Beyond Doom and Gloom: New Economic Development Rules for Local Policymakers

By Golden Capital Network CEO Jon Gregory

Introducing GLOBIES

With Tuesday’s impending inauguration ceremonies there has been a lot of media, economic and political speculation about President-elect Barack Obama’s stimulus package. While debate continues in the beltway about how to rejuvenate the American economy from a macroeconomic perspective, little attention has been given to the equally difficult challenge local elected officials face in cities and counties across America. They are tasked with creating jobs, tax revenues and prosperity in their communities in a period compared to the Great Depression. It is at the local grass roots level where the effects of lay-off notices are exceedingly personal and the impacts on public services most noticeable.

The recent announcement of the closure of the remaining 567 Circuit City stores in the U.S. at a cost of 34,000 jobs, along with major reduction in employment levels at well-known companies like Hertz Global Holdings Inc., WellPoint, ConocoPhillips, Advanced Micro Devices, Saks and Motorola Inc. make the road to economic recovery for local policymakers pretty rough.

Recent studies by economists and academics, along with noted authors and distinguished reporters, suggest that innovation remains the one true economic advantage America possesses over other nations. Excellent publications such as Regional Innovation, National Prosperity by the Council on Competitiveness, and The Innovation Driven Economic Development Model by Collaborative Economics serve as excellent resources on this topic. Yet, despite the increased attention on innovation, discussion among thought leaders about innovation as an economic development strategy has mostly been relegated to the 50,000-foot-level rather than given merit as a practical solution that can be implemented at the grass-roots level.

Even more important is the distinction between long-established national and global businesses with divisions or stores located in hundreds of communities across the country but whose headquarters are located elsewhere, versus innovation-based businesses serving national and global markets with their home base of operations located in the community itself.

I’ve coined a new term for the economic development vernacular to better distinguish these types of businesses from others: GLOBIE (Growth-focused Locally-Owned Businesses run by Innovative Entrepreneurs). Even while major global corporations such as those I mentioned earlier in this article falter or stumble, at Golden Capital Network we are able to regularly observe the under-recognized progress made by hundreds of GLOBIEs. Just last week, for example, alumni presenting company GLOBIEs like Red Condor, Utopy, Alter-G, Inc., and Sentilla reported important business-related achievements, such as new customers, new management team hires, new rounds of capital raised and new technology milestones reached.

The most recent 10-year period of my economic development career has been spent in the trenches on a day-by-day basis with the founders and CEOs of GLOBIEs. It is this subset of the innovation sector that drives ongoing economic growth. Importantly, GLOBIEs exist everywhere in this country. They represent the bright spots in an otherwise struggling economy.

GLOBIEs deserve special recognition and support by local policymakers because they not only serve as the market-leading difference-makers in a community, but also usually have a true affinity for that community and a desire to stay and grow there.

With 25 years directly or indirectly involved in local economic development under my belt, I am concerned that our local elected officials -- and other civic leaders charged with economic development responsibilities -- are not fully equipped with the right knowledge or the most effective tools and strategies to stimulate their economies by focusing on GLOBIEs. Instead, many of the strategies being championed to elected officials in communities across the country today are the same ones touted when I started my career in economic development in 1985. The problem is that the economy of today is nothing like it was in 1985.

It is important to emphasize that GLOBIEs are the businesses that are most vital to the economic recovery and growth of a local economy, and that grass-roots efforts can actually have a positive impact on their success! With companies whose headquarters are located elsewhere, the ability for a local entity to impact their decision-making process is minimal, at best. In fact, the economic development strategies being advocated in many communities and states across the U.S. today offer little value to GLOBIEs. This is disheartening in that it is possible for local policymakers and other leaders of local economic development organizations to have a profound impact on the success of these businesses by helping to address their needs. The organization of a community’s human capital assets is a good example. I am referring not only to the employees who become the workforce for GLOBIE businesses, but all of the human-related input essential to starting, growing and exiting a GLOBIE company; known as the innovation eco-system.

Local policymakers can play a pivotal role in this process. Yet in most community’s economic development efforts exert no energy into proactively cultivating this innovation eco-system. It is this disconnect that has inspired me to write “Beyond Doom and Gloom: New Rules for Local Policymakers” as a guidebook for policymakers and other economic development leaders to implement a cost-effective, sustainable and compelling economic development initiative at the local level that is focused on GLOBIEs.

Over the course of the next two weeks, I’ll periodically release these New Rules seeking perspectives from throughout the extended GCN network. If you have inputs, feel free to respond here. Next we’ll start the journey with New Rule #1 for local policymakers: “Take Action Now! Don’t Get Bogged Down in the Minutiae.”

Jon Gregory
President/CEO
Golden Capital Network
California Business Ascent