S economyreach full employment

Need for a New Economic Development Model

The analysis by the McKinsey Global Institute calls for radical changes incurrent practice in order to increase the chance that the U.S economy willreach full employment by 2020 The challenge is multifaceted It willrequire significant increases in job creation The challenge will also requiresignificant changes and realignment in the education and skills of the work-force Since the choice of an education or training program is a decision or a

series of decisions made by individuals, there is a need for much betterinformation to be available to people as they are making career choices.

There is some evidence that the old economic development model is

gover-nors were inaugurated The lingering impact of the 2008 recession and thehigh unemployment rate led them to launch a number of reforms andexperiments to accelerate economic improvement In analyzing these initia-tives the report’s authors identify six trends that have emerged across thestates:

its regions;

talent;

terms of the commercialization of research into patents, new products, and new enterprises;

Many of these ideas are not new But the urgency of the situation seems

to have ignited a search for identifying promising practices and deployingthem more widely across the country

Some of these initiatives do appear to represent new thinking in nomic development and suggest that the new emphasis is evidence of anemerging new paradigm The emphasis on job creation from within thestate appears at least in part to have resulted from research results that show

study in California, for example, examined the period from 1992 through

2006 and found that about 1 percent of the job gains in California resulted

On the other hand, 40.6 percent of new

businesses—and 58.4 percent came from “births”—the creation of newenterprises

Data for the nation as a whole show that for all states 1.9 percent of jobgains resulted from moves from one state to another, 41.6 percent came

gov-ernors to put more emphasis on creating jobs from within the state These

as starting new businesses through entrepreneurship initiatives promotingecosystem growth and the support of incubators and accelerators.

The emerging economic development trend in states is to focus on nomic development from within the state, rather than on the much publi-

headlines, but there is little data to support their effectiveness as job tion tools The job and employment creation success of Texas is not theresult of job raids, but of other policies and quality-of-life issues in

in the state and entrepreneurship Economic development job attractionofficials will point out that there is a difference between “job raiding” (i.e.,

firms considering new investments and new job creation to select anotherinvestment site However, from the perspective of the state that loses theplanned expansion, this may be a distinction without a difference

Another trend that suggests new thinking in terms of economic

within a state with high growth potential For example, Nebraska has oped a partnership with the Gallup organization to identify small to

to improve their entrepreneurial ability in hopes of accelerating business

to encounter the political objections of government favoritism However,

job growth Whether states can design valid ways of predicting which will

be the high-growth companies and whether they can make such targetingpolitically acceptable to citizens remain to be seen But in an environment

of limited resources, this approach appears to be one that merits attention.Another illustration of new thinking is the increased emphasis on organ-izations and services that assist business to grow For many years univer-sities have partnered with their economic development agencies tosupport businesses through entities such as technology extension services,productivity centers, and centers of entrepreneurship Typically, these havebeen relatively low-budget operations that were supported by a mix offunding from public and private sectors that existed to support job creationand business competitiveness

Some of these initiatives also had as their mission to provide practicalapplication experience to students and link businesses with faculty in order

to create collaborative research opportunities for the faculty and business

value for the companies While these programs were generally wellregarded by those businesses that became involved, the programs had lim-ited impact on job creation because they lacked the resources to scale up

to the level that would generate the impact Cost–benefit analyses of theseprograms could demonstrate significant payback of the state’s investment,but the old economic development paradigms did not appreciate theirvalue

This seems to be changing In addition, there are new forms of tance organizations that are more targeted to start-up and high-growthbusinesses The two types of organizations that are evolving are incubatorsand business accelerators Incubators tend to be a place where new busi-nesses can develop They typically provide space, support services, men-toring and networking opportunities, and access to investors Someincubators charge a monthly fee and some trade the use of their servicesfor equity in the new company Some are hybrids that are supported by

entrepreneurs As of 2012, 1,300 incubators were operating in the United

Business accelerators differ from incubators in that they typically offerless time in the program They provide links to funding upon entry and typ-ically take equity positions in the businesses they accept They screenentrants to identify those that will attract venture funding in the near term

so that the accelerators can get a quick return on their investment As aresult they tend to favor seasoned entrepreneurs—often in high-tech indus-tries Acceptance rates into accelerators are similar to acceptance rates intovery selective universities Seed-DB is an emerging database of accelerators

worldwide with 3,712 companies accelerated and 16,129 jobs created Thetotal funding has been $4,835,682,545 or approximately $299,000 per jobcreated

Another aspect of the emerging new paradigm is that states appear to be

the enduring lessons of the quality revolution that swept through U.S nesses from the late 1970s into the 1990s was that it is customers that createjobs, not businesses If customers buy the products and services of an enter-prise, and if they market those products and services through word ofmouth to their contacts, businesses grow As employees gain this under-standing that job security does not come from your employer, but ulti-mately comes from customers, they will be more willing to align theiron-the-job behavior with the requirements of their ultimate customer

busi-It appears from the examples of new initiatives in state government thatthis lesson has made it to statehouses and to leaders of economic develop-ment and workforce development agencies As a result, now that they real-ize existing businesses and new start-ups are the major job creators, it is

need in order to be successful This is also happening at a time when thereare increasing pressures for businesses to act more responsibly in terms ofenvironmental and social performance in addition to economic perfor-

“conver-gence” of goals between the public and private sectors to a greater degreethan we have previously experienced

We still hear much of the antitax, antiregulation rhetoric from the school business community And we still hear from some government offi-

relationship between the sectors However, we also see more businesseswilling to be engaged in public–private partnerships, more businesses-building sustainability initiatives into their business strategies, and moregovernments taking a hard look at how to make their regulatory and taxstructures less burdensome on the business community

How This Book Is Organized

Chapter 2 will examine the role of values in economic development ning and implementation As we examine different approaches to economicdevelopment not only in the United States but also across the world, we seethat as cultures and communities have different values they reflect these val-ues in the strategies they embrace in developing organizations, jobs andcommunities In this chapter we frame the issue of values and economic

to create?” What we find in talking with economic development sionals is that this question is not always asked

profes-A key premise of this book is that the answer to this question by citizenswithin the jurisdiction (state, region, county, or city) is the beginning pointfor a successful economic development strategy When citizens can see thattheir personal values are aligned with the community’s economic develop-ment strategy, the result will be greater citizen ownership and support forthe economic development process Values alignment acts as an economicand employment development accelerator This chapter will describe a jobcreation process that is values based and that stimulates innovation andproductivity in order to accelerate the creation of good jobs

In Chapter 3 we will look at past job crises and identify themes, ful practices, and lessons learned that can have applicability today and inthe future Past jobs crises have included the Great Depression of the1930s, a number of business cycle recessions, and competitive threats inthe 1970s when Japan’s manufacturing success peaked and we saw U.S.companies losing market share and jobs in industry after industry TheUnited States also assisted other nations to rebuild their economies follow-ing major wars Chapter 3 will review these past efforts with a focus on theMarshall Plan to rebuild Europe after World War II and the response to theloss of jobs and market share to Japanese businesses in the late 1980s and1990s.

success-Chapter 4 focuses on examples of changes in economic developmentpractices that are being made at the state level in a number of states, includ-ing Arizona, Colorado, Tennessee, Massachusetts, Mississippi, Maine,Oregon, North Carolina, Michigan, Virginia, and New York It will thenfocus in more detail on changes at the state level in Maryland as a way tolook at state economic development not only at the executive branch level,but also from the legislative branch and higher education perspectives

In Chapters 5 and 6 we will shift the focus from the state to the local leveland examine two economic development success stories Chapter 5 willfocus on Austin, Texas, and Chapter 6 will focus on Dubuque, Iowa Wewill examine these cases in some detail and extract principles that can helpguide our development of a new economic development framework that ispresented in Chapters 7 and 8

Chapter 7 describes the proposed new framework for local communityand economic development Chapter 8 describes the proposed new frame-work for state-level community and economic development—focusing onhow the state should support the local community and economic develop-ment systems

In Chapter 9 the book will conclude with a discussion of the basic ale for transforming community and economic development toward thenew frameworks We present this discussion in the form of a hypotheticaldialogue between the author and an experienced and thoughtful economicdevelopment professional who is a bit skeptical of the new framework

ration-What Type of Economy Do We

We will examine the logic for the process displayed in Figure 2.1

the National Governors Association (NGA) pointed out that:

Productivity drives both prosperity and economic growth Productivity growth (output per worker) is the basis for rising real wages for workers, increasing returns to shareholders and increasing per capita income for a state and the nation Innovation also is important to productivity growth The value of goods and services increases not only as more workers are employed and as investors create more capital, but also because of new tech- nologies and innovation in products, processes and management Increas- ingly, it is innovation-driven productivity growth that is the basis for rising real wages for workers, increasing returns to shareholders, and increasing

If we move upstream through the process in Figure 2.1, we see that ductivity is driven by innovation There are many forms of innovation The

pro-NGA report mentioned three types of innovation: innovation in products,

in processes, and in management practices

Next we must ask, what is the source of innovation? The model pointsout that the behavioral intentions of people drive innovation Whether this

is an inventor in her garage, a scientist or engineer in the laboratory, or afrontline employee on the assembly line, new ideas, which are the source

of innovation, come from people The ideas may be from people acting asindividuals or working in team settings, but innovations stem from thebehaviors of people

Architect, writer, consultant, and educator William McDonough haswritten and spoken widely about the way in which design thinking can ben-efit businesses and society In an article published in the Guardian, McDon-ough discusses the way in which innovation occurs

The most successful companies embrace good design by loudly and clearly stating their positive intentions When a CEO declares that his or her com- pany will improve the water quality of an entire community or build a work- place that will generate more renewable energy than it requires, this statement alone can unleash enthusiasm, creativity and innovation A state-

use and generate only renewable energy” rather than the more commonly

produces far higher levels of innovation and performance than starting the design process with metrics, which tends to blur goals and aspirations with commonplace limits and benchmarks When values and upcycling set the agenda, when—rather than inching forward bit by bit toward doing less harm—companies set purposeful goals and seek continuous improvement

Two authors from Babson College who have studied the factors that

They have defined the key elements that support innovation as falling into

ele-ments are resources, processes, and success The soft eleele-ments are values,

and point out that values impact people’s behaviors, the climate, and howsuccess is defined and measured Of the two sets of factors, they concludethat the hard elements are the most effectively managed, but in terms ofstimulating innovation, the soft elements may offer the greatest potentialfor improving innovation.

From the evidence discussed, we can safely conclude that values arethe foundation for understanding the behavior and behavioral intentionsthat ultimately produce innovation-driven productivity, business success,and job creation Therefore we must begin our exploration of how togrow good jobs with an understanding of values and how values operate

to shape behavior More specifically, we will examine how values pin the behaviors that are important to any effort to accelerate job crea-tion

under-Values do not completely account for behavior Skills, knowledge, ronment, and the like are also key factors But values guide our decisionmaking They exert a significant influence over what skills and knowledgeare acquired Knowledge and skills are required for individuals to converttheir values into action—that is, to live their values

the ideals that give significance to our lives, that are reflected through the

Hall devoted his life’s work to demonstrating that values can be identifiedand measured at both individual and organizational levels His colleagueBenjamin Tonna demonstrated that values can be assessed and tracked at

Hall and Tonna cataloged and defined 125 human values which theyformed into a taxonomy that will be discussed later in this chapter This tax-onomy of values can be considered to be to the science of behavior what theperiodic table of elements is to chemistry These elemental values are thebuilding blocks for behavior analysis and for explaining human decisionmaking

The case for how values impact economic development practice can bemade more concrete by considering a range of situations that presentchoices that are strongly influenced by value preferences Consider the fol-lowing situations:

invest-ment Which business case(s) does he choose to fund?

commun-ity’s needs that can be addressed through funding various charities How are those community needs framed and which are chosen for funding?