Polish your crystal ball and gaze into the post-COVID-19 future.

Polish your crystal ball and gaze into the post-COVID-19 future.

Everyone’s opinion of what our world will look like and work like after it is safe to come out of our homes is worthy of consideration. The only thing that is certain is uncertainty. “The only constant in life is change,” opined Heraclitus; as true today as it was in 500 BCE. It is certain that life as we knew it will change even more in the months and years ahead as we try to reestablish our social and economic lives. Just how it will change is open to speculation. But the process for returning to ‘normal’ will take a long time and will embrace more than one solution. One size will not fit all. Comfort levels are personal, and our more heightened sense of personal and family safety (and mortality) is likely to create more job mobility and inform our choices about where and how we live. With this is likely to come additional healthcare reform.

Just as we expect the coronavirus to do next year, humans will need to evolve to survive. Indeed the ‘r-evolution’ has already begun. We have been forced to accelerate our learning curve on how to connect virtually…for business meetings, watercooler chats, afternoon coffee breaks, 5 O’clock Somewhere happy hours, and virtual late-night clubbing. It is likely that in the brave new working world, offices will be designed with physical distancing in mind while also being downsized to accommodate stints of working from home. What long term virtual behavior means for our work life is yet to be determined.

Pre-COVID, gross domestic product (GDP) in the United States across economic sectors shows that agriculture contributed 1%, industry (manufacturing/products) 19%, and the service sector (financial services/media/transportation/technology) 80%. Comparably, China’s sector GDP was 8%, 40%, and 52%, respectively. As a result of the pandemic, sector redistribution in the US will likely occur over the next decade. The early signs point to a more protectionist economy. Global supply chain interdependence will be realigned, and we will see a rise in the US manufacturing sector, most likely in advanced manufacturing, as controlled access to products will be seen as a national security issue. This is particularly front and center today in the medical and pharmaceutical industries. De-globalization will work itself into the economies of countries around the world in order to develop more self-reliance. Resilience planning will become a major policy exercise.

Solving for what all of this means for a particular metropolitan area or state will be different in each instance. National and international macro trends and impacts need to be incorporated into local, micro-level analysis of assets, aspirations, and ability to execute in order to determine an optimal regional economic development strategy for post-COVID-19 America. Also critical to a local strategy is the increasingly important role that regional innovation ecosystems will play in creating the future. Change, disruption, and pivots are familiar territory to creative entrepreneurs. Expect to see more entrepreneurial activity if there is healthcare reform that decouples health insurance from employers.

Crystal ball reflections should be coupled with knowledgeable advisory support to craft actionable plans that factor in local strengths and challenges in order to position a region to be nationally competitive when the economy turns around. The only thing that is certain is uncertainty; the only constant is change. It is how we are prepared to respond to the changes and disruptions of our local economies that will separate cities and regions when the starter’s gun is sounded at the gate. Now is the time to proactively prepare for what the new local normal is likely to be. Now is the time to formulate a plan to capitalize on opportunities when it is safe to emerge from our homes!

Middle America Darlings

Middle America Darlings

In addition to serving our clients in crisis, Waymaker Group has been working hard behind the scenes to expand and fine-tune services we know our communities will need when the COVID-19 chaos settles. Teammate Brian Kelsey’s piece on the abundance of talent in unrecognized markets is exactly where we think economic development will firmly land when this storm passes. Markets in the middle U.S. will become the new darlings, especially post-pandemic.

For example, corporate leaders are telling us they’re canceling real estate hunts for large downtown properties (in recognized tech hubs) and expect that a minimum of 30% of their workforce will be working from home. Office expansions are already moving away from a prime, single-headquarters building to smaller offices across the country. In short, companies are realizing that talent can work from anywhere.

Six of the top ten markets with the highest concentrations of software developers (with wages roughly 20% less than Silicon Valley) are in cities you wouldn’t normally think of. We’re looking at you, Kansas City, Detroit, Columbus, Minneapolis, Charlotte, and Salt Lake City. We’ve known for some time that Rise of the Rest is for real but it does seem here lately, that our time is truly on the horizon.

15 Markets Tech Recruiters Should Be Watching

 

The Imbalance of Innovation Growth

The Imbalance of Innovation Growth

The December white paper issued by Information Technology and Innovation Foundation & The Brookings Institution has, thankfully, been getting a lot of national attention and represents the next chapter in our country’s economic history. The bad news? 90% of innovation employment growth in the last 15 years was generated in just five major coastal cities: Seattle, Boston, San Francisco, San Diego, and San Jose. This concentration is not only risky for the country, it completely discounts the invention and technical talent in the middle part of the country. Progressive companies (Google, Microsoft, etc.) are catching on and expanding offices in urban markets in the middle U.S. as industry and government slowly come to realize that they’ll be left behind without an aggressive innovation economic development strategy. Those that move quickly and rally the leadership and resources required to be competitive in the tech talent arena will be rewarded exponentially. Just ask St. Louis, Nashville, Austin, Madison, Charleston, Phoenix, Las Vegas…

https://www.washingtonpost.com/business/2020/02/28/midsize-vs-metropolitan-cities/

 

Inclusive Innovation?

Inclusive Innovation?

The term, “winner takes all” is a common if not stale term that’s been used in the technology industry for years. While it may be an ugly reality in tech, it’s a principle that has some significantly detrimental consequences in economic development. The Brookings report on growth centers solidly positions our understanding of why the federal government needs to get involved in making sure our second and third tier markets don’t get completely left behind. In the authors’ words, this is becoming a “grave national problem.” Learn here about how the promise of innovation districts offers to solve some of our core issues today by fostering more inclusive community and economic development, while giving our non-top-20 markets a fighting chance at being competitive.

https://www.brookings.edu/blog/the-avenue/2020/01/23/how-investments-in-innovation-districts-can-combat-the-countrys-regional-divides/

America is Slipping. Should the Feds Intervene?

America is Slipping. Should the Feds Intervene?

A recent Brookings/ITIF report announced recently that nine out of 10 tech jobs were created from 2005 to 2017 in just five U.S. markets: Boston, Seattle, San Diego, San Francisco and Silicon Valley. Nine out of ten. Roughly half of the remaining 382 markets lost jobs in the same industries; others gained but not as substantially as the top five. So, what next? The authors propose—and we wholeheartedly agree—that the federal government invest in the top eight or ten most-promising-for-innovation markets in the middle U.S., providing the necessary jumpstart cities need to successfully seed growth. Not a crazy idea if you understand that some of our country’s earliest research parks were heavily funded with federal dollars (i.e., Raleigh-Durham, Boston, etc.)  

https://www.nytimes.com/2019/12/09/business/economy/innovation-jobs-cities.html

The Super Heroes of Middle America

The Super Heroes of Middle America

As Waymaker closes up a three-day tour with generous Midwestern hospitality provided by the leaders of the Cortex Innovation Community, it sinks in deeply: innovation leaders in the middle part of the country are made from a special kind of mettle. Leaders of Cortex, a 200-acre model innovation ecosystem built in the heart of St. Louis, started with zero resources and lots of resistance. I’m certain every breakthrough innovation leader would say the same, but St. Louis offers some unique and inspiring lessons for the rest of the middle U.S. Our takeaways from the trip can be applied to any of us pursuing advancement through technology and innovation: Champions and champion-level investments are required. While on the ground, much credit is given to founding partners BJC HealthCare, the Missouri Botanical Garden, St. Louis University, the University of Missouri-St. Louis (UMSL) and Washington University in St. Louis; not enough external recognition is given to the visionaries who “sold” the project and its required initial investment of $29M. William Danforth and the administration of Washington University strike me as the superheroes in this narrative, with later leadership coming from Donn Rubin of BioSTL; Dennis Lower of Cortex, and others. I left with astonishment as the true level of sacrifice and tenacity came into view.

Reinvention is a long game. Rushes to find partners, make commitments, or set trajectories will be met with certain failure.
Cluster strategies don’t always apply. Leveraging a market’s natural strengths makes sense for some, but not all markets in the middle U.S. Strengths in declining industries don’t always translate into success in innovation ecosystems, so new strengths must be imported and built. Place matters. I know we’ve all heard this, but it can’t be repeated enough. Next-gen workers rate environment much higher than former generations. Catering to their needs is not optional.

No One Can Do It Alone is Cortex’s slogan and its rung in my ears for weeks. Single entities (municipalities, universities, corporates) who have invested independently of one another in innovation efforts are already finding the error of their ways. While it’s understandable—this is a new game after all—institutions becoming inter-dependent will become the new skill, art, and key to success.

While St. Louis folks will tell you they’re still fighting for more growth, more inclusive prosperity, declining populations, and unequal access to education, they’ll also tell you there’s never been a better time to be in St. Louis. I would have to agree. To be affiliated with a project that has, against all the odds, made such progress in such a short amount of time tells me the flywheel is spinning and the future super bright. Kudos to the unsung innovation superheroes of St. Louis, Missouri.