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Time for a New Business Leadership?
Tuesday, October 24, 2006 The following commentary appeared in Crain's this week. Since Crain's is a subscription site, I'm posting the commentary here, as well. Here's a question to ponder over your coffee this morning. Does Cleveland need new business leadership? To answer that, let's start with a few more questions. Can you explain Cleveland's economic development strategy? Can you clearly define Cleveland's role in building an innovation economy in Northeast Ohio? Can you quickly communicate a positive future for our city to a high school student? Chances are you, like me, cannot answer these questions. So, in truth, we don't have a very clear picture of Cleveland's future. Let's look in another direction. In about 1990, an income growth gap began to appear between Cleveland and Pittsburgh. It's been getting wider ever since. Why? We both suffered when our steel industries collapsed. We both have well endowed foundations. We both have public and private universities. We both have difficult political climates. Yet, Pittsburgh seems to have a clear focus on building a regional innovation economy, while in Cleveland -- as we have seen -- our future is harder to define. The answer to this riddle lies in the nature of regional economic development strategies. Successful regional economic development takes two parallel strategies. The public sector leads one strategy with heavy, publicly-financed investments in infrastructure. These investments set the stage for private enterprise. But standing alone, publicly-led strategies are never enough. Big as they are, they are simply too small to move the regional economy forward. That's why most economists will tell you that convention centers and stadiums by themselves are inadequate regional strategies. Enter the private sector, stage right. Privately led strategies align the major driver of a regional economic transformation: productive private investment. Clusters of economic activity, propelled by private investment, drive the dynamic regional economies of Austin, Silicon Valley, and Research Triangle. Government and foundations play a supportive role to these privately-led strategies. They are careful not to get in the way. Astute government and foundation leaders understand that when it comes to reading market signals, they're not too smart. They leave this job to entrepreneurs, business executives and venture-capital investors who have "skin in the game". (When government and foundation leaders try to lead too much, we end up with wrong-headed industrial policies.) With privately-led strategies, smart government and foundation leaders are happy to play a supportive role. Starting in the 1980s, Cleveland did a good job with strategies based on large-scale public investment. Public officials, representing our taxpayers of course, committed vast sums of public money to remake our downtown. By the early 1990s, these investments were essentially complete. Yet, for 15 years we have been waiting for the private sector's strategy to enter from the wings. Now, apparently with the Issue 3, we have it. Gambling is supposed to remake our city. Playing an appropriate role, public officials have lined up to support this privately led strategy. There's only one problem. Casino gambling is a thirty year old economic development strategy that does not work. Listen to a voice of experience. Last month, the editors of the Baton Rouge newspaper wrote about Louisiana's experiment with casinos: "Alas, gambling has not delivered the promised pot of gold at the end of the rainbow... Louisiana would be much better off today if we had spent the past decade paying attention to more fundamental reforms to grow business, such as investing in education..." After fifteen years of waiting, a tired, failed strategy is disappointing enough. What's worse, the Greater Cleveland Partnership has closely associated itself with a mind-boggling political campaign that has managed to split the Ohio business community, generate allegations of fraud in the inducement of petition signatures, used children as an advertising shield for casino owners, treated the Ohio Constitution like a small town zoning ordinance, inflated revenue estimates, misrepresented clear facts (developed by their own consultants) on the significant social costs of gambling, and promoted a very public "buy off" of support in Cincinnati with a $100 million side deal. (We're not sure how to summarize these blunders, but "sordid" pops to mind. The last clumsy move is the most enduring: Shipping $100 million in income from citizens in Northeast Ohio -- where most of the slots will locate -- to Southeast Ohio may be shrewd politics, but it will further disable Cleveland, Cuyahoga County and our regional economy.) Meanwhile, a group of civic entrepreneurs has come up with a truly imaginative proposal for Cleveland and Cuyahoga County: Support our cultural institutions with an increase in the cigarette tax. Issue 18 recognizes that the future of Cleveland rests in our cultural and educational institutions. These entrepreneurs are taking and applying the lessons of other successful cities, like London, Toronto and Vienna. In the digital age, creative industries provide one very promising path to higher income and prosperity. Creative industries are not our only way forward. In Indiana, civic and business leaders are embracing manufacturing as the core of high-performance production systems. They are redesigning high schools, community colleges, university technology transfer and other systems to support the integration of research, product design, manufacturing and logistics. Meanwhile, back in Cleveland, our business leadership is fighting hard for its casinos. Luckily, though, we have a choice. If you are looking to move toward a new generation of business leadership in Cleveland join us in voting "No" on Issue 3 and "Yes" on issue 18. Our future lies with creativity and innovation, not casinos and gambling. Ed Morrison is Economic Policy Advisor to the Purdue Center for Regional Development and partner in I-Open, the Institute for Open Economic Networks. ------ In the wake of Issue 3 -- regardless of how the vote turns out -- our task is ahead is clear: encourage a new Cleveland business leadership dedicated to integrity and transparency. We need to foster the civic disciplines that build trust, collaboration, and open innovation. In Cleveland, the "soft stuff" has always been the hard stuff. The irony is that in the knowledge economy, the "soft stuff" drives innovation: the ability to learn quickly, align resources quickly, and act quickly. Civic trust fuels speed, flexibility and agility. posted by Ed |
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