Leadership by Geoff Colvin

What would real economic stimulus look like?

August 23, 2011: 9:54 AM ET

It's time to stop the zero-sum game where regions merely pull jobs from each other with expensive tax incentives and call it economic development. And one particular approach just might do the trick.

By Eleanor Bloxham, contributor

FORTUNE -- It is time to roll up our sleeves and get to work on the very real economic problems the U.S. is facing – to finally move the needle on the economy, deliver better wages for our workers, and jobs for the unemployed and under-employed.

We need to stop the zero-sum game where regions merely pull jobs from each other with expensive, unproductive tax incentives and call it economic development.

We need an approach to our problems that involves real expertise, where success can be measured, and replicated from one location to another. And we need an approach that is nimble and cost effective. In short, we need a solution that makes sense.

A new plan, right in front of us, will roll out soon. An "enterprise development and market competitiveness project" is being launched with specific goals in mind.

"The project is designed to raise incomes and employment…. Focusing on the role of small and medium-sized enterprises ... the [project] will facilitate the development of competitive enterprises ... by stimulating innovation, enhancing workforce skills, accelerating new enterprise formation, improving access to finance, and addressing shortcomings in the business environment. The [project] will provide technical assistance, training, and grants to … [expand] sales in new and existing markets. The [project manager] and [the U.S. government] will mobilize additional resources from other sources to accelerate growth."

The manager for this project has been chosen. And work will begin soon.

In Armenia.

Armenia (in rough figures) has a population one-hundredth the size of the U.S. (3.2 million people versus approximately 311 million here). The workforce is roughly 7.1% unemployed versus our July figure of 9.1%.

If we can define a project like this for Armenia, with a population one hundredth the size of ours, why not define 100 regional projects of this type for the U.S.?

Of course, to move on such an undertaking requires agility, expertise, funding and limited bureaucracy. The projected cost for those running the project in Armenia is $17 million. The U.S. would need 100 Armenia-type projects, so how about a $1.7 billion budget for this project?

By comparison, similar projects have been done in the U.S. for $10 - $15 million in the past. One such example is Oklahoma City, which staged an impressive economic comeback after suffering from the collapse of the energy boom of the 1980s. That project was spearheaded by noted economic development expert Ed Morrison along with area business leaders -- in particular, Charles Van Rysselberge, who headed the Oklahoma City Chamber of Commerce at that time.

Where could we get $1.7 billion?

Just as Van Rysselberge did in Oklahoma City, the initial cash could come from business leaders. If CEOs of the Fortune 500 each pledged $1 million per year over the next five years, that would amount to $2.5 billion, more than enough to take on the task. Infrastructure spending could come, just as it did by the efforts of Van Rysselberge in Oklahoma City, from passing local sales taxes to fund those programs. (If you think sales taxes can't be raised for the right efforts, think again. Van Rysselberge, who moved to Charleston to head the Chamber of Commerce there, says that Charleston just this last November passed a one cent sales tax to build new schools and create jobs there.)

Before Oklahoma City, Van Rysselberge had worked with Morrison to help turn around Shreveport, La., when he was CEO of the Chamber there.

Following his experience at Oklahoma City, Morrison, a former strategy consultant for Telesis, a spinoff of the Boston Consulting Group, sat down to figure out what had made Oklahoma City and his other successes possible.

He recognized that there was a method and, if he could teach it to others, his work could be replicated. He calls his approach "strategic doing," which embraces similar ideas used to develop open-source software, where a given project is opened up to many different types of participants (public officials, experts, business leaders, the community, etc.).

Morrison says that real progress in today's economy does not stem from hierarchies or specific institutions, but rather from groups of passionate individuals supported by committed leaders. So instead of bringing any one of these groups into the conversation at different stages of a project, all groups should have a part to play throughout the process. Morrison has established a certification program in "strategic doing" at Purdue University.

A network of U.S. universities called TRE Networks has adopted Morrison's "strategic doing" ideas to develop a national, replicable model for regional economic development. TRE was the brainchild of Tim Franklin, director of the Office of Public Partnerships and Engagement at Pennsylvania State University and his wife Nancy, director of outreach sustainability initiatives and assistant director of Penn State's Institutes of Energy and the Environment (PSIEE). Tim Franklin, who is passionate about regional economic development and whose own work in Virginia has won recognition, worked with Ed Morrison to "not just focus on policy," but build a network of universities focused on economic development. "Now the network provides a neutral space where collaboration can occur and a set of resources for anyone wishing to tap into it," Morrison says.

Just the same, having the support from up top makes a significant difference. "The presidents of the universities participating have been key. They are the passionate leaders supporting these efforts," Morrison says.

Several weeks ago, Arizona State University hosted a solar energy summit that used Morrison's approach. The day-and-a-half summit, which was led by Todd Hardy, Arizona State's associate VP of economic affairs, and facilitated by Morrison, generated real results for Arizona's solar energy efforts. According to Hardy, 40 people have committed to advancing Arizona's solar energy efforts.

While the capability to do these kinds of projects exists, funding remains an issue. And that's where business leaders need to step up, as they did in Oklahoma City.

To contribute to our future prosperity, some university leaders have stepped forward. Where will the next crop of committed business leaders come from?

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm. 

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About This Author
Eleanor Bloxham
Eleanor Bloxham
Contributor, Fortune

Eleanor Bloxham, an authority on governance and valuation, is CEO of The Value Alliance and Corporate Governance Alliance, an independent board and executive educational and advisory firm she founded in 1999. She is author of the books Value Led Organizations and Economic Value Management: Applications and Techniques, and publisher of the Corporate Governance Alliance Digest and her blog The Bloxham Voice.

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