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An Introduction to Open Source Economic DevelopmentI-Open

April 2008

The material included in this presentation is copyright by the Institute for Open Economic Networks (I-Open) and Edward F. Morrison. It is distributed under a Creative Commons 2.5 Attribution License.

2

Ed Morrison and the Institute for Open Economic Networks (I-Open) presented this material

to the participants in an Open Source Economic Development workshop at Punderson Lake Park, Ohio from April 23-25.

This material is copyright Ed Morrison and I-Open and distributed under a Creative Commons 3.0 attribution license. That means you are free to modify, copy and use this

material for commercial purposes provided that you attribute it as follows:

Source: Ed Morrison and I-Open Distributed under a Creative Commons 3.0 license.

You can learn more about the Creative Commons license at www.creativecommons.org

http://www.cretivecommons.org

http://www.cretivecommons.org

Agenda

• Wednesday

• Asset Mapping, Appreciative Inquiry and the Strategic Role of Conversations

• Thursday

• Module 1: Understanding the Shift to The Second Curve

• Module 2: Civic Network Mapping

• Civic Values Discussion: Why should we care about civic spaces?

• Module 3: Organizing a Civic Space with Civic Forums

• Module 4: Strategic Doing Workshops: Creating “Hot Spots”

• Tool Set for Strategic Doing

• Workshop: Designing a Strategic Doing Exercise

• Friday

• Module 5: Strategy Mapping, Process Mapping

• Tools: Strategy Maps and Process Maps

• Module 6: Open Source Economic Development and Web 2.0

• Tools: Collaborative Workspaces

• The Incubator: Our Next Steps

3

Module 1: Moving to the Second Curve

4

1

Rest of the

World

Traded

Businesses

Local Businesses

Purchases and paychecks

Your economy

Another

region

Brain Drain and

Purchases

Sales

3

2

1

2

3

Good Money: Increase the volume of

income into the region with competitive

traded businesses

Neutral Money: Increase the velocity

of money circulating in the region with

local businesses to create more jobs

Bad Money: Reduce income leaks

by reducing outside purchases,

workers who move out, and

students who drop out

Economic Development in an Nutshell

Source: Ed Morrison, David Morganthaler

DependencyDrop Outs

The starting point: Economic Development in a Nutshell

Building prosperous economies involves managing three flows of money. Good money flows into an economy when businesses trade with customers outside the region. These traded businesses usually account for about a third on the total employment it in an economy. They pay higher wages, and that provide the income that other businesses, local businesses, circulate.

Local businesses provide much of the character of the community. With a vibrant local business sector, income circulates and employment rises.

Bad money leaks out of the economy when businesses make purchases from outside companies and people leave. Money also leaks from our economy when young people drop out of school.

The fundamentals of economic development have not changed. Communities and regions need to increase the flow of good money, increase the velocity of neutral money, and reduce the flow of bad money.

At the same time, the underlying dynamics of how wealth is created in our economy have shifted dramatically overall last twenty years.

5

Our Grandfather’s Economy generated enormous wealth

We can see this wealth all around us in the libraries, courthouses, symphonies, art museums, great colleges and world-class research universities.

6

What happened to our grandfather’s economy?

In a word, the S-Curve.

The S-Curve describes the natural maturation of markets from birth, growth, maturity and decline.

In our case, the forces of globalization collapsed costs and integrated markets. This process began in the 1960s, and continued to accelerate.

By the early 1980s, Fortune 500 companies were actively establishing global production networks. They were closing down factories in the United States and moving production to lower-cost countries like Mexico and Singapore.

The change was deeper than simply a search for low costs. Instead, industrial era business models were beginning to fall apart.

These models were based on minimizing costs through vertical integration and long, stable production runs. In the U.S. auto these models -- pioneered by Ford and GM -- led to market dominance.

In Japan, automakers organized production differently.

They focused on flatter organization, networks of suppliers, more flexible production, simpler product design, faster design-build cycles, and closer connections to their web of suppliers.

In a word, networked production.

Time

Growth

7

The Internet explodes...business models shift

In late 1994, the first version of the Netscape web browser launched.

Version 1.1, in March 1995, introduced HTML tables, a key feature for page layouts.

The result...The Internet exploded.

The Internet is our first interactive mass medium. We’re not sure what all that entails, but by enabling interactivity, the Internet is fundamentally different from other mass media.

More to our point, the Internet accelerated the demise of industrial-era business models -- out-sourcing accelerated -- while at the same time accelerating the shift to new business models based on networks.

Economists and the business press often misunderstood this shift or were too superficial in their analysis. They viewed the shift as one of moving from manufacturing to services.

The real shift is one of business models. From business models based on command and control hierarchies to business models based on more open, porous networks and collaboration. The winning organization of the future will look more like a collection of

jazz ensembles than a symphony orchestra...Leaders will be in the flow, not remote. Teamwork and cooperation will increase at the expense of individual competition. Cooperative support will moderate anxiety and encourage risk taking. Talented people will be attracted by the ability to see and influence the whole process, to learn from other knowledgeable people, and by the opportunity to create and grow.

John Clarkson, Boston Consulting Group, Jazz Versus Symphony (1990)

The defining characteristic of the Web is universal connectivity based on information standards. This rich connectivity blows up the need for closed information channels. It weakens the need for vertical or horizontal integration of any kind.

Philip B. Evans and Thomas S. Wurster, Boston Consulting Group, “From 'Clicks and Mortar' to

'Clicks and Bricks'” (2000)

8

Moving to the Second Curve

We are moving to a Second Curve...a new form of capitalism is emerging, based on networks.

We are now having to rethink all of the First Curve assumptions: about how work should be organized; about how intellectual property should be protected; about how anti-trust laws should be enforced; about how financial markets should be regulated.

At the same time that the Second Curve economy emerges, the First Curve economy will not disappear. But momentum and growth favor businesses on the Second Curve.

The exciting opportunity comes in building Second Curve businesses. Why? Because they operate with networks...on a dynamic of increasing returns.

Time

Growth

First Curve: Wealth driven by vertical business models

Second Curve: Wealth driven by network business models

Managerial Capitalism

Network Capitalism

We are here

Every few hundred years in Western history, there occurs a sharp transformation.

Peter Drucker, The New Realities (1989)

Economies are not just metaphorically like open systems; they literally and physically are a member of the universal class of open systems.

Eric Beinhocker, The Origin of Wealth (2006)

Do not go where the path may lead; go instead where there is no path and leave a trail.

Ralph Waldo Emerson

9

Increasing returns on the Second Curve

Knowledge drives wealth on the Second Curve. To accelerate wealth creation on the Second Curve, we need to accelerate innovation and entrepreneurship.

This new mandate calls for new approaches to Economic Development. Here is the exciting shift: wall businesses on the First Curve operate in a world of diminishing returns, businesses on the Second Curve operate in world of increasing returns.

Network economics presents us with the remarkable opportunity to leverage increasing returns. The communities and regions that figure out how to support innovation and entrepreneurship on the Second Curve will prosper.

Our challenge is to connect First Curve assets to our Second Curve opportunities.

Mechanisms of increasing returns exist alongside those of diminishing returns in all industries. ...The two worlds have different economics. They differ in behavior, style, and culture. They call for different management techniques, strategies, and codes of government regulation.

They call for different understandings.

Brian Arthur, “Increasing Returns and the New World of Business”, Harvard

Business Review, (1996)

Moving from the First Curve to the Second Curve involves

"linking and leveraging" First Curve assets to Second Curve

opportunities

Source: Ed Morrison

Low

Low

High

High

Prosperity

Trust and

collaboration

Opport

unity

Zone

Inflection Point

Returns on the Second Curve are driven by network

economics...the Metcalfe Curve

10

Our biggest challenge is we think we have time

Huge chunks of our First Curve economy are still at risk.

In 1993, I visited General Motor’s first Chinese joint venture. It was a failure. GM was attempting to assemble light duty pick-up trucks from knock down kits.

Ten years later, I was driving around in Shanghai in the backseat of a Shanghai Buick. This automobile had the fit and finish of American luxury car.

Within five years, the Chinese will begin exporting automobiles from China to the US.

The pressure to move off the First Curve will continue relentlessly.

11

Module 2: Understanding Civic Networks

12

Economic development and entrepreneurship takes place in the Civic Space

The civic space exists outside the four walls of any one organization. It is where economic development projects are conceived and executed. It is also in the civic space that entrepreneurs must gain access to the resources they do not control.

The challenge is, of course, to coordinate action in the civic space.

The lower diagram illustrates a partial map of the economic development landscape in Charleston, South Carolina. The dotted line marks the boundary of the influence of the Chamber of Commerce. The chamber influence directly all of the organizations on the right side of the boundary.

At the same time, a whole range of other economic development and entrepreneurial support organizations operate outside the chamber’s orbit.

Within the civic space, nobody can tell anybody else what to do. The mayor cannot tell the chamber what to do. The chamber cannot tell a school board or superintendent what to do.

The central challenge that most communities face is not about vision; it is about coherence and alignment.

Coherence and alignment call for continuous adjustment and redefinition. They call for civic processes that continuously balance open participation with leadership guidance.

The Civic Space

Source: Ed Morrison

The civic space is fragmented and confusing

Alliance

Mt. Pleasant

AlliancePartnership

County ED

Digital Corridor

Chamber

Chamber

Chamber

County

County

County$

$

$

BusinessInvestors

$

County ED

County ED

WorkforceInvestment

Board

ThinkTec

Low Country

Mfg.

Port

MUSC

Defense Industries

MarineSciences

Other Local and Chamber ED

Activities

Tourism/ CVB

Education Foundation

Environmental Groups

COG

Base Closure

Higher Ed consortium

Low Country Graduate

Center

BenchmarkCollaborative

Charleston

N. Charleston

World Trade Center

State Legislators

The partial civic space for economic development

in Charleston, SC is highly fragmented

13

Open Source Economic Development: Background

To understand how the new practice of economic development is evolving, we need first to explore the dynamics of networks. In recent years, the advance of complexity science and new theories of the role of knowledge in economic growth have shifted our understanding of how regional economies operate. We’re still very early in the process. Open Source Economic Development is a first model to develop frameworks, disciplines and tools that community leaders can use to build the civic processes needed to strengthen their economy.

Civic Network Mapping: Some Key Points

• Community and regional economies consist of networks embedded in other networks.

• Networks consist of strong and weak ties. Strong ties enable us to get projects done. Weak ties are critical for learning and ability to innovate.

• A healthy network consists of a strong core with porous boundaries. A strong core enables the network to get things done. Within this strong core, some elements of hierarchy the often emerge, as people organize themselves into teams to manage specific projects.

• A porous boundary is important to enable new information the flow into the network. Research shown that week ties on the boundary of the network are critically important to innovation. Innovation takes place on the edges of networks.

• With in a network, people play different roles. The terms used to define these roles are evolving.

• Building a competitive community or region involves building networks in the civic space. The civic space exists outside the four walls of any one organization. Most communities have no organized practices to develop these civic networks.

• Strengthening a network involves strengthening the bonds of trust within the network. Trust emerges when people learn to work together in mutually beneficial ways, share information openly, and keep their commitments to each other. We strengthen civic trust by strengthening habits of “Strategic Doing”. We can also strengthen our civic networks by connecting new people to the network. We do that by encouraging people to “close a triangle”.

• Over the long-term, communities and regions with thicker civic networks will be more competitive. They will learn faster, spot opportunities faster, and align their resources faster.

• Civic network analysis provides of powerful tool to make a group of whom invisible civic networks visible. Maps enable us to see how we can strengthen and leverage these civic networks.

14

Knowledge Person;

Hub

Boundary Spanner

Knowledge Person;

Hub; Influencer

Peripheral

Person

Information

Broker

Knowledge

Person

Roles in a Network

People play differ roles in a network.

A Knowledge Person represents a resource to the network. A person in the hub position forms the center the network and often provides inspiration and direction.

An Information Broker connects to sources of knowledge with in the network. It boundaries banner connects to networks together. People on the periphery can either be isolated or represent an access point to another network.

These roles within the network are not assigned. They emerge from people’s assets and behaviors.

The concept of the emergence places an important role in explaining why networks are important. Strengths emerge from the network that do not exist in any one individual within the network.

Peripheral

Boundary Spanner

Hub

Roles in a Network

Here are three networks that are connected by boundaries spanners.

Tip: Inspiration.com has inexpensive but powerful mind-mapping software

Social Network Mapof the

Southwest Regional Leadership ForumUniversity of Evansville

March 17, 2006

Presented by the Indiana Humaniteis Council

This is a social network map from 14 counties in North

Central Indiana.

This is the social network map from three counties around

Evansville, Indiana.

Networks in two regions in Indiana

Here are two network maps from regions in Indiana. Both of these maps come from regional leadership forums,

The map one on the left comes from North Central Indiana. With in this region there are no strong metropolitan areas, only Lafayette and Kokomo. The region lacks a strong identity.

On the right, you see a network map of Evansville. In this map you can see a core and periphery forming. Contrast the map on the left where it is very difficult to identify a core.

Map your network

Begin to map your network. Next, think about how you could strengthen your network by closing a triangle.

Close a triangle: E-mail introductions

Closing a triangle strengthens a network. Make a list of one or more e-mail introductions that have come to mind. You can start meetings with this challenge: 1) exchange two business cards with a short introduction; 2) close one triangle; 3) schedule one longer lunch.

INTRODUCE... TO... BECAUSE...

1

2

3

“The network economy rewards the plentitude of open systems more than the scarcity of closed systems,”

Kevin Kelly, New Rules for the New Economy

“The only real voyage of discovery consists not in seeing new landscapes, but in having new eyes, in seeing the universe with the eyes of another, of hundreds of others, in seeing the hundreds of universes that each of them sees.”

Marcel Proust

...Think of the small as large and the few as many...accomplish the great task by a series of small acts...

Tao Te Ching, Chapter 63

How many times it thundered before Franklin took the hint! How many apples fell on Newton's head before he took the hint! Nature is always hinting at us. It hints over and over again. And suddenly we take the hint.

Robert Frost

Civic Values Discussion: Why should we care about civility and civic spaces?

What is civility?

Is civility strategic?

How does a community improve civility?

What does the example of Southwest Airlines teach us about civility?

Consider these notes from P.M. Forni, Author of Choosing Civility:

• “Civility allows us to connect successfully with others.”

• “Civitas is the same word from which civilization comes. The age old assumption behind civility is that life in the city has a civilizing effect. The city is where we enlighten our intellect and refine our social skills. And as we are shaped by the city, we learn to give of ourselves for the sake of the city. Although we can describe the civil as courteous, polite, and well mannered, etymology reminds us that we are also supposed to be good citizens and good neighbors.”

• “As a society we have done a good job of encouraging self-esteem, but not as good a job teaching self-control. We all need self-esteem. Self-esteem is good, it keeps us sane, it is an immune system for our souls. However, when we're too focused on raising self-esteem, we swell the ranks of the self-absorbed.”

And this one from E.J. Dionne, Why Americans Hate Politics:

“Our current political dialogue fails us and leads us to hate politics because it insists on stifling yes/no, either/or approaches that ignore the elements that must come together to create a successful and democratic civic culture. Democracy is built on constant struggle among competing goods, not on an absolute certainty about which goods are paramount.”

20

Seven Principles: Manifesto for a New Pittsburgh

1. Connect and reconnect with the virtual Pittsburgh.

Pittsburgh must replicate its famous bridges, by building metaphoric bridges to other countries, states, companies, and groups and above all to the diaspora of people and institutions with historic ties to Western Pennsylvania. We must build a global Pittsburgh.

2. Bring new resources to the region.

Pittsburgh’s diaspora is flush with social capital, which is on full display whenever and wherever the Pittsburgh Steelers play. Pittsburgh needs to use its metaphoric bridges to broaden the sources of that capital and to convey it back to Western Pennsylvania in the form of intellectual and economic capital. The diaspora can contribute time, money, and ideas to the rebirth of the region.

3. Energize Pittsburgh’s culture and community.

Pittsburgh’s position as a world leader in science, art, and culture should get extended across populations both young and old and across virtual and material media. Building the global Pittsburgh means extending excellence in computing, music, and sport and embracing the economic and social value of global community in domains beyond Pittsburgh's traditional strengths.

4. Listen for new voices.

For too long, Pittsburgh has heard the same voices in public political, cultural, and economic conversations. As part of reaching out to the Pittsburgh diaspora, Pittsburgh must enfranchise new and marginalized voices.

5. Change the face of Pittsburgh.

With new people come new opportunities. East Asian, South Asian, and Latino populations, among many others, are bringing much needed energy and human and financial capital to cities all over the United States. Building bridges to the Pittsburgh diaspora means reaching out to a 21st century global Pittsburgh of many colors, nationalities and ethnicities.

6. Build on the best of Pittsburgh’s past.

A connected Pittsburgh brings change, and change and novelty must respect the strengths of the old. Pittsburgh has rich heritage of industrial and human success to be blended with the capital contributed by the diaspora.

7. Recognize the geopolitics of the neighborhood.

The traditional localism of Pittsburgh politics should give way to an accommodation of that localism in the context of 21st century globalization. The global Pittsburgh should exist at many scales, from the region to the city to the neighborhood.22

Why is moving to the Second Curve so difficult in some places?

Moving a community or region toward the Second Curve is not of linear process.

Regions that once appeared dormant, suddenly wake up and undertake the substantial changes needed to build an economy based on innovation and entrepreneurship. Eastern Tennessee is a good example. So are Peoria and Ft. Wayne.

On the other hand, some regions continue to follow old patterns and obsolete ways.

As economic performance lags, or as plants close, people from the outside can recognize the need for change.

Gradually, in many communities, a critical mass of civic entrepreneurs forms. They start building new arrangements and exploring new pathways.

But vested interests slow down the transformation. They are entrenched in the defense of an old system. They often feel threatened by new ideas, new approaches, new collaborations.

In the short-run, moving to the Second Curve is an uphill struggle.

The transformation turns on civic conversations and public opinion. Once public opinion shifts and public perceptions change, the vested interests weaken and the transformation accelerates. Political leadership follows public opinion.

23

Our challenge: Shifting our thinking to the new ways wealth is generated

The communities that can make the shift to new ways of generating wealth through innovation and entrepreneurship will prosper.

Those that don’t will decline.

The problem is that the decline cycle, once started, is hard to reverse.

The opportunity is that the prosperous cycle is relatively easy to start...and it can start anywhere.

Take the case of Fairfield, Iowa, and entrepreneurial hot spot. Located sixty miles from the nearest Interstate, Fairfield now has more restaurants per capita than San Francisco.

The primary predictor of economic development is the nature of the conversations taking place in the community and region.

A prosperous cycle of economic development

accelerates with civic collaboration

Entrepreneurial

activity

increases

Tax base grows

Civic amenities

and infrastructure

improves

Lower taxes

Well-paid jobs

increase

Quality of life

improves

Skilled labor

supply grows

New firms emerge,

established firms

grow

Build a quality,

connected place

Build brainpower

with 21st century

work skills

Build innovation

and entrepreneur

networks

Collaborative

Civic Environment

Skilled people

move in

Source: Ed Morrison

A downward cycle of economic development

accelerates with a deteriorating civic environment

Entrepreneurial

activity

declines

Tax base erodes

Civic amenities and

infrastructure

deteriorate

Higher taxesWell-paid jobs

decline

Quality of life

deteriorates

Skilled labor

supply shrinks

Businesses

shrink or leave,

start-ups do

not arise

Business base

gets weakerDeteriorating Civic

Environment

Skilled people

move out

Brain drain as

young people

drop out and

move out Place develops a

bad reputation

Source: Ed Morrison

Positive

conversations

Negative

conversations

Years

Prosperity

Index

Consequences of different conversations

about economic development

Today

Source: Ed Morrison

24

Moving to the Second Curve requires new approaches to strategic thinking

Imposing old models of strategic planning on an increasingly networked economy leads to frustration. The chief reason these strategies fail is lack of alignment. It is no longer possible to impose a vision from above.

Ultimately, moving to the Second Curve requires fundamentally new ways to thinking and acting....

• A new commitment to civility and collaboration

• A new commitment to transparency and open information sharing

• A new commitment to continuously learning -- finding out “what works -- from experiments and metrics

Traditional approaches to

economic development strategy:

Strategic Planning

Open Source approaches to

economic development strategy:

Strategic Doing

Strong emphasis on Vision and Control

Strong emphasis on Coherence and Alignment

25

Module 3: Guiding the Civic Space with Civic Forums:Creating “Hot Spots” for Innovation and Entrepreneurship

26

Our theory of change on the Second Curve: Accelerate Open Innovation

Innovation drives productivity and prosperity. In order for innovation to thrive on the Second Curve, we need to build and promote open networks of collaboration. Through these networks, entrepreneurs and high growth companies find their resources that they need to grow.

These networks need a physical presence. They cannot simply be virtual. It is not enough to establishing web portal to support entrepreneurs.

Innovation Productivity Prosperity

Accelerating cycle

BrainpowerInnovation networksQuality, connected placesEffective brandingCollaborative leadership

Source: Ed Morrison

The challenge is to build and support

productive, focused networks

Collaboration

27

Civic forums provide the venue to define new opportunities

and practice new civic behaviors

Source: Nead Brand Partners

28

We are using civic forums to identify the civic entrepreneurs in a region...they will drive the transformations

Civic forums themselves represent an innovation, a new way of “thinking together”. We need to build these new habits by modeling new behavior. Colleges and universities have a role to play in creating these “safe, neutral” civic spaces. It is important to understand that civic forums represent a process, not an event.

Civic forums themselves represent an innovation, a new way of “thinking together”.

The people attracted to these forms tend to be the “civic entrepreneurs”. These people, in turn, recruit “willing volunteers” to get stuff done. In sum, civic forums represent a key strategy for understanding and building civic networks. You can think of this process as a business person, using the product life cycle. Or, you can think of this process from a political perspective of “securing your base”.

29

Civic Entrepreneurs

Core Team

Initiative

Team

Leaders

Willing

Volunteers,

Pragmatists

Passive

skeptics

The "Chasm"

Sore

heads

Percent of regional citizens

Circles of Engagement: Move from the High Ground

Committed

Core

Engaged

Volunteers

Supportive

Citizens

A Few Soreheads

Source: Ed Morrison

Civic forums start the practice of developing innovation “hot spots”...places where innovation happens and entrepreneurs connect

Hot spots share several important characteristics:

1. They model the behavior and build the habits of relentless connectivity.

2. They encourage boundary spanning by asking compelling questions, linking people to outside resources, and keeping boundaries open.

3. They translate ideas into action quickly and encourage experimentation.

4. They help entrepreneurs shape an “igniting purpose” for their business; they focus on transformation, not marginal improvements.

Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.

Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and apply the principles of successful innovation.

Peter Drucker, Innovation and Entrepreneurship

30

Use civic forums to begin mapping assets and networks

Civic forums provide a way to start mapping networks. These networks grow as you continue holding regular forums.

Use Inspiration (www.inspiration.com) to start. It’s an easy and low cost mind mapping tool.

As you develop, experiment with other mapping software. We use InFlow. (www.orgnet.com)

A typical Forum schedule

6:00 – 6:15 P.M. Presenter & Audience Introductions

6:15 - 7:00 P.M. Presentation of new information

7:00 – 7:45 P.M. Discussion

7:45 – 8:00 P.M. Wrap Up & Next Steps

Typical Forum Topics:

What would we look like as global leader in digital media? What’s our next step?

What is our opportunity in biofuels?

How do we leverage education and health care (EDS

and MEDS)?

What are the new developments in nanotechnology in our region? How do they connect to STEM education?

31

http://www.inspiration.com

http://www.inspiration.com

http://www.orgnet.com

http://www.orgnet.com

Network hubs use forums to build their networks

Networks begin to form as in-person events establish strong connections among different people. Each of these nodes and connections strengthens the “network capital” in the network. They increase the speed entrepreneurs and innovators need to gain access to the resources they need.

Stage 4Stage 3Stage 2Stage 1

Anchor

Supporting networksbegin to form with public and private

support

Networks typically

start from an anchor

conveynor

Networks continue to form

by attractingfirms and brainpower

Network continues to evolve with split-offs

and outside investment

Time

Number of participants

32

Module 4: Strategic Doing Workshops:Understanding Strategies that “Link, Leverage and Align”

33

To move on to the Second Curve, communities and regions need to align networks in five areas:

• Building brainpower with 21st century skills

• Converting brainpower to wealth through entrepreneurship networks

• Developing quality, connected places (innovation “hot spots”)

• Promoting a brand and a buzz

• Strengthening civic habits of collaboration.

Civic forums represent the first step that a community or region can take to begin this process.

You can use this model to map and align your strategies.

34

Brainpower21 Century Talent

InnovationEntrepreneurship

BrandingStories

Quality, Connected

Places

CivicCollaboration

Innovative Businesses

Cre

ati

ve

Pe

op

le

Dyn

am

ic C

luste

rs

Hot Spots

Our theory of change on the Second Curve: Accelerate Open Innovation

Innovation drives productivity and prosperity. In order for innovation to thrive on the Second Curve, we need to build and promote open networks of collaboration. Through these networks, entrepreneurs and high growth companies find their resources that they need to grow.

These networks need a physical presence. They cannot simply be virtual. It is not enough to establishing web portal to support entrepreneurs.

Innovation Productivity Prosperity

Accelerating cycle

BrainpowerInnovation networksQuality, connected placesEffective brandingCollaborative leadership

Source: Ed Morrison

The challenge is to build and support

productive, focused networks

Collaboration

35

The challenge is to continue building the open networks that accelerate innovation.

By continuously focusing network building with the practical framework of “strategic doing”, we are creating new networks and focusing them on strategic initiatives and critical next steps.

This approach provides the roadmap for many of the transformations now taking place in the Wired regions (Workforce Innovation in Regional Economic Development)

36

27Source: Ed Morrison

This model incorporates different perspectives on what makes community and regional economies competitive.

Civic forums help communities and regions explore these different perspectives.

37

Collaboration

Open Source Economic Development

incorporates different perspectives



BrandingStories

Quality, Connected

Places

CivicCollaboration


Cre

ati

ve

Pe

op

le

Dyn

am

ic C

luste

rs

Hot Spots

Managing networks requires “economic gardening”, an organic management model

As forums take hold, new networks will form. Alignment and coherence represents the most difficult challenge for leadership. By keeping information open, the networks begin to self-organize. The biggest challenge is moving people to share information instead of protecting boundaries.

Managing forums is like gardening: seeding, feeding and weeding. It’s an organic management model.

“Seeding” means planing the seeds for new networks and connections.

“Feeding” means supporting the network until it gains self-sufficiency.

“Weeding” means closing down efforts that do not appear to be growing.

A dynamic regional innovation economy will

have a range of different communities

connected some connected to each other but

all connected to a regional forum

Brainpower Innovation

BrandingQuality, Connected

Places

Collaboration

38

Accelerating the formation of trusted networks: The civic discipline of Strategic Doing

Forums are not simply meetings. If they are to create value, they must be focused.

The discipline of Strategic Doing helps keep forums and the emerging networks organized and focused.

Strategic Doing is a discipline, a habit of guiding conversations to 1) generate ideas and 2) translate these ideas into action.

So, for example, one forum could be devoted to the first step...What could we do together? A subsequent forum focuses on choosing a strategic priority. A third, could focus on launching specific initiatives. While a final forum could explore results and measure what we have learned.

In sum, the forums provide the opportunity for guided conversations to make sense of new opportunities.

Find

Launch

FocusLearn

Evaluations

Action Plans

Insights

Initiatives

Develop ideas about what we can do

together

Choose what we will do

Identify and align resources to

specific initiatives

Execute and measure results

39

ExampleStrategic Doing Pack

Youngstown

Explore

Align

FocusExecute

Evaluations

Action Plans

Insights

Initiatives


together

Choose what to

do




The Strategic Doing cycle

41

Explore

Align

FocusExecute

Evaluations

Action Plans

Insights

Initiatives


together

Choose what to

do





Exercise 1

Exercise 2Exercise 3

41

Strategic Outcomefor Youngstown

Describe the outcome in three years

Strategic Collaborations Describe at least three strategic partners that can collaborate to accomplish this

outcome (list more on the back)

With our help, we envision Youngstown will ....

1

2

3

4

5

Workshop Exercise 1:Explore

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Strategic Outcomes Strategic Outcomes describe a desired state in the future. Descriptions of the desired state should include the idea of stretch, measurable goals. What will Indiana Internships look like, feel like in 3 years? What will people be doing? How will people be connecting? How will Youngstown transform?

“An innovation hot spot” is not as good a strategic outcome as “an innovation hub between Pittsburgh and Cleveland, a pivot point on the innovation corridor.”

Strategic Collaborations

Strategic Collaboration describes the type of partnerships we need to achieve our Strategic Outcomes. More specific descriptions will provide clarity to “who should be at the table”.

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Explore

Align

FocusExecute

Evaluations

Action Plans

Insights

Initiatives


together

Choose what to

do





Exercise 1


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Strategic Initiative A for Youngstown

Initiative A SMART GoalsHow should we measure our progress? How

will we know we will be successful?

To achieve our strategic outcomes, we will (do what?)...

1

2

3

4

5

Workshop Exercise 2:Focus

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Strategic Initiative B for Youngstown

Initiative B SMART GoalsHow should we measure our progress? How

will we know we will be successful?

To achieve our strategic outcomes, we will (do what?)...

1

2

3

4

5

Workshop Exercise 2:Focus

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Strategic Activities and Initiatives

Strategic Outcomes are just words until we describe what we will actually do to achieve our outcomes. Strategic activities and initiatives (or projects) describe what we will do together.

We still need to be more specific though. We need to mark the path forward with some SMART goals -- or road markers.

SMART Goals SMART Goals are simple, measurable, aggressive, relevant and time sensitive. They are milestones to mark our path.

So a SMART Goal might be: By 2010, we will increase the number of companies graduating from the Youngstown Business incubator by....

In this exercise, focus on what we need to measure to keep us focused on our path ahead.

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Explore

Align

FocusExecute

Evaluations

Action Plans

Insights

Initiatives


together

Choose what to

do





Exercise 1


48

Initiative:______________Workshop Exercise 3:Align

Our Strategic Outcome:

Time frame What Who

In the next 6 months

In the next 3 months

In the next 30 days

Next week

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Module 5: Strategy Maps, Process Maps

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Zone (consists of)

Anchor2+ Founding Partners

Education/R&D

• Must have initial resources (people & money for county match) to start a zone

• Must provide the leadership and drive in place to make it happen

• Must provide “brainpower” plan and actions to link students to zone businesses

1+ Hot Spot and 1 Business Network

• Where goal-directed collaborations happen

• Location for anchoring physical zone development

Hot Spot(s) Business Network(s)

• For providing supporting services to the zone

PHASE 1• Must map proposed

zone network• Formalize a community

of practice (charter)• Designate 1 or more Hot

Spots• Develop business case

for the zone, including budget and basic incentive pack

• A package of services and incentives unique to each zone that will attract employers and entrepreneurs

• Each “pack” must contain for-profit (through the business network) and government contributions (e.g. county concierge service, tax, permitting, regulatory relief)

Zone Incentive Pack (ZIP)Incentive Pack

PHASE 2• County provides

matching dollars and designates Hot Spots (logo for branding?)

• Growing the community to build out business network

• Formalize incentive pack• Develop physical

development plan

PHASE 3• County provides

matching dollars and designates Zone (logo for branding?)

• Functioning incentive pack, business network, and government services

• Physical development underway

that collaborate to define…

Through which the founding partners define a…

Minimum Requirements

Anchor Partners

agreement tosupport, map and share

develop a brainpower plan and

zone incentive packcreate a business

development network

to support businesses in the hot spot

to support businesses in the hot spot

Anchor Partners designate one or more hot spots

Source: Ed Morrison

How can we use public economic development incentives to encourage open innovation “hot spots”?We developed Cuyahoga Innovation Zones as a first effort to re-align local economic development incentives to focus on what matters to prosperity on the 2d Curve.

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Open networks will emerge in dynamic regional economies. Over time, networks will form on their own, The challenge comes in keeping these networks connected and aligned.

HealthyBrainpower and

World Class Skills

Entrepreneur and

Innovation Networks

Insightful Stories and Effective

Branding

Infrastructure for Quality,Connected

Places

Civic Collaboration


Healthy, Creative Places

Healthy, CreativePeople

Dynamic Clusters

Collaboration

Open Source Economic Development

incorporates different perspectives

Region

Cluster

County

Neighborhood

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration




Dynamic Clusters

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration




Dynamic Clusters

This model works on different geographic levels

Source: Ed Morrison



BrandingStories

Quality, Connected

Places

CivicCollaboration


Cre

ati

ve

Pe

op

le

Dyn

am

ic C

luste

rs

Hot Spots



BrandingStories

Quality, Connected

Places

CivicCollaboration


Cre

ati

ve

Pe

op

le

Dyn

am

ic C

luste

rs

Hot Spots



BrandingStories

Quality, Connected

Places

CivicCollaboration


Cre

ati

ve

Pe

op

le

Dyn

am

ic C

luste

rs

Hot Spots

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A strategy “base map” can help keep networks organized and alignedBecause this map incorporates different perspectives and operates on different levels, it is useful for promoting alignment.

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Open networks can organize around the base map. This visual representation helps people “see” their network and how it relates to others.

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Brainpower


54







54






Quality, Connected Places


54






BrandingQuality, Connected Places


54






BrandingQuality, Connected Places

Collaboration


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Strategy Maps help us simplify strategy

They focus on on 1) keeping track of who does what; 2) what we want to accomplish; and 3) how much we are investing.

Brainpower

Quality, Connected Places Marketing and Branding

Innovation and Entrepreneurship

Increase pre-school attendanceby 1,500

Reduce number of children reading below grade level in the third grade by 2,000

Reduce dropouts by 500per year

Increase the number of regional planning officials trained in sustainable growthconcepts by 50 per year

Increase the penetration of broadband to 75% of regional households by 2010

Increase the number of high school students takingentrepreneurship courses by 300 per year

Increase the number of technology-based start-upsby 20 per year

Develop 50 qualified investment leads per year by 2010

Increase installed investment in wind energy systemsto $25 million by 2008

Collaboration

Brainpower


Innovation

and Entrepreneurship

Private investment: $125,000/yr

Private investment: $0/yr



Collaboration

Brainpower


Innovation and Entrepreneurship

Collaboration

Moving to Second Curve thinking means changing the way we think about civic process

The common framework involves thinking of a process as either “top down” or “bottom up”. There’s only one problem. There is no top or bottom to a network.

In network thinking, we need to focus on building networks with tight cores and porous boundaries. We need to encourage both leadership direction and open participation.

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Leadership DirectionDecision

Low High

Public ParticipationDeliberation

Low

High

Apathy

Street

politics

Effective Strategies

Back room politics

Effective strategies require both

open participation and leadership direction

Source: Ed Morrison

We can measure progress on these two dimensions

We are developing tools to help communities reflect on how well they encourage both open participation and leadership direction.

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0

10

5

Attributes of High Effectiveness

Attributes of Low Effectiveness

0

10

5

Attributes of High Effectiveness

Attributes of Low Effectiveness

Civic LeadershipDecision

Civic ParticipationDeliberation

Inspires and energizes participationCommitted to honestyActions are consistent with wordsDemonstrates fairness and compassion

Focuses on personal agendasHides relevant informationSeeks to control agendasUnwilling to collaborate

Collaborative networks form easilyCivic entrepreneurs are supportedAttitudes of learning dominateDiversity is welcomed

Meetings happen but nothing gets doneHidden agendas distort deliberations Political manipulations replace dialogueSmall power groups seek to dominate

Measuring Civic Leadership and Civic Participation

Total

1 2 4

We are willing to

experiment with new

collaborations

3 5

3We trust each other across

county lines1 52 4

2 5431

We commonly consider

issues from a regional point

of view

Total

5

We do a good job

communicating with each

other across organizatinal

and county lines

421 3

1 5

We have a willingness to

listen to different points of

view

3 42

2 5We have a habit of sharing

information41 3

532 41

Our civic leaders have the

skills to collaborate

regionally

4

More people are interested

in regional collaboration

than a year ago

51 32

The political and social

climate in our region is

good for new collaboration

32 51 4

21 5Our region has a history of

working together43

Strongly

disagree

Somewhat

agree

Somewhat

agree

Not

sure

Somewhat

disagree

We are using these tools also to evaluate leadership’s openness to innovation

Leaders set the tone for a region. If they are willing and able to encourage collaboration, they are modeling the behavior that others follow.

Leadership direction encourages new ideas but also strengthens on a region’s focus on the handful of ideas that are likely to be truyly transformative.

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Total

1 2 4Collaborations among

businesses to innovate3 5

3Collaborations among local

governments1 52 4

2 5431The development of

entrepreneurship networks

Total

5Innovations in health care 421 3

1 5Collaborations among

colleges and universities3 42

2 5

Business development

collaborations between

colleges and universities

and businesses

41 3

532 41Joint tourism development

and marketing

4Collaborations among

downtown merchants51 32

Training collaborations

between schools and

businesses

32 51 4

21 5Collaborations among K-12

schools43

Strongly

disagreeOur region encourages....

Stongly

agree

Somewhat

agree

Not

sure

Somewhat

disagree

Phase 1 Phase 2 Phase 3 Phase 4

Balancing open participation and leadership direction is a continuous process

The practice of strategic doing...used in the context of a meeting or a longer strategy process...represents a discipline to balance open participation and leadership direction..

You can also envision your process as a process of encouraging both divergent and convergent thinking.

The critical step comes at the end. People have a clear idea, as they disperse, of their Next Steps.

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Leadership directionOpen parti

cipatio

n

Innovation requires both open participation and

leadership direction

Dialogue Decision

CollaborationSource: Ed Morrison

Process Maps also help us simplify

We are drawing process maps to help guide the development of continuing alignment and consensus. The idea is to use larger gatherings or strategic doing workshops to report on progress, refine strategic outcomes and set new action plans. The map below represents a base map to start the process of design.

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Source: Ed Morrison

Regions are moving toward civic processes

that focus on Strategic Doing

Here is the example of a simple process map

We used this map to realign the chamber of commerce in Lexington, KY.

Chambers of commerce are not well organized to promote open innovation. Most are hierarchical organizations with large boards. Power resides in the staff and a handful of board members.

Because they do not move fast, the biggest risk facing chambers toady is irrelevance.

We confronted many of these issues and more as we sought to redesign CommerceLexington.

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Staff

Workshop

Board

Workshop

Combined

Workshop

Alpha Draft Beta Draft Final Draft

January

2006

July

2005

InterviewsInternet

Interview

June

2006

Implementation

Begins

Process maps need clear explanations of “You are here”

We all get lost. This is particularly true in economic development in which there are no defined processes. Use process maps to keep people aligned.

We used this process map in Cuyahoga County to keep an advisory group focused.

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CuyahogaNext Advisors

AdvisorsDesign Team

ClustersDesign Team

InnovationZonesDesign Team

Consulting Team

Design Process for March 28 Meeting

of CuyahogaNext Advisors

CuyahogaNext Advisors

1

2

3 4

1. Our group will divide into three teams to address the key issues on three initiatives: CuyahogaNext Advisors, North

Coast Clusters, and Innovation Zones.

2. The working teams will each focus on their key issues and record their decisions for the consulting team.

3. The consulting team will distill these decisions in the form of strategic doing handbooks for each initiative. These handbooks

will guide the launch of the three initiatives and establish investment guidelines based on objective criteria.

4. Advisors will review, amend and adopt the handbooks. From time to time, the Advisors will amend the handbooks. Each

year, the Advisors will use the handbooks to guide their budget recommendations to the County.

Translating a process into a strategy document involves telling an evolving story of a community or region

An effective strategy document serves two purposes: 1) it tells a story of the future; and 2) it provides a framework to maintain focus. A good strategy process leads to clear outcomes.

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Leadership and sponsorship

Compelling agenda

Success metrics

Effective involvement with

key constituencies

Engaging forums and

communicationsResources and accountability

StrategicPurpose or

Mission

Strategic Outcomes or

Vision

Strategic Activities

Characteristics and Metrics

Strategic Initiatives

Action Plans Milestones

Why does the initiative exist? What solutions are you providing?

What measurable outcomes do you want to achieve?

In what activities will you engage to achieve your vision?

What projects do you want to undertake?

Who does what? Who is responsible? What resources are required?

SMART Goals

Metrics and Milestones

High level metrics to let you know if you are accomplishing your purpose

Lower level metrics to let you know if each initiative is accomplishing its purpose. Milestones to keep you on track.

How do you define your initiatives

in terms of Simple, Measurable,

Aggressive, Relevant and Time-sensitive goals?

Designing Strategic Alignment

Copyright, 2005, Ed Morrison, distributed under a Creative Commons license

Strategy MapsMaps to keep you focused and balanced

Alignment Tools

Principles and Values

Principles and values provide guides to the purpose of your initiative

We are developing new ways to focus on alignment

You can use this chart to help you maintain alignment with your strategy as you refine it.

Metrics are important

In the industrial economy metrics defined deviance.

In the 2d curve economy, we use metrics in a different way: to guide our learning and maintain our focus.

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Innovating Region

Leading Regional Metrics

STEM Education

Entrepreneurship Educatioon

Post-secondary Degrees

Investments in new products

Investment leverage

Lagging Regional Metrics

Higher per capita incomes

Traded employment growth

Reduced brain drain

Concurrent Metrics

Testimonials

Evaluations

Civic networks

Defining outcomes entails difficulty sorting through

leading, concurrent and lagging indicators

Initiative Metrics

Metrics for each Strategic initiative

In May we will be launching a process in Southeastern Wisconsin to deal with the most complex challenge we face: re-imagining education and workforce development.

The Center for Education Innovation and Regional Economic Development will be promoting Open Source Economic Development and strategic doing as a way to visualize our opportunities and leave old, stale conversations behind.

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K through 12

Dependency Cycle

Dropouts

Career

Entry level

Working poor

No career plan Weak skills

$10.00per hour

2 Years of College

Certifications

4 Years of College

No easy way for the

working poor to escape

Early ChildhoodEducation

20% to 30% of the jobs

are below the line

70% to 80% of young

people fall below the line

70% to 80% of the jobs

are above the line

20% to 30% of young

people stay above the

line

Strategic Doing:

Linking and Leveraging Regional Assets

2nd Annual

Regional Education and Economic

Development Symposium

May 20, 2008

5:30 pm ~President’s Reception

6:45 pm ~ Symposium

Milwaukee Transit Center

Harbor Lights Room

909 East Michigan Street

Milwaukee, WI 53202

featuring: Ed Morrison

Purdue Center for Regional DevelopmentJulia Taylor

Greater Milwaukee CommitteeJan Sten

US Department of Labor

For more information, please contact Amanda Nick at 262-787-9555 or [email protected]

An opportunity to explore the intersections of business, government and education sectors interested in improving the region’s economic health and increasing the skill

sets of tomorrow’s talent

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Module 6: Open Source Economic Development and Web 2.0

We are developing on-line collaborative workspaces to leverage our time and knowledge

Web 2.0 tools make collaboration more powerful. The challenge becomes developing new habits. Our partner, Near Time, provides the most powerful, easy to use and affordable platform available.

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Wrap Up: The Open Source Economic Development incubator: Our Next Steps

Tools checklist for guiding civic networks and building innovation “hotspots”

Asset Maps

Civic Forums

Strategic Doing Workshops

SMART Goals

Social Network Maps

Strategy Maps

Process Maps

On-line Workspaces: Web 2.0

i open retreat slides print

Technology

open economic networks

creative commons

attribution license