Thursday, September 5, 2013

A Case Study on Regenerating a Local Economy

Dr. Rosabeth Moss Kanter builds off of her previous research of five American cities of Boston, Cleveland, Miami, Seattle, and Spartanburg-Greenville to find patterns to success economic rejuvenation. It is important for struggling cities to develop concepts, competence and connections. It is also necessary to encourage those who think in the region to work with those who make products and those who sell the products. As an example of success, she focuses in on Spartanburg-Greenville and how it became a world class area of manufacturing that attracted foreign investments from 215 companies in 18 countries. Without visionary leadership, friendly business environment, commitment to training, and collaboration between business and government the success story would have never generated.

Her paper argues that success will come from matching the local needs to that of the global economy. Unfortunately, there is a level of divergence between locals who are aware of local issues and the business leaders who are more aware of global issues. Trying to get the social and business interests on the same page for improved competitiveness is difficult.

A particular problem is local political interests that desire to move into an isolationist stance. Unfortunately, this stance leads to economic withdrawal and estrangement that impacts the lives of those who local politicians profess to protect. At times local political interests will use the fears of workers to create rifts between them and the outside world that manifests itself in worker resentment, a downgraded economy, and “us vs them” mentality.

In the industrial world the location of a company was important because it means they had control over distribution and local labor. However, the global economy requires these companies to think on a new paradigm which includes the ability to harness innovation and knowledge to continually update their products. In such cases innovation can meet manufacturing to compete in the global economy.

A market is made up of three different types of people:

Thinkers: These are the intellectual innovators that create new ways of competing on the market. This may be in the form of new products and services. Such people are adept at creativity and developing new and unusual solutions to problems.  

Makers: Makers are people who are strong at execution. They can use manufacturing abilities to create high value-laden products. Such makers can be pre-existing businesses that are retooled for new products and services.

Traders: These are individuals that can make global connections to other countries and people. They are the ones who foster new business investment, distribution of products, and connect the local area to the global economy.

Spartanburg-Greenville, South Carolina, is a success story even though it is an unlikely place for such global success. They were able to renew entrepreneurship, innovation, teaming, improving awareness of world needs, and connecting local companies to global networks. Despite its textile, automotive, metalworking background it, at present, has one of the lowest unemployment rates, high per capita engineers in the area, and rising wages throughout the region while many other areas are declining.

From her research a successful “come back” requires:

  • 1 -Visionary leaders who have a clear economic strategy and recruit international companies.
  • 2-A hospitable business climate and positive work ethic that attracts innovative companies to make long-term investments.
  • 3-Strong training and upgrading of local worker skills.
  • 4-Collaborations between business and business as well as business and government.

Local regions that have suffered from the weight of change often do so because of the perspectives of those within the area and a need for a broader self-perceptive view. To change this perspective requires an expanding of understanding from local to global. The catalysts to this change often include a vision brought forward by leadership, positive business environments, business interaction and partnerships with local government, and the upgrading of employee skills/abilities.  Without putting the right factors in place that change the competitive nature of the area it is likely that such declines will continue if the tendency to be protective outlives the need to grow and develop. Those who do the thinking, are partners with those who do the making and those who sell the products. They are all on the same team.

Kanter, R. (2003). Thriving locally in the global economy. Harvard Business Review, 81 (8)

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