What does it mean to be a “future ready” local economy today?
22 January, 2016 / Articles
For many decades, cities focused their economic development efforts on attracting industry. These companies generated new local jobs – both at the companies and through existing local businesses that supplied the companies’ employees with the products they needed, everything from new homes to groceries and other retail items. Civic leaders knew the formula for attracting industry: They had to provide financial incentives, a strong transportation system, a solid infrastructure, and community services such as public schools. The winning cities were the ones that made it easiest to do business by improving access to capital and information and reducing the economic frictions of time and distance for manufacturing and distributing products.
But technology has started to change that formula. Information is ubiquitous. For many companies, virtual infrastructure has become as important as physical infrastructure. Access to capital has grown, and the system for securing that capital has been transformed. As we move from a brick-and-mortar economy to one driven by innovation, it will be crucial for cities to facilitate job and economic growth by fostering established businesses, as well as the entrepreneurs who today are driving 50 percent of GDP and creating 75 percent of new jobs.
So what strategies should cities adopt to ensure they attract and nurture the people, ideas, and businesses that will be the economic growth engines of the future?
Dell and Harvard University put this question to several dozen experts at the 2015 Strategic Innovation Summit: Enabling Economies for the Future. Held at Harvard, the gathering included economists, educators, local elected officials and administrators, tech infrastructure builders, entrepreneurs, and chief innovation officers.
Summit leaders identified three major enablers communities must focus on to become a future-ready economy: 1) attract and nurture human capital; 2) foster collaborative, growth-oriented commercial environments; and 3) build an enabling foundation of technology, telecom, and physical infrastructure.
Human capital is a key factor. Workers today care more about what they work on and whom they work with than whom they work for; instead of people pursuing companies, companies are now chasing talent. To a certain degree, people choose where they live based on the lifestyle a community offers them. And most important, the innovators who will transform industry and create economic growth are people attracted by continuous opportunities to learn from others, to collaborate together, and to experience culture in all its diversity.
The summit leaders also agreed that future-ready cities must create a collaborative business environment that supports established firms and their workers as well as the growing number of independent contributors and growth-oriented entrepreneurs. Because entrepreneurs play such a crucial role in economic and job growth, cities must focus particularly on nurturing the “gazelles,” high-growth companies that have an outsized impact on regional economic growth.
And finally, the infrastructure that serves citizens has to be robust. Beyond just transportation, communities must also have the mobile networks, broadband connections, and open data platforms that allow value creators to work on their own terms and that enable the communities to provide public services with limited public funds.
After the summit, Dell partnered with IHS Economics, an industry-leading macroeconomics firm, to build an economic model for evaluating the future readiness of cities. The Dell Future-Ready Economies Model measures the performance of leading metro areas in creating policies and programs that support the three key factors that build future-ready cities: human capital, commerce, and infrastructure.
The model has allowed Dell to identify the top 25 future-ready economies in the U.S., a list that lets public- and private-sector community leaders compare their strengths to those of other future-ready economies.
These 25 cities are located throughout the U.S. This suggests that success is not only about location. It also is about cities strongly embracing the factors that enable them to become future ready. Furthermore, the model can help all cities prepare for future growth.
