I-Open’s Approach to Changing the World

Ed MorrisonI-Open

May, 2007

What happened to our grandfather’s economy?

Building Prosperity: The Basics

Climbing the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

Innovation in our grandfather’s economy: Move a lot of stuff

Our Metrics of Success

The problem is that nothing stands still...

1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 20000

20

40

60

80

100

120

140

160

Millions of tons

Steel production

1810 1820 18301840 1850 1860 1870 18801890 1900 1910 1920 19301940 1950 1960 1970 19801990 20000

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Population

Cleveland

Cuyahoga County

Steel declined, and the region’s leadership failed to see the transition

The consequence has been a decline in population and relative incomes

What happened to our grandfather’s economy?

Building Prosperity: The Basics

Climbing the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

1

Rest of the

World

Traded

Businesses

Local Businesses

Purchases and paychecks

Your economy

Another

region

Brain Drain and

Purchases

Sales

3

2

1

2

3

Good Money: Import income into the

region with traded businesses

Neutral Money: Circulate the

income in the region with local

businesses and workers

Bad Money: Reduce the leakage

by reducing outside purchases

and workers

Economic Development in an Nutshell

Source: Ed Morrison

1

Rest of the

World

Traded

Businesses

Local Businesses

Purchases and paychecks

Your economy

Another

county

Braindrain

Sales

3

2

1

2

3

Competition for traded businesses is

now far more complex and global

Wal-Mart and the malls make

shopping a regional experience

Young people moving out have

created major brain drains

Economic Development Challenges in an Nutshell

A prosperous cycle of economic development

accelerates with a healthy civic spaces

Entrepreneurial

activity

increases

Tax base grows

Civic amenities

and infrastructure

improves

Lower taxes

Well-paid jobs

increase

Quality of life

improves

Skilled labor

supply grows

New firms emerge,

established firms

grow

Build a quality,

connected place

Build brainpower

with stronger work

skills

Build innovation

and entrepreneur

networks

Healthy

Civic Environment

Skilled people

move in

Source: Ed Morrison

A downward cycle of economic development

accelerates with a deteriorating civic environment

Entrepreneurial

activity

declines

Tax base erodes

Civic amenities and

infrastructure

deteriorate

Higher taxesWell-paid jobs

decline

Quality of life

deteriorates

Skilled labor

supply shrinks

Businesses

shrink or leave,

start-ups do

not arise

Business base

gets weakerDeteriorating Civic

Environment

Skilled people

move out

Brain drain as

young people

move out

Place develops a

bad reputation

Source: Ed Morrison

Virtuous

Cycle:

Prosperity

Downward

Cycle:

Decline

Years

Prosperity

Index

Consequences of different cycles

of economic development

Today

Source: Ed Morrison

What happened to our grandfather’s economy?

Building Prosperity: The Basics

Climbing the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

What happened to our grandfather’s economy?

1930 1940 1950 1960 1970 1980 1990 2000

0

20

40

60

80

100

120

Cost index

Sea Freight

Air Transport

Telephone

Satellite

Costs collapsed

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 20050

100,000,000

200,000,000

300,000,000

400,000,000

Number of Internet Hosts

The Internet exploded

The Second Curve economy is emerging

First Curve: Wealth driven by large "command and control"

organizations

Second Curve: Wealth driven by "link and leverage"

networks

Source: Ed Morrison

On the Second Curve, dynamic networks rule....

Connect First Curve assets to Second Curve opportunities

Key Point 1:

Economic development is all about innovation

Innovation: Translating ideas into wealth

Learning to Climb the Second Curve

Innovation

Productivity

Prosperity

Key Point 2:

To innovate, we need to shift our thinking from hierarchies to

networks

There’s no top...no bottom...only links and nodes

Key Point 3:

Command and control habits do not work in

the civic space

The Civic Space

Most communities and regions are fragmented...People are still living in a Curve 1 world

The economic development “system” in Charleston, SC

Alliance

Mt. Pleasant

AlliancePartnership

County ED

Digital Corridor

Chamber

Chamber

Chamber

County

County

County$

$

$

BusinessInvestors

$

County ED

County ED

WorkforceInvestment

Board

ThinkTec

Low Country

Mfg.

Port

MUSC

Defense Industries

MarineSciences

Other Local and Chamber ED

Activities

Tourism/ CVB

Education Foundation

Environmental Groups

COG

Base Closure

Higher Ed consortium

Low Country Graduate

Center

BenchmarkCollaborative

Charleston

N. Charleston

World Trade Center

State Legislators

Key Point 4:

We need to connect and align our

resources in the civic space

It’s all about “linking and leveraging”

The “soft stuff” is the hard stuff

The Civic Space

Source: Ed Morrison

Key Point 5: We need to balance open participation and leadership direction...(it’s both “top down”

and “bottom up”)

Leadership directionOpen parti

cipatio

n

Dialogue Decision

Collaboration

Leadership DirectionDecision

Low High

Public ParticipationDialogue

Low

High

Apathy

Street

politics

Effective Strategies

Back room politics

Effective strategies require both

public participation and leadership direction

Source: Ed Morrison

Transparency and trust are strategic

They lead to stronger civic networks

Regions with stronger networks will be more prosperous

They will learn fasterAlign fasterAct faster

Key Point 6:

Our opportunities expand as our

networks develop

Hint: What’s the value of one fax

machine?

Low

Low

High

High

Prosperity

Trust and

collaboration

Key Point 7:

People move in the direction of their

conversations

We can ignite action by mapping our assets

Purposeful conversation is

strategic

Half full

conversations

Half empty

conversations

Years

Prosperity

Index

Consequences of different conversations

about economic development

Today

Source: Ed Morrison

Key Point 8: We strengthen our networks by

translating ideas into action quickly

Source: Ed Morrison

Find

Launch

FocusLearn

Evaluations

Action Plans

Insights

Initiatives

Develop ideas about what we can do together

Choose what we will

do

Identify and align resources to specific initiatives

Execute and measure results

Strategic Doing is a civic discipline to guide innovation

Source: Ed Morrison

Key Point 9: To compete globally, we need to

collaborate regionally...We need regional networks

Key Point 10: To strengthen regional networks, take the

Shanghai perspective

Our View Their View

Returning to Our Key Point 1:

Economic development is all about “open” innovation

Innovation

Productivity

Prosperity

Innovation Productivity Prosperity

Strategic Activities

Strategic Outcomes

Accelerating cycle

BrainpowerInnovation networksQuality, connected placesEffective brandingCollaborative leadership

Source: Ed Morrison

The challenge is to build and support

productive, focused networks

Innovation Productivity Prosperity

Strategic Activities

Strategic Outcomes

Accelerating cycle

BrainpowerInnovation networksQuality, connected placesEffective brandingCollaborative leadership

To innovate on the Second Curve, we need to “connect and develop” and

“link and leverage” open networks

What happened to our grandfather’s economy?

Building Prosperity

Surfing the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration

Innovative Businesses

Healthy, Creative Places

Healthy, CreativePeople

Dynamic Clusters

Our New Road Map to Regional Prosperity

Collaboration

Source: Ed Morrison

The Road Map incorporates different

economic development perspectives

Region

Cluster

County

Neighborhood

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration

Innovative Businesses

Healthy, Creative Places

Healthy, CreativePeople

Dynamic Clusters

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration

Innovative Businesses

Healthy, Creative Places

Healthy, CreativePeople

Dynamic Clusters

This model works on different geographic levels

Source: Ed Morrison

Building healthy, world class brainpower

• New high school reform models

• Manufacturing Boot Camp for High School Graduates

Civic

Collaboration

Brainpower Innovation

Branding

Quality,

Connected

places

Innovative Businesses

He

alt

hy,

Cre

ati

ve

Pe

op

le

Creative places

Dyn

am

ic c

luste

rs

In the 21st century the only competitive advantage available to the South or to any region in the global economy is brainpower.We will be successful only to the extent that we unstintingly cultivate, develop and wisely deploy our intellectual capital. Education is everything.

1998 Commission on the Future of the South

Building innovation and entrepreneurship networks

• Economic gardening

• Entrepreneurship training in every high school

• Business plan competitions linking high schools and colleges

Civic

Collaboration

Brainpower Innovation

Branding

Quality,

Connected

places

Innovative Businesses

He

alt

hy,

Cre

ati

ve

Pe

op

le

Creative places

Dyn

am

ic c

luste

rs

Building quality connected places

• Strengthening downtowns with Main Street programs

• Expanding broadband infrastructure

Civic

Collaboration

Brainpower Innovation

Branding

Quality,

Connected

places

Innovative Businesses

He

alt

hy,

Cre

ati

ve

Pe

op

le

Creative places

Dyn

am

ic c

luste

rs

Effective branding

• Integration of heritage tourism

• Regional food brands

Civic

Collaboration

Brainpower Innovation

Branding

Quality,

Connected

places

Innovative Businesses

He

alt

hy,

Cre

ati

ve

Pe

op

le

Creative places

Dyn

am

ic c

luste

rs

Civic collaborations

• Weekly civic forums to explore opportunities

• Regional forums to check on progress

Civic

Collaboration

Brainpower Innovation

Branding

Quality,

Connected

places

Innovative Businesses

He

alt

hy,

Cre

ati

ve

Pe

op

le

Creative places

Dyn

am

ic c

luste

rs

Region 1

Region 2

Region 3

World classBrainpower

Entrepreneur and

Innovation Networks

Effective Branding

Quality,Connected

Places

Civic Collaboration

Innovative Businesses

Healthy, Creative Places

Healthy, CreativePeople

Dynamic Clusters

What happened to our grandfather’s economy?

Building Prosperity

Wake up to the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

Find

Launch

FocusLearn

Evaluations

Action Plans

Insights

Initiatives

Develop ideas about what we can do together

Choose what we will

do

Identify and align resources to specific initiatives

Execute and measure results

Strategic Doing is a civic discipline to guide innovation

Source: Ed Morrison

Strategic Doing Requires Simple Rules

• Move fast: Focus on the task at hand: Don’t get hijacked: Limit digressions: No speeches: No whining

• Stop thinking only about today’s issues: Focus on outcomes in 10 years, your legacy, your children, your grandchildren: Get your eyes off the rearview mirror

• Encourage “stretch” thinking: Generate new ideas: Don’t burn ideas: Don’t recycle old opinions

• Push for specifics: Get beyond rhetoric: No bumper sticker thinking

• No blame game: No simplistic solutions: Think in terms of connections, incentives and systems

49

Sample

We use workshops and workshop exercises to move

people around the circle.

We use civic forums to build habits and uncover

connections.

Civic forums provide the venue to define new opportunities

and practice new civic behaviors

Source: Nead Brand Partners, Ed Morrison

Source: Ed Morrison

Regions are moving toward civic processes

that focus on Strategic Doing

What happened to our grandfather’s economy?

Building Prosperity

Wake up to the Second Curve

The New Road Map

Setting Out: The Basics of Strategic Doing

I-Open Results

Developing and deploying new tools

Web 2.0Collaboration

Social NetworkAnalysis

Source: Ed Morrison

Regions are moving toward civic processes

that focus on Strategic Doing

Accelerating regional growth involves

developing open networks

Translate Open Source Economic Development into Regular Civic Forums

Translate Open Source Economic Development into Regular Civic Forums

Translate Open Source Economic Development into Self-Supporting Cluster-Based

Organizations

Translate Open Source Economic Development into Workforce Innovations: Indiana

Zone (consists of)

Anchor2+ Founding Partners

Education/R&D

• Must have initial resources (people & money for county match) to start a zone

• Must provide the leadership and drive in place to make it happen

• Must provide “brainpower” plan and actions to link students to zone businesses

1+ Hot Spot and 1 Business Network

• Where goal-directed collaborations happen

• Location for anchoring physical zone development

Hot Spot(s) Business Network(s)

• For providing supporting services to the zone

PHASE 1• Must map proposed

zone network• Formalize a community

of practice (charter)• Designate 1 or more Hot

Spots• Develop business case

for the zone, including budget and basic incentive pack

• A package of services and incentives unique to each zone that will attract employers and entrepreneurs

• Each “pack” must contain for-profit (through the business network) and government contributions (e.g. county concierge service, tax, permitting, regulatory relief)

Zone Incentive Pack (ZIP)Incentive Pack

PHASE 2• County provides

matching dollars and designates Hot Spots (logo for branding?)

• Growing the community to build out business network

• Formalize incentive pack• Develop physical

development plan

PHASE 3• County provides

matching dollars and designates Zone (logo for branding?)

• Functioning incentive pack, business network, and government services

• Physical development underway

that collaborate to define…

Through which the founding partners define a…

Minimum Requirements

Anchor Partners

agreement tosupport, map and share

develop a brainpower plan and

zone incentive packcreate a business

development network

to support businesses in the hot spot

to support businesses in the hot spot

Anchor Partners designate one or more hot spots

Source: Ed Morrison

Translate Open Source Economic Development into Policy: Cuyahoga Innovation Zones

Translate Open Source Economic Development into Chambers of Commerce: Commerce Lexington and

Regional Strategic Doing

Translate Open Source Economic Development into new Economic Development Organizations:

Hoosiers Helping Hoosiers

Promote Open Source Economic Development Nationally: EDPro Premium Weblog

“I find EDPro to be a great source to learn about issues outside of traditional manufacturing based ED.”

“Your newsletter continues to be our Bible.”

“I forward it as the source of information for anyone new or any long time EDPros. Great information. Keep it up.”

“I enjoy the focus on innovation-led, technology based economic development.”

“I find the Weblog to be an asset as a one stop center for learning about cutting edge innovations in the world of economic development. There is a lot of stuff that can be accessed by the net, but you are not confident in its credibility. The EDPro weblog is a credible source.”

I-Open Web Sitehttp://www.i-open.org

EDPro Webloghttp://edpro.blogspot.com

Purdue Center for Regional Developmenthttp://www.purdue.edu/dp/pcrd/

Thank you!