Your Regional Knowledge Economy Strategy: Is it Succeeding? (cont.)

What we measure now

Economic development is a relatively new art form, created essentially since the 1960s to respond to competitive challenges in the late stage of the industrial economy – the era of unquestioned U.S. dominance in industrial performance. What we know how to do well today we learned during that era.

The driver of prosperity in our advanced industrial economy was manufacturing jobs. Economic impact analysis basically began with these jobs, to calculate overall economic activity. In fact, the initial focus of economic development was business recruitment – creation of manufacturing jobs that would provide employment for hundreds or thousands of local people. The current focus on business retention and expansion in place – now considered critical – came later. The most recent addition to the repertoire was business formation – bringing with it engagement of universities and colleges as major new partners in regional economic development.

In real estate-based strategies, one counts acres of developed land; square feet of space leased or occupied; numbers of employees in the facilities; and, sometimes, sales volume of companies. Only in the late 1990s did workforce development come clearly into focus as being within the professional domain of economic development – creating not the jobs, but the people with skills to fill the jobs (and thus attract them). Now, workforce analyses are a major new industry. More recently still, we begin to see comprehensive, regional knowledge economy strategies, in which universities, community colleges, government agencies and private industry combine assets to target new-economy enterprises.

To this day, some stakeholders still view the job count as the important measure of economic development. Many economic development organizations are tasked, above all, with job creation targets. Those who focus professionally on economic research have developed other metrics, including measures of competitiveness – for example, the well-used Cost of Living Index published by the Council for Community and Economic Research (C2ER, formerly ACCRA). Higher education lives by other metrics, such as external research funding, published by the National Science Foundation, and technology transfer metrics, published by the Association of University Technology Managers.

Benchmarking has become a widespread practice and is useful, although true comparability of situations is rare. But, arguably, U.S. economic development organizations still do not benchmark to their non-U.S. competition.Many comparative reports still provide data only about the 50 states. As a result, regions still do not have the data at hand by which to benchmark in an era of global competition, nor do we travel enough outside the U.S. to see our competition.

What should be measured

Inputs vs. outcomes
A new metrics model should track both inputs (assets) that the region’s growth depends upon and outcomes (economic results) that the region’s strategy should achieve, illustrated by the examples in the table below.

Click for larger image.

Then, for both, it is useful to select some generic measures and some that relate to the targets defined in your regional strategy.

What is our progress in building our assets?
Political and community stakeholders typically understand why we measure outcomes. But it may be important to make the case for why you should regularly measure inputs.

Growing a regional knowledge economy is as much about using existing strengths to build assets that the region then promotes as its globally competitive competencies than it is about recruiting or building companies and jobs. Given that knowledge-based companies can start and grow anywhere in the world, it is essential to strengthen the case for why knowledge enterprises would form and grow in, or want to relocate to, your region.

What assets do we need to measure most? Overall, the inputs range from educated people to university research and innovation programs, from effective healthcare systems to business capital resources, from broadband access to attractive, livable communities. Two characteristics that matter most in the knowledge economy include competence in specific things and scale of resources. Niches of specialization or competence are important, because clusters grow around human resource talent pools and related assets. This is why cities are doing well today, whereas they suffered in the postwar, suburbanizing, late industrial economy. And getting to larger competitive scale – by counting and promoting regional assets such as medical facilities or university programs collectively – also is an essential strategy. In fact, many state investment strategies today aim at these very goals: niche competencies and collaborative scale-up.

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