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North Louisiana’s New Economic Engine
Ed MorisonEconomic Policy AdvisorPurdue Center for Regional DevelopmentFebruary, 2009Louisiana, like the rest of the country, is confronting a fundamentaltransformation: the way in which we build prosperity is changing dra-matically. In the past, we relied heavily on business strategies de-veloped in our grandfather’s economy. We chased after large, vertic-ally integrated and hierarchically managed corporations, capable of producing large volumes of low-cost, mass-produced goods, like auto-mobiles and appliances.Our grandfather’s business models were designed to minimize costs. Traditional practices of economic development spoke directly to thesebusinesses by emphasizing low-cost land, labor, and capital, bundledinto a good "business climate". The legacy of recruitment strategiesand the deep (and for the most part unproductive) economic develop-ment incentives that fueled the strategy still dominate most economicdevelopment organizations throughout Louisiana and the South.Beginning about 20 years ago, new business models began to emergebased on networks. In the 1980s, Fortune 500 companies began tobuild global manufacturing networks. With improvements in telecom-munications and logistics, supply chain integration emerged as an im-portant strategy. This shift had tremendous implications for places likeShreveport, when AT&T moved its residential telephone manufacturingbusiness to Singapore.In the 1990s, companies started connecting with their customers inmany of the same ways they had been connecting with suppliers. Cus-tomer relations management emerged a critical strategy. In the mid-1990's, the Internet exploded with the invention of the Web browser. The strategy of connecting to customers took off like a rocket. The in-teractivity of the Web made pure network business models, like Googleand eBay, possible.We are now faced with some clear realities:1. Traditional economic development strategies based on low-costcompetition are no longer effective. Low-cost land, labor, logistics andcapital are increasingly available anywhere.
 
2. Sustainable competitive advantage for a company or a regional eco-nomy is rooted in the capacity to innovate. Innovation leads to busi-nesses that can sustain higher incomes in a region.3. Increasingly, innovation is taking place outside the four walls of anyone organization: in open networks. Collaborative innovation emergeswithin regional economies among clusters of related firms and support-ing organizations, like community colleges and research universities. These clusters form complex regional innovation systems to share in-formation and resources.4. To accelerate regional innovation, economic developers need to fo-cus on building these regional networks with colleges and universitiesas their hub.5. Open innovation networks become the key feature of competitive re-gions. Regions with thicker collaborative networks learn faster, spot op-portunities faster, and align their resources faster. In short, they aremore competitive. Building more entrepreneurial regions comes downto developing these networks with new tools and resources targeted tothe needs of high growth companies.6. Competitive regions also need more effective networks for buildingbrainpower with 21st-century skills. The skill demands of high-value jobs are increasing, yet our public educational systems have only mademarginal improvements over the past 20 years. At the same time, theretirement of the Baby Boom generation creates serious skill shortagesin professions demanding post-secondary education. The connectionbetween educational attainment and economic prosperity is strong,clear and irrefutable. Regions that learn to innovate in building brain-power and boosting educational attainment will prosper.7. New approaches to regional leadership are also emerging. In thepast communities and regions relied on a handful of regional leaderscapable of projecting a "command and control" presence to lead astrategy. Now, the responsibilities of regional leadership are far moredistributed and shared. Regional leaders can emerge from almost any-where, based on their talent, integrity and energy. These leaders are just as likely to lead from the rear as from the front.8. Colleges and universities play a number of critical roles, as regionsdevelop innovating networks. They are a major source of brainpower topower a regional economy. They often have access to important ex-pertise and technologies useful for high-growth companies. They canprovide strong entrepreneurial resources to accelerate the volume andvelocity of startup companies. Alumni networks provide informal cap-
 
ital networks to support emerging companies. Equally important, col-leges and universities provide a neutral space where regional leaderscan convene to conduct the often difficult conversations needed toshape effective regional strategies.At the Center for Regional Development at Purdue University, we aredeveloping the models and tools of Open Source Economic Develop-ment to enable economic developers to understand and accelerate thedevelopment of open networks within their regional economies. (Weare also working on a close cousin, Open Source Workforce Develop-ment, to create innovating networks among schools, post-secondaryinstitutions, and businesses.)We have identified the five key networks that regional economies needto prosper. We have developed new disciplines of strategic doing to re-place the slower, more expensive, and increasingly ineffective prac-tices of strategic planning. (In complex systems like a regional eco-nomy, strategy becomes a matter of following a handful of simplerules. Strategic doing is a simple, but not easy discipline of following aset of simple rules.)We are also evolving new protocols for making economic developmentinvestment decisions. We are designing new data tools for businesscluster and occupational cluster analysis, so economic developers canunderstand the deeper systems driving their economies. In workforcedevelopment, we are focused on two areas: 1) improving the productiv-ity of re-employment networks within regional economies; and 2) ac-celerating education transformation through open innovation networksand strategic doing.Across the country, college and university networks are forming toprovide the innovation infrastructure that regions need to compete in aglobal economy. Two weeks ago, I visited Louisiana Tech University tobrief members of the Consortium for Education, Research and Techno-logy (CERT) on our work at Purdue. CERT is an established network of post-secondary institutions from across North Louisiana. It representsthe single most important economic development resource for the 22parishes of North Louisiana.During the meeting, I learned of the drastic budget cuts in higher edu-cation now under consideration by the state legislature. These cuts, if enacted, will drive North Louisiana’s economy toward Third Worldstatus. This prediction is not hyperbole. International comparisonsalready demonstrate that the US economy is slipping from the top rankin education and innovation. Global competition is gaining on regionslike North Louisiana… fast.
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