Submitted by acohill on Mon, 01/24/2005 - 11:06
In my talks to community leaders, I talk about the ability to sell goods and services that are, literally, weightless, via the Internet. I get a lot of blank stares, as some folks still have trouble understanding the revolution in business.
The latest news comes from Apple, which reports it sells more than one million songs PER DAY from its online music store, or nearly half a billion songs per year.
Remember that in the distant past, when dinosaurs roamed the earth, music was pretty heavy. It came in the form of 12" LP records, then tape cassettes, and then CDs. The very same product that used to weigh nearly a pound, in the form of those old records, is now delivered to us as a stream of electrons, radio waves, and/or photons. Same music--better, actually, since the digital recordings don't wear out or suffer tape breakages.
It's a new world, and in every state and in many communities, some businesspeople and entrepreneurs have already made the switch. But what about the rest of your businesses? How are your economic development programs preparing them to boost their business by going online?
Submitted by acohill on Sat, 01/22/2005 - 11:35
The 'net is buzzing over an article called What You'll Wish You'd Known by computer scientist and dot-com success Paul Graham. The article is interesting, but I don't think most kids will take the time to read it--by their standards, it's way too long (a topic for another discussion).
But you can always rely on the geeks that inhabit SlashDot to not only read this stuff, but critique it extensively, and one comment jumped right off the page at me:
"...why didn't anyone, not even my parents, tell me that I could actually start my own business and not have to necessarily go and get a job working for someone else?"
Bingo! Here's a young guy who perfectly fits the profile of the 21st Century entrepreneur and businessperson. Our young people are ready and anxious to get going, to create new businesses, to get into space, to wrangle the global economy.
But his comment raises a question. What are we doing in our schools to give our youth the skills they need? Are you, in your community, lamenting the fact that young people don't stay to live and to work? If you are, what are you doing to reform your schools to give them the skills to start their own businesses in their home towns, instead of feeling like they have to move away to find a job?
Submitted by acohill on Fri, 01/14/2005 - 09:02
There was an article in yesterday's Roanoke Times in the Business section about a new firm in Roanoke that is selling late model used cars with a "new car showroom" approach. The owner is trying to overcome the stigma associated with the stereotyped used car salesman by offering only late model cars in excellent condition, and using a high quality presentation.
What was interesting was the owner's remark about his Web site. What he said was that he had put a lot of time and effort into the site because buyers checked out a business by taking a look at the Web site before visiting the physical location.
This businessperson has it exactly right, and has figured out that Manufacturing Economy sales techniques have to be updated to reflect the new kinds of tools that consumers have at their fingertips--literally. This firm has a large, expensive product that is typically sold in person,but the company is using the Web as an integral part of the sales experience.
How about the retail businesses in your area? Are they putting appropriate and regular time and energy into their Web sites? Do they understand the potential for expanding their business into new markets and attracting new customers? Have they figured out that the Web is now important to help keep their current customers? Does your economic development authority have regular programs for local businesses on how to use the Web?
Submitted by acohill on Tue, 01/04/2005 - 11:12
Jewelry, flowers, clothing, and computer stuff fueled a 25% increase in online buying during the holiday season. This article describes the surge in spending in more detail.
In my own experience, I've seen a dramatic improvement in the quality of many online shopping sites. Even some smaller businesses have excellent and easy to use Web sites that make it quick and easy to find what you want, order it quickly, and get confirmation of the order via email. It sames time and money to be able to shop online, especially if you live in a rural area like I do, where shopping options are pretty limited.
Broadband is a key requirement, though. I'd do a lot less buying online if I had to use a dialup connection, which is just too slow to wade through a graphics-rich catalogue site. Broadband is not only an economic development issue, it's a quality of life issue. Who wants to move to an otherwise beautiful rural area far from big city shopping opportunities if broadband is not available to help mitigate that?
Submitted by acohill on Sun, 01/02/2005 - 11:18
One of the best ways to create new jobs in your region is to make sure the businesses that are already in the community have access to good advice, including advice and guidance on technical matters.
The traditional role of the economic developer in the Manufacturing Economy was to recruit jobs from other parts of the country. But that has not been an effective primary strategy for many years. In a global economy, many traditional manufacturing jobs have moved offshore, and no amount of tax incentives are going to change that.
A diversified economic development strategy would put more time and resources into helping existing businesses grow. And there is plenty of simple and effective things that can be done. For example, I still find many businesses have poorly designed Web sites. Why not use some ED funds to pay for Web site critiques and reviews of business Web sites? This could be done on a 50% match basis to ensure that the businesses are likely to take the advice seriously.
As an example of how bad things could be, I just found a business with this statement on their "Contact Us" page:
To email us, order a free catalog, check on an order, etc., please call 1-800-829-xxxx.
I'm not making this up--to email the company, you have to call them first! Here is a business that has apparently been asleep for the past ten years, and still does not recognize that current and potential customers may want to email the company. I find that the majority of small businesses are still not taking the Web seriously, largely because they simply don't know what to do.
Part of the problem is not their fault. Too many businesses have been burned badly with bad advice. There are basically two ways to get help with a business Web site.
Submitted by acohill on Wed, 12/29/2004 - 12:30
I just bought an inexpensive audio mixer to help with some recording tasks I have. It is sold by a small German firm. I was struck by the User's Manual, which came with instructions in the following languages:
Do the businesspeople and merchants in your area understand the importance of providing multilingual instructions if they are trying to sell internationally? Has your economic development organization identified qualified translators to save each business from having to do so? Have you prepared a handout that walks a business through the steps of preparing a product or service for the global marketplace? How will the businesses in your region compete with market-savvy businesses from other countries? Can they do the job right?
Submitted by acohill on Tue, 12/21/2004 - 16:20
If you hate waiting in line at the Post Office to mail packages, don't. The U.S. Postal Service has online label and postage services that are just terrific. Now that I have an account with my credit card information saved, it takes about a minute to print out a bar coded shipping label complete with postage. If you get it done early enough in the day, put a sticky note on your mailbox and the postman will come right to your door to pick up the packages. Or if you are running late (as I am today with Christmas gifts), you can walk right in the post office, drop them off, and walk out. It's a wonderful benefit of having broadband, and the Postal Service is to be applauded for offering the service.
Incidentally, it's a boon for small business as well. The Web application has an address book to store frequently-used addresses, so for small to medium-sized boxes, this Web app can be your shipping department. Note to economic developers: do all the small businesses in your region know about this service and know how to use it?
Submitted by acohill on Tue, 12/21/2004 - 07:34
The Roanoke region recently competed for a Dell manufacturing facility, and lost out to North Carolina, which offered Dell a whopping $242 million in tax credits. That's an awful lot to pay for just one firm that could easily pick up and leave after a few years. Imagine what a few hundred small businesses with good business plans could do if given ten or fifteen years of tax relief.
But that's not the story today. In today's Roanoke Times, an article says that one of the issues with Dell was access to an airport that could handle long range 747 freighters--one of the biggest commercial airplanes made. Not only does Dell get parts from suppliers worldwide, they ship their computers all over the world.
This is a good example of how the global marketplace is changing things. Forty years ago, it was rare to make goods in one country and ship them to another. Most manufacturing plants made things for regional or national consumption. You can tell how much things have changed when ordinary items like paper towels and batteries come with packaging printed in three or four languages.
Geography is still important, but not the way we think. You no longer have to be close to markets, because the entire world has become a single, large marketplace. But while many products and services can be delivered via the internet, not everything can, so regions have to consider transportation facilities in a new way. In Roanoke, airport capacity was, according to the newspaper, not on the list. You can bet it is now.
Submitted by acohill on Wed, 12/15/2004 - 14:41
The online site Human Events chronicles what it calls a "cynical" backroom deal that Congress made with the IT industry to allow more foreign IT workers in the country on work visas in the coming year.
Not surprisingly, Oracle was apparently one of the industry "leaders" behind this kick in the pants to American workers, and by extension, to American communities where those workers live. I just wrote about Oracle and it's lack of innovation. Instead of retraining perfectly capable American workers, these companies are bringing in workers from overseas, who are happy to work for half to two-thirds less than their American counterparts.
Another part of the problem was also created by the IT industry itself, during the drunken orgy of escalating IT wages during the dot-com bubble. Fueled by venture capital funds, Internet startups, over a period of three years or so, ran IT wages up to ridiculous levels. Many of those overpaid and underqualified workers were eventually laid off, but the damage was done--the average IT wage remains higher than ever.
So the companies and industry that happily inflated its own wage structure now won't take its medicine and restructure wages or find ways to use perfectly capable American workers, of whom there are plenty. Instead, these companies have run to Congress for a handout.
This kind of thinking is going to continue to depress the future of IT innovation in the U.S., and the industry itself will slow atrophy as parallel universe efforts like the Open Source movement simply eliminate the need for whole chunks of the IT industry (Oracle's problem is that it is increasingly irrelevant).
In the Knowledge Economy, you have to be either very big (e.g. Walmart, Fedex, etc.) or as Schumpeter would put it, small and beautiful (e.g. Open Source). And you have to be flexible and innovative.
Submitted by acohill on Wed, 12/08/2004 - 10:22
This CNet article describes what corporate America wants from its workforce. Surprise--it's not necessarily tech-savvy youths with oversize thumbs from playing video games and keying text messages on cellphones the size of chiclets.
What corporate America wants is workers who can read and write--especially writing. Our kids are growing up and entering the workforce without the vaguest notion of how to compose a complete, grammatically correct sentence, and it's driving bosses everywhere crazy.
Email is a particular problem, as the informal style of email messages has encouraged ever more casual communication, to the point of being incomprehensible, if you look at the examples of corporate "writing" included in the article.
This reinforces the article I mentioned a couple of days ago about the study that showed that kids that spend a lot of time on the computer are dumber. Playing video games, typing code in instant messenger (r u ther, lol), and surfing the Web is not preparing our kids for the workforce.
Step one is for parents and educators to take control and stop repeating the fallacy that, "Our kids know a lot more about technology than we do." The fact that my daughter can rack up a much higher score on Super Mario Brothers does not make her smarter or more tech savvy than me. Nor do high scores on video games or the ability to send text messages on cellphones prepare them to enter the Knowledge Economy workforce.
How well do the schools in your community do in preparing your youth for the Knowledge Economy? Is there a concerted effort to make sure they can read and write at appropriate grade levels. Are you holding regular meetings with economic developers, local business leaders, and school administrators to make sure the schools are emphasizing the right stuff?
Submitted by acohill on Tue, 11/30/2004 - 09:55
It is being widely reported that Internet shopping over the Thanksgiving weekend jumped dramatically, especially on Thanksgiving Day. Apparently, while everyone was waiting for the turkey to cook, twice as many people as last year went online to do a little shopping. Friday also saw a big increase (about 50% more).
The big loser was Walmart, which did not see the big increases expected. Other stores, like Target, apparently did better. There are all sorts of theories explaining various aspects of the holiday shopping--that Target offers a nicer shopping environment and better quality, that Walmart shoppers bought from Walmart.com instead of going to the store, and so on. All the explanations probably have some truth to them.
I'm more interested in the implications for smaller and rural communities. One interesting fact is that half of broadband users were apparently shopping online, by one estimate. That's a big number, and I think the reason is that you really need (and want) broadband for online shopping. Browsing an online catalog by dialup is painful. You might as well get in the car and drive to the shopping center.
For rural communities, affordable broadband and the willingness to shop online means people living in these towns and regions have much the same shopping alternatives available to them as people in the suburbs and big cities. But you have to have the affordable broadband.
It also means that small towns and communities may want to think differently about their approach to retail. In many of the towns and regions in which I work, there is much worry and discussion about the lack of retail. Maybe this is not the problem we think it is--if your residents have affordable broadband. It may be that money spent on retail initiatives might be better directed at quality of life issues that will attract entrepreneurs and businesspeople to the community, who know they can shop online, and instead want a Main Street that supports small businesspeople (lawyers, accountants, copy services, coffee shops, good restaurants, etc.). Finally, the change agent is affordable broadband. Instead of putting new street lamps on Main Street with the hope of reviving retail stores there, invest in a public broadband infrastructure that will bring broadband providers to town--thereby letting people shop online.
Submitted by acohill on Thu, 11/04/2004 - 10:18
There is the old joke that goes like this:
"There are two kinds of people in the world--those that divide people into two groups, and those that don't."
At the risk of self parody, there are two kinds of people in the world (and I'm broadly overgeneralizing, of course)--those that use eBay and those that don't.
For those that don't, the eBay phenomenon is a bit of mystery. From a certain distance, EBay is cluttered with junk, trivia, excess, and silliness. But it also is a terrific business transaction mechanism, for both formal and informal business.
I just bought a part for my breadmaker. The manufacturer has been out of business for four years, and parts are no longer available through "normal" channels--that is to say, the Manufacturing Economy manufacturer--distributor--dealer supply chain.
But I found the part I needed for $9 (new cost was $15 when it was available) from a guy in Nebraska whose machine had burned up. Instead of throwing it in the landfill, he's selling usable parts from it and making a few extra bucks. It's not only reducing the amount of waste going into landfills (parts of his machine and all of mine), he's profiting from it, and I'm able to keep a perfectly good machine working.
It's amazing when you think about it. A scant ten years ago, the notion of linking a buyer for a very obscure machine part in Virginia with a seller in Nebraska was inconceivable. Today, we take it for granted.
Many small businesses are now using eBay as a strategic part of their business, putting both normal stock and overstocks there for sale. It's a cheap and easy mail order strategy that has virtually no downside.
Does your region's economic development strategy include workshops to help businesspeople learn how to use eBay? I bet not, and business growth opportunities are being missed.
Submitted by acohill on Tue, 10/26/2004 - 09:27
About this time last year, Virginia Tech, right here in rural Appalachia, made world news with a dirt cheap supercomputer that ranked number 3 in the world in terms of speed and processing power.
The university did some thinking out of the box and discarded the conventional approach to building supercomputers (typically using a lot of custom hardware). Instead they bought 1100 off the shelf Macintoshes, wired them together with more off the shelf hardware, and wrote a small amount of software to turn the Macs into a monster supercomputer.
Since then, the university has swapped out all the older G4 processor-based machines for much smaller Macintosh Xserve industrial servers based on the much more powerful G5 processor. The floor space needed for the machine shrunk, the heat output was reduced, and speed was increased by 19%.
I remain convinced that a regional supercomputer facility should be regarded as essential economic development infrastructure. Microenterprise businesses and other small businesses increasingly need access to supercomputing facilities, and this is no different that sewer and water was forty years ago.
The good news is that putting a supercomputer together is pretty easy. Apple will build you a turnkey G5 cluster so you don't need a research university. And for a rural community seeking an edge in the global economy, I can't think of a better calling card. A modest supercomputer facility would not cost as much as a shell building, and would be a perfect complement to a business incubator.
Submitted by acohill on Fri, 10/22/2004 - 14:29
Outsourcing of U.S. jobs to other countries, depending upon who you believe, is wrecking the country or no big deal. Based on data developed by business experts like Peter Drucker, who says three U.S. jobs are created for everyone that is outsourced, I'm inclined to believe that it is not a major concern as a national issue.
As a local issue, if your area has been losing jobs, it's certainly a big deal, hence the confusion about outsourcing--it is a matter of geography. Nationally, we are creating jobs. But in some localities, real jobs are being lost and workers and their families affected materially.
The real question is what to do about it. Hence, insourcing. Insourcing is looking through the other end of the telescope. Instead of bemoaning the loss of jobs, take a look at insourcing, or the jobs and companies that are coming to the United States. If Drucker is right that 3 jobs are being created for every job that leaves, then the real opportunity is to figure out to be attractive to those international companies coming to the United States.
This site is a gem, and worth bookmarking. The Organization for International Investment has compiled state by state statistics on insourcing. In Virginia for example, I found that there are 146,000 insourced jobs, which is a 25% increase over the past five years. In Illinois, 268,400 jobs that represent a 39% increase. In New Hampshire, it's a stunning 38,400 workers with a 43% increase over five years. Insourced jobs provide more than 7% of all jobs in New Hampshire, and the state ranks 4th in the country in terms of per capita insourced jobs.
How do you get insourced jobs? You can bet that those international companies are relying heavily on the Web to do their research. Your community, government, and economic development Web sites need to be attractive, vibrant, well-designed, and professional. They need to tell a good story. One suggestion: create "Welcome" pages in some of the dominant languages of trade (Spanish, French, German, Japanese, and Chinese) would be a good start. It's not expensive, and it will project that your community embraces the global economy.
Submitted by acohill on Fri, 10/08/2004 - 11:21
The U.S. Dept. of Labor has announced they are going to revise the way they count jobs. In the past, the emphasis was on the Payroll Survey. In this survey, employers are called and asked how many employees they have. Payroll jobs have been shrinking, hence a lot of political heat and smoke about whether the economy is improving or not. But Labor has also been doing what's called the Household Survey, in which households are polled about who is working in the household. Job counts based on the Household Survey have been increasing rather dramatically, but the government has not really factored those jobs into the "jobs" number that typically gets published and discussed widely.
If you have a self-employed husband and wife, both fully "employed" in their own businesses, those jobs never show up on the Payroll Survey. They would on the Household Survey.
This is an important issue for communities trying to measure the impact of new and diversified economic development efforts, like investments in getting affordable broadband and small business training and development. If economic developers are being rewarded for increases in payroll jobs, the community is losing out big time--that's not where the growth is.
Not only that, a factory floor payroll job is not necessarily equal to a self-employed job. A prosperous microenterprise owner with a gross business income of $150,000/year and take home "pay" of half that has a much larger impact on the economic health of the community than a $12/hour full time hourly worker, and it's probably much more than just a simple 3x factor. One economic developer I talked to thought that the impact of a single self-employed professional in the community might be worth as much as ten shop floor jobs, because of the indirect effect. Self-employed professionals are spending some of their business income on local businesses--attorneys, accountants, copy services, and other professionals in the community, lifting all of them.
Submitted by acohill on Mon, 10/04/2004 - 09:07
An op-ed piece in the NY Times (registration required) provides another data point to show that outsourcing jobs to other countries is not the national crisis the mainstream media has tried to make it.
The author provides data that shows the U.S., as other studies have suggested, is actually showing net gains from outsourcing. That is, outsourcing low pay, low skills jobs creates other business opportunities that more than offset the direct job loss.
As the author notes, this data is not a great comfort to a region that has lost those jobs. Factory floor workers who have had their jobs outsourced need training and help to be able to compete for the higher wage, higher skill jobs that are being created.
For rural communities, it's another indicator that business as usual just won't work. The Old Economy jobs being lost cannot be replaced by more aggressive industrial recruitment, better brochures, or a new logo--all things I've seen promoted as "proof" of a revitalized local economic development program.
What does work? Here are some things that are important in the Knowledge Economy:
Submitted by acohill on Mon, 09/27/2004 - 08:10
I met a scientist and researcher a few days ago who is putting together a pharmaceutical startup in a very rural community. He owns several patents and putting together an operation to manufacture and market the new drugs. Size of the company? Approximately ten highly paid scientists, researchers, and marketers. Virtually all other operations will be outsourced.
This businessperson chose where he lives based on two criteria: great quality of life and the availability of broadband.
This story is being repeated over and over again across the country. Here's the question for rural communities: Do your economic development efforts (marketing, services, Web site) provide the information that businesspeople like this one want to make a relocation decision? How do you assess "success" in your economic development efforts? Do you have a formula that considers the value of microenterprises in your community? For example, are you still just counting heads as a measure of success?
By that, I mean if you don't have a way of considering the financial impact of ten scientist/researcher jobs on your community compared to ten factory floor jobs, you are in trouble (my guess is that one scientist/consultant/professional job could be worth as much as ten factory floor jobs).
Submitted by acohill on Thu, 09/23/2004 - 11:39
According to an article in USA Today, more than 800 communities in the United States are building their own networks. There is some fascinating stuff in this article, which highlights a high speed fiber network and MSAP (Multimedia Services Access Point) in Danville, Virginia.
A high speed fiber network and MSAP for the Danville area was first proposed by me in a 1999 document study I did for Virginia's Center for Innovative Technologies, which was encouraging Danville to "think big" as they designed and built a business incubator.
Here are some of the other highlights from the USA Today article.
"We used to have to beg businesses to locate here. Now our phones are ringing off the hook," Hamlin (Mayor of Danville) says, beaming.
"This was never a case of 'Build it and they will come,' " says Hamlin, the Danville mayor. "This was a case of, 'If you don't build it, you know they won't come.' "
...nDanville paves the way for a raft of possibilities: advanced college placement courses, home-based instruction, teacher-parent meetings via the Internet and videoconferencing galore.
"If you want to recruit high-tech, you have to be high-tech," says Locker, adding: "Nobody moves to Danville without first looking at the schools."
In the Knowledge Economy, as they have found out in Danville, it's more than just infrastructure that makes a difference. Good schools, quality of life, and support for entrepreneurs all contribute to success in economic development.
Submitted by acohill on Mon, 09/20/2004 - 06:01
I visit a lot of rural communities. Most of them are trying to chart a path for themselves in the Knowledge Economy. But there is still a lot of stovepipe thinking going on. Economic developers are rarely talking to town planners. Town planners are rarely talking to business people. Hardly anyone is talking to work at home businesspeople.
No one cares about broadband. Let me repeat that. Businesspeople that are engaged in the new economy don't care about broadband. What they care about is being able to meet their customers needs and expectations. Broadband is needed to do that, but broadband is not really an issue for them--what they are able to do with it is an issue.
What I'm trying to say is that broadband is simply one part of a bigger picture for communities, and the bigger picture, for the entrepreneurial, microenterprise businessperson (remember that small businesses are creating 75% of new jobs), is that they need a bunch of amenities and services in a community to be able to meet their customer needs and expectations. It's never just one thing (like broadband).
What are some of those things? Here's my list:
Submitted by acohill on Mon, 09/13/2004 - 19:52
A few years back, Idaho set its eyes firmly on the future, and the effort is beginning to have a major impact in the rural state. Idaho is not only not on the way to anywhere, it does not come to mind quickly as a hotbed of technology companies and entrepreneurs.
But it is. Wired's story is worth a read to see what can happen when a region sets a vision for the future and sticks to it long enough to see results. Idaho did not go after the quick fix. The state took its time, invested patiently, and kept it's eye on the ball.
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