module 7-presentation team copy

8/6/2019 Module 7-Presentation Team Copy

http://slidepdf.com/reader/full/module-7-presentation-team-copy 1/58

Exploring Opportunities fora Stronger Region

Module

Seven



Reflecting on the Previous Session

• What did you find most useful or valuableabout the previous session on thedemographic features of your region?

• What progress have you made since theprevious session in terms of your homeworkassignments?

• Any questions or clarification about ModuleSix?



Overview of Module Seven

• Explore basic concepts of competitiveadvantage

• Provide an overview of tools and dataavailable to detect regional competitiveadvantage

• Examine strategies for building stronger

regional economies



Basic Concepts ofCompetitive Advantage



Competitive Advantage: Four Factors

What determines competitive advantage?

• Firm Strategy, Structure and Rivalry

• Factor Conditions

• Related and Supporting Industries

• Demand Conditions

Business shapes the economic value of a region, but places can help shape, nourish,and sustain local enterprises and industry.



Firm Strategy, Structure and Rivalry

Porter’s Diamond Theory

Firm Strategy,Structure and

Rivalry

DemandConditions

FactorConditions

Related andSupportingIndustries

How does placeinfluence the

quantity, qualityand cost of input

factors?

Local customerbase? What dopeople want?

How manycompetitors?What is the threat

of new entry?

What valuechains or

clusters existin our region?



HealthCareIndustry

Firm strategy:

3 hospitals

7 full-time doctors

Industry determined by

University-Owned Hospital,located 100 miles away

Demand Conditions:

Unemployed and

underemployed seekinglow-cost health care

Higher income leaving theregion for large urban

hospital

Factor Conditions:

Low rent

Inexpensive unskilled labor

Difficult to retain medicalprofessionals

Related and SupportingIndustry:

25% of durable suppliescan be purchased locally

0% of non-durable suppliescan be purchased locally



Regional Competitive Advantage

• Businesses are competitive to the degreethey can generate profits.

• Places are competitive to the degree their

residents can build wealth.• Regional competitive advantage: the

interaction between businesses, industry andplaces that generate local wealth.

• Wealth building opportunities also existoutside of the private sector (government,non-profit organizations, and investments)



Tools and Data for DetectingRegional Competitive Advantage



What Are the Keys toEconomic Growth?

• People

• Place

• Businesses

• Innovation

• Clusters or branding



First Key to EconomicGrowth: People

• Who are our workers?

Skill level, education, occupation

Work ethic

• Who are our residents?

History and culture

Long time residents, newcomers



People: The Residents

• Who are the people that live in this region?

How long have they lived here?

How many generations have lived here?

Where did they move from?

Why?

• Why do they like living here?

Social conditions

Cultural factors

Economic prospects



People: The Workforce

• Who are our workers?

Basic demographics

Experience

Work ethic

• Is our workforce adapting to change?

Technology

Recognizing needs



The Second Key to EconomicGrowth: Place

• What amenities doesour region offer?

• Why would people wantto live here?

• Why would businesses

relocate here?



Place: Industrial Indicators

• Current leading employers

• New and expanding companies and industries

• Research bases, R & D

• Available land and buildings

• Existing infrastructure

• Access to transportation networks

• Tax structure



Place: People & Qualityof Life Indicators

• Population and labor force

• Education

• Health care• Recreational opportunities

• Shopping

• Crime, weather, etc.



The Third Key to EconomicGrowth: Business

• What is the portfolio of businesses in ourregion (small, medium, large)?

• What‟s the mix of industrial sectors in our

region?



Industries & Occupations: Looking atData on Your Region

• What types of industries/ businesses currently exist inyour region?

• What are the keyoccupations?

• How have these businessesfared particularly during theeconomic downturn of the

last few years?



Business Assistance in the Region

What type of programs, assistance,or incentives are offered to:

• Support expanding businesses?• Recruit new businesses?

• Foster the growth of

entrepreneurs or small locallyowned businesses?



Identifying Entrepreneurs

Smallbusinesses

Self- Employed

People with

underutilized talentSocial

Entrepreneurs

Theunemployed

Innovators

High growthbusinesses

Entrepreneurship

Youth



Who is an Innovator/Entrepreneur?

Identifying Innovators &Entrepreneurs

Problem/Opportunity

New Old

Solution

New YES YES

Old YES NO

Entrepreneur: one whose goal is tocreate or capitalize on new economic

opportunities through innovation.



Assessing Entrepreneurship Capacity

• Community surveys

Existing programs

Community readiness for new programs

Leadership

Networks

• One-on-one interviews with local entrepreneur

Assess ambitions and needs Identify regional constraints

Community surveys and one-on-one interviews



Assessment for Entrepreneurship Capacity

Inventory of Entrepreneurship:• BEA-REIS data

• Census (non-employer statistics)

• County Business Patterns

• Panel Study on EntrepreneurialDynamics

• Survey of Business Owners

Capacity for New Entrepreneurs:• Educational attainment

• Immigration and diversity

• Financial resources

• Business resources



The Fourth Key to EconomicGrowth: Innovation

"Innovation . . . the successful

introduction of a new thing or

method . . . Innovation is the

embodiment, combination, or

synthesis of knowledge in original, relevant,

valued new products, processes, or services”

Luecke and Katz, 2003



Your Region’s Capacity for Innovation

• What are your region‟s most competitive

Research & Development (R&D)assets?

• How effective are regional universitiesor community colleges atcommercializing new ideas and

innovations?

• What resources does your region offerto foster innovation?



How Nurturing is Your Region?

Conception Implementation Marketing

• Idea Generation• Project Planning

• Development• Prototype Dev• Testing

• Production• Launch

BusinessProcess

RegionalCapacity

• R&D centers• Universities• Industrial Parks

• Capital availability• Community Support

• Education• Technical

Assistance

Three Phases of Innovation

Source : Tawari, Buse and Herstatt, 2007



The Creative Class

• Identified class of “creative”

occupations that should be attractedand retained

• Defined as “developing, designing or creating new applications, ideas,relationships, systems, or products,including artistic contributions”

• This class is thought of as “footloose”and attracted to high amenity places

Term popularized by Richard Florida in his 2002 book

“Rise of the Creative Class.”



Why the Creative Class?

• The density of creative class hasa positive effect on job growthboth in the „creative‟ and „non-

creative‟ sectors.

• Creative capital andentrepreneurship work in

synergy with one another toincrease employmentopportunities in both sectors.



Where is the Creative Class in the US?How "creatively-driven" is your economy compared to the national average?

Dark-blue is the least creative and dark-red the most creative areas.



Fifth Key to Economic Growth:Clusters or Branding

• Cluster – making the whole greater thanthe sum of the parts

• Branding – consolidating the essential

characteristics of the individual identity intoa brand core



Industry Cluster Analysis

• A type of analysis that views firms,

and therefore, industries, as

interdependent, not isolated• Value chains

• A collection of businesses producing

similar output



What Can RegionalCluster Analysis Tell Us?

Where we have . . .

• Gaps• Growing industries/clusters

• Declining industries/ clusters



Data Needs

• Industry sector data : number of

establishments (over time), number of

employees, payroll, earnings

• Potential linkages to determine value

chains



You Think There is a RegionalCluster, So Now What?

• Map the cluster by identifying the industries thatmake up the cluster.

• Determine if the cluster is growing or declining.

• Decide if you have the regional capacity to supplythe necessary industries/products.

• Identify potential leakages and/or opportunities fornew enterprises.

• Determine which economic strategy(ies) might bemost successful at strengthening the cluster.



Mapping the Cluster



Value Chain Cluster Example

Grapestock

Fertilizers,Pesticides,Herbicides

GrapeHarvestingEquipment

Irrigation

Technology

Educational, Research

& Trade Organizations

Growers/ Vineyards

Wineries/ ProcessingFacilities

State GovernmentAgencies

SpecializedPublications

PublicRelations &Advertising

Labels

Caps & Corks

Bottles

Barrels

WinemakingEquipment

CaliforniaAgricultural Cluster

TourismCluster

FoodCluster

Wine

Source : California Department of Food and Agriculture



Manufacturing Clusters

Manufacturing

Below Average

Above AverageSig Above Average

500 0 500 1000 Miles

N

EW

S

WesternUnitedStates



Cluster Illustration: Bubble Chart

Source : EMSI.com

Kentucky Industrial Bubble Chart



Identify Potential Leakages andBusiness Opportunities

• Determine the industries that make up the cluster.

• Assess the current regional capacity for industryproduction.

• Characterize the potential of each industry assaturated, potential expansion, zero potential.

• Characterize the future growth of industry as stable,high-growth, or declining.

• Determine the types of skills needed to create thesebusinesses.

Identify Potential Leakages and



Identify Potential Leakages andOpportunities for New Businesses

Wine

Zero inputs available regionally

Small % of inputs available regionally

Large % of inputs available regionally

100% of inputs available regionally

Grapes

Research

Fertilizer

Advertising



Examining Clusters in Your Region

Possible Economic Development



Possible Economic DevelopmentStrategies to Strengthen a

Cluster or Brand

• Targeted attraction of industry

• Business retention and expansion

• New firm creation/entrepreneurship

• Attracting the creative class

• Network development and

meta-business creation



Targeted Attraction of Industry

• Past Approach: Blindly attracting industry

• Now: Targeting businesses within identify

industries identified as likely to be successful inthe region

• Strategies for identifying potential successes: Cluster Mapping

Location Models

Community Business Matching Model



Location Models

• Have you ever heard someone say:

“We are working on attracting ______

(some large manufacturer) to our rural

region” ?

• There are models that employ place

specific data that identify the probability ofcertain types of industries locating in aparticular area.



Location Models

Source : Targeting Regional Economic Development, 2009

By examining demographic and economic trends:

• We may identify certain industries that we willhave limited success in attracting to the region

…AND THAT’S OKAY!

• We can also find industries and businesses thatwill work well in your region.

C it B i M t hi M d l



Community Business Matching Model

Compatibility Desirability

Community

Business

Assets

Needs Profile

Goals

TheIdeal

Source: Cox et al., 2009



Business Retention and Expansion

• Focuses on keeping existingbusinesses

• Helps existing businessesgrow and add jobs

• Includes all efforts to help

insure the survival and growthof a community‟s existing

businesses

How to Approach Business



How to Approach BusinessRetention & Expansion

Community-Based Business Visitation• Planning Phase • Action Phase

Recruit volunteer visitors Visit and survey local businesses

• Follow-up Respond to “Red Flags” Prepare and present report Plan for future Follow-up is most important!



Advantages of BR&E

• Lets businesses know they are valued

• Helps solve local business issues

• Improves community awareness andinvolvement

• Can connect businesses to othercommunity resources

• Can create a coalition of communityorganizations

• Can keep or add jobs

R i l St t i t I



Regional Strategies to IncreaseEntrepreneurism

• Community-based training options

Weekend boot camps

FASTRAC or other 13 week programs Short-term targeted business training

• Access to business coaching

• Youth entrepreneurship: 4H,Scouts, in-school programs

E t i l C iti R i



Entrepreneurial Communities or Regions

CommunitySupport

Conception

Birth

Openness tonew ideas and

intellectualstimulation

Capital: Equity and Debt

Education: K-22

Information

Connections +Networking

Infrastructure

Services and Amenities

Source: Based on Reynolds, et. al., Small Business Economics 23: 263 –

284, 2004.

Att ti th C ti Cl



Attracting the Creative Class

The creative class is „footloose‟ and tend tocongregate in places with a high quality of life

• Networking

• Retain / Attract Youth

• Recreational Activities

• Cultural Diversity, Tolerance and Inclusiveness

• Infrastructure

• Population Density• Proximity to Metropolitan Areas

• Natural Amenities (esp. mountains, forest) P o t e n t i a l t o A f f e c t



Network Development

Business Network Development: A formalor informal collaboration or cooperation

among either competing firms or firms thatare part of a value chain for the purpose ofcreating a net benefit for all involved



Network Examples

Workforce Development Example • Milwaukee Seven Water Council:

Goal is to transform the workforce system and

create high performance talent pipelines within the region

Entrepreneurship Network Example

• The Entrepreneurs Network:Promote and enhance job growth and business

creation

M t B i F ti



Meta-Business Formation

Strategies for generating revenue thatsupport all local business

Examples:

• Local coupons

• Local credit/debit cards

• Local currency

• Business directories

• Local stock exchange

• Businesses that support other businesses



What’s Next?

• Identify a strategy or two that the teamthinks could be successful

• Consider data collection needs

• Identify assets and

barriers



Final Reflections

• What are the takeaways from thismodule?

What topics did you find most helpful? What did you find confusing?

What do you hope to implement as

part of your regional team’s activities? Other items you want to mention?



Looking Ahead: Module Eight

• Refining Your Goals

• Identifying the ABCs of Success

• Selecting Strategies

• Planning for Action

module 7-presentation team copy

Documents