Summary

In this post, I explore how we could design the next generation of regional strategies using a set of interlocking tools and disciplines. These new approaches embrace the realities of continuous change and open networks. Unlike traditional approaches to strategy, this new approach is more agile, resilient and low-cost.

Background

Imagine the situation. You are a civic leader in a region facing some dismal economic prospects. Over the past decade, major employers have closed shop, leaving vacant buildings and dislocated workers. While a new crop of employers is creating jobs, they are having difficulty finding skilled workers. Among these employers, the school system is a chronic complaint, and the workforce system does not seem to respond to fill the gaps. You’d like to convert an old building into an incubator. With this asset in place, you might start to change the development dynamic in your region. Yet, in order to access funds from the Economic Development Administration (EDA) for your project, your region first needs a Comprehensive Economic Development Strategy (CEDS).

The Traditional Approach to Regional Strategy

In theory, EDA’s requirement for a CEDS makes good sense. With a regional strategy in place, the federal government reduces its risk of failure. In the grand scope of things, isolated investments by the EDA do not amount to much, unless they are connected to some broader strategy. At the same time, the CEDS requirement increases the probability that federal investment will leverage other funds and pack a bigger punch. From your perspective, a regional strategy also offers some benefits. As a straightforward planning exercise, it promises to build both engagement among various groups and strategic focus. A strategy process, backed by regional leaders, can help you narrow your focus to projects that promise a relatively high impact and that are relatively easy to do.

Unfortunately, what seems sensible in theory does not often work out in practice. In my experience, many regional leaders simply view the CEDS process as a perfunctory requirement to gain access to EDA funds. It represents a box to check in the long, drawn-out process of accessing federal funding.

Indeed, it is not uncommon for regions to complete the CEDS process and then turn around and develop a “real” strategy by hiring an outside consulting firm. This approach has its own weaknesses. It’s expensive, and it may not generate much enthusiasm for the resulting strategy. Finally, it doesn’t provide any quick way to adjust when circumstances change.

New Directions for Regional Strategy

It does not have to be this way. With some sensible changes, EDA can lead the transformation of the CEDS process. Some time ago, EDA commissioned a report from the Upjohn Institute to evaluate the CEDS process. The Upjohn report identified some promising practices, and it pointed EDA in the direction of some sensible changes.

So, for example, the report suggested that a strategy document from the CEDS process should be no more than 10 to 15 pages. Detailed data and analysis should be stored in a separate volume. A shorter strategy document can be more easily updated annually. Following the report, EDA proposed streamlining the CEDS process and providing more flexibility. These changes, although welcome, did not go far enough. At the Purdue Center for Regional Development, we’ve been looking at the CEDS process to explore how we might transform it.

At the center of this transformation lies an important shift in the philosophy of planning. The traditional approach to planning, which took root in this country in the 1920s and 1930s, follows a linear, step-by-step process. Each step is separate from one another and should be completed before the next step is taken.

This protocol leads to a long strategy process that typically takes nearly a year to complete and frames choices within a five-year time horizon. The problem, of course, is that this traditional approach to developing a strategy falls behind the pace of change in most regions. To be effective, a planning process must move at roughly the same speed as the market changes taking place around it. As global connections have accelerated shifts within regional economies, traditional approaches to planning are being left in the dust.

A New Approach to Regional Strategy: The Core Components

We need a new approach to keep up. This approach needs to be flexible, adaptive, low-cost and continuous. To be effective, it should both simplify the complexities of regional strategy and leverage the interactive power of the Internet to engage more people in the process. We are framing the transformation of the regional strategy process in 4 steps:

1. Establish a common, simple strategy framework. Strategy has become a confusing mishmash of complex language and process. To make matters worse, most regions start off in the wrong place. They begin by trying to frame a vision of their future, perhaps the most difficult component of a strategy. By starting here, they often exhaust people before they engage in substantive work of defining and executing a practical strategy. In today’s world, a regional vision is emergent from the narratives circulating within the region. Powerful regional visions emerge when people pay attention to building positive stories of their collaborations and passions.

Rather than starting with the vision, regions would be better off starting with a simple theory of change. At Purdue, we think of the challenges facing regions as building a portfolio of collaborative investment in five areas. Most of the results we want from economic development — cool places, cool people, hot companies, innovative clusters — are “emergent”.  They emerge from a balanced set of underlying investments.  An effective regional strategy focuses on generating measurable returns from these underlying investments.

Here’s our theory of change.

  • To be competitive in today’s economy, any region needs to start with 21st-century brainpower.
  • Next, the region needs to convert this brainpower in the wealth through support networks for entrepreneurs and innovative companies.
  • Because both talented people and innovative companies are mobile, regions must focus on physical development and building quality, connected places.
  • To provide a sense of coherence and direction to their strategy, regional leaders need strong new narratives that point to the future.
  • Finally, designing and executing a regional strategy is tricky. It starts with a deeply engaged core team and spreads to a far wider network of civic leaders. Fundamentally, effective regional strategy requires broadly distributed leadership skills in complex collaboration and  new civic disciplines of collaboration.

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This framework provides a “base map” on which any region can map its strategy. The base map helps regional leaders identify assets and explore both connections and gaps. It provides an inclusive, common sense starting point for strategy development.

2. Teach civic leaders how to collaborate strategically by following simple rules. Collaboration seems simple enough, but it’s not. To transform the regional economy, we must undertake a wide range of projects that are complex. We design launch and manage these initiatives in an environment in which no one can tell anyone what to do. Much like open source software development, civic collaborations take place in open, loosely joined networks. Even the classic term “public-private partnerships”, which emerged in the 1980s, is inadequate to capture the level of complexity involved.

We are moving toward new approaches to regional strategies for simple reason: the old approaches don’t work very well. These new approaches proceed from a different set of assumptions.

The world is no longer stable, but constantly changing. Command-and-control hierarchies, while not disappearing, are less relevant to meeting the complex challenges we face.

We start with the premise that an open networks, people move in the direction of their conversations. So, if we can manage these conversations with some simple questions, we can guide an open network toward a sensible, sustainable strategy.

3. Launch powerful and practical Internet-based tools for analysis and insights. As civic leaders engage in these conversations, they need the insights that effective data analysis can provide. Fortunately, we have new tools that can crunch “big data” and display these analyses visually, so that they can be easily grasped.

At Purdue, we have been developing powerful mapping platforms that are easy to use. With these tools, regional leaders can focus their collaborations on strategic issues that matter to future prosperity.

Because these tools are interactive, they can quickly explore different dimensions of competitiveness or make comparisons with similar regions. We are developing a powerful mapping platform for regions to provide them easy access to the data and insights they need. This mapping platform enables quick access to underlying data. At the same time, it is flexible. Regional leaders can draw the boundaries of their own regions. We need this flexibility.

Regions are not immutable. They follow watersheds, media markets, business clusters, commuting patterns and football teams. A regional definition for one purpose — a cluster, for example — might not make any sense for another — a watershed, for example. Even among business clusters, regional boundaries will differ.

We need the flexibility to view these regions interactively, as out thinking and needs shift. The EDA is moving in this direction of building Internet based tools with the recent effort to assess the sustainability of new development projects. The Triple Bottom Line tool enables development practitioners to place a development project in a broader context of sustainable development.

4. Provide a simple, but powerful collaboration platform that regions can use to build, design, launch and manage collaborations. The civic collaborations that transform a regional economy compete for attention. Most people simply do not have the time to devote much more than a few hours a week on average. Virtually everyone has another job. The full-time professionals charged with the responsibility of designing and implementing a strategy process can do little on their own. They are only effective when they can engage a broader network of civic leaders. These realities point us to the power of the Internet.

Collaboration platforms on the Internet can keep our attention focused on a handful of strategic priorities. At the same time, these platforms can serve as an “institutional memory”, so that we don’t lose track of the insights, materials and resources that we collect during our strategy conversations. Purdue as in building collaboration platforms in complex areas like nanotechnology and advanced manufacturing. These platforms could be leveraged within a region to enable civic leaders to design, implement and revise their strategies on a regular basis.

Conclusion

We are moving toward new approaches to regional strategies for simple reason: the old approaches don’t work very well. These new approaches proceed from a different set of assumptions. The world is no longer stable, but constantly changing. Command-and-control hierarchies, while not disappearing, are less relevant to meeting the complex challenges we face.

We need to learn how to design and manage complex projects in open networks. We cannot know everything about a situation before we act. We must learn by doing. Speed and agility improve our competitiveness. Perhaps most important, these new approaches encourage us to take a global perspective and to collaborate in building more prosperous communities and regions.

Ed Morrison is Director of the Purdue Agile Strategy Lab. He is also an adjunct professor at the University of the Sunshine Coast in Queensland, Australia. For the past five or six years, he has been developing new, agile approaches to strategy in open, loosely joined networks, a discipline he calls Strategic Doing. Prior to starting his economic development work, Ed worked for Telesis, a corporate strategy consulting firm. In this position, he served on consulting teams for clients such as Ford Motor Company, Volvo, and General Electric. He conducted manufacturing cost studies in the U.S., Japan, Mexico, Canada, Italy, Sweden, and France. Ed started his professional career in Washington, D.C., where he has served as a legislative assistant to an Ohio Congressman, staff attorney in the Federal Trade Commission, and staff counsel in the US Senate. He holds a BA degree cum laude with honors from Yale University and MBA and JD degrees from the University of Virginia.

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