Lubbock, Texas: Building Innovation

March 24, 2016

By: John Karras, senior consultant, TIP Strategies

Texas Tech University, Lubbock, TX

One recent project that has yielded significant positive outcomes is the strategic plan [PDF] TIP completed for the Lubbock Economic Development Alliance (LEDA). Since the plan was finalized in March 2015, two of the five priority projects TIP identified have already been partially implemented: 1) attracting catalyst R&D investments into the community in partnership with the Texas Tech University system and city leaders; and 2) establishing a community college campus in an under-served portion of the city.

Below is a brief summary of early results from these two priority initiatives:

Research & Development: LEDA’s financial commitment to support programs related to entrepreneurship & innovation as part of Texas Tech’s new research park were highlighted in a November 2014 press release [PDF]. Thanks in part to the strategic plan, LEDA has committed over $250,000 to the effort. LEDA’s 2014-2015 annual report [PDF] reveals that their contributions are already yielding results. The research park’s first tenant was announced in February 2015, several months before the park opened. (Chromatin, an agri-science company based in Chicago is moving its R&D division to Lubbock.)

Community College: A South Plains College media release [PDF] details LEDA’s involvement in expanding the college into Lubbock, specifically to an underserved part of the city, which TIP identified as a critical gap in the region’s talent development system to be addressed by the strategic plan. LEDA is committing $1.9 million initially (with another $1 million held for future investment) as part of a coalition of community partners that is developing a major new center for South Plains College in East Lubbock—an area that has experienced disinvestment for many years.

The plan has played a key supportive role in moving these initiatives forward, leading to some investments and job growth. Yet, this is just the beginning. We’re excited to watch as LEDA continues to implement the plan.

North Louisiana Economic Partnership: Impressive First Year Results

March 15, 2016

By: Caroline Alexander, senior consultant, TIP Strategies

Downtown Shreveport, LA

Image credit: Downtown Shreveport, LA by Shreveport-Bossier Convention and Tourist Bureau via Flickr (CC BY 2.0)

In June 2014, the North Louisiana Economic Partnership (NLEP) adopted its five-year strategic plan, developed with the assistance of TIP Strategies. The plan was created to serve as a roadmap for the organization under the leadership of NLEP President, Scott Martinez, CEcD.

TIP’s principal and CEO, Tom Stellman, recently attended NLEP’s Annual Meeting to provide an update on plan implementation and outcomes to the organization’s Board of Directors. Tom was happy to report that the staff at NLEP has been fully engaged and fully committed to the plan.

NLEP’s initial successes include: 1) designation as Accredited Economic Development Organization by IEDC; 2) hosting the inaugural Top Skills Workforce Summit; 3) capturing 212 million media impressions, and landing projects representing over $40 million in new investment.

In the first year, NLEP raised additional funds to support implementation, including additional staff. They also increased stakeholder engagement, adding almost 30 new investors. They modified their by-laws and staffing structure to align with the strategic plan recommendations. With this enhanced implementation structure in place, they set out to achieve the vision laid out in the plan.

NLEP strengthened their economic development marketing campaign and built staff capacity in key industry sectors. They hosted the inaugural Top Skills Workforce Summit and continued to work with partners to improve the alignment of regional education and training resources with employers’ needs. They also put in place the structure for launching a regional advocacy program.

2016: Trends and Predictions

January 20, 2016

By: Jon Roberts, Principal, TIP Strategies

There is something irresistible about making New Year’s predictions. Never mind that things always turn out differently than we expected. It’s an exercise worthy of the effort. From an economic (and economic development) perspective, 2015 was certainly an odd year. The biggest news was probably the precipitous decline in oil prices.

Global price of WTI crude_DailySource: International Monetary Fund, Global price of WTI Crude [POILWTIUSDM], retrieved from FRED, January 18, 2016

The effects of this decrease will continue to be felt in the new year. While good news for consumers, the drop hit oil-producing regions especially hard (nationally and internationally). The ripples are being felt in the renewable energy market and in the automotive industry (with lagging hybrid and electric car sales). It even has significant implications for the reshoring of manufacturing companies (due to the reduction in shipping costs). Of course, the job market in domestic oil and gas producing regions has suffered accordingly.

So what does this mean for 2016? Will prices remain low? My friend Chris Tomlinson of the Houston Chronicle predicted the coming price drop, and I’m persuaded that he’s right. Prices will remain low throughout 2016.

From energy let’s move to technology, especially automotive technology. By now we’ve come to realize that some of the biggest breakthroughs are in relatively mundane sectors. Uber and Lyft are nothing more than apps that rely largely on ordinary mobile devices. The implications of these services, however, are wide-ranging. Can we imagine a generation for whom car ownership is of little importance? We can, because they are already among us. Add to that radical breakthroughs in driving-assisted technologies, and the future of the auto industry suddenly begins to look very different from what it does now. Is this a prediction for 2016? Yes it is. But the changes will be incremental. And it’s only when we look back from, say, 2025 that we’ll realize how profound the changes have been.

On a related note, the Tesla battery factory in Reno deserves prominent attention. Tesla’s site selection can be seen as a way to stay in California without paying California taxes. It’s less than a four hour drive from the Tesla HQ to Reno, and a lot less if you are in a Tesla without CHIPs to patrol you (funny how word associations change). What Tesla’s energy innovations mean for 2016, especially in light of low oil prices, makes for interesting speculation. Will there be fewer Teslas sold? Or will the firm’s auto sales be only a small part of a larger battery technology play? Elon Musk is spearheading a move on the energy grid, targeting commercial and residential customers. I think it’s safe to assume that the impact of battery storage in the building industry will be as significant as anything in the automotive realm. Commercial battery storage will make news in 2016, but the implications will be with us for the rest of the decade.

The other inescapable economic story of 2015 was income inequality. The following chart (courtesy of National Public Radio) gives a remarkably broad perspective on the subject:

IncomeGrowthChart-NPRSource: World Top Incomes Database via Quoctrung Bui/NPR, Note: Income is inflation adjusted in 2012 dollars

Going all the way back to the 1920s, we can see that the “rise of the 1%” doesn’t begin in earnest until the early 80s. And it doesn’t exceed the rate of income growth of the bottom 90% of earners until after the year 2000. So the question for 2016, and well beyond, is: What will the chart look like? Will the extremely wealthy get more so? And will it come at the expense of the bottom 90%? The answer to the second question is usually assumed to be yes. But, in reality, the equation is complicated. Income inequality is not inherently negative. If we could achieve a significant reduction in poverty, even if a large disparity remained, would that be a bad thing? The better way to frame the question is how much “inequality” can the economy tolerate? This brings us to Thomas Piketty’s much-discussed thesis. If the rate of return on wealth exceeds economic growth, then inequality increases—and that (implicitly) becomes unsustainable. 2016 won’t bring an answer, but we can safely predict that it will be a pressing topic. Why? Because 2016 will see one of the most contentious elections ever. Among the issues will be income inequality and what to do about it.

One topic, however, will be conspicuously absent from the political debate: the impact of technological advances on the economy. Why is that? Because the relationship of technology to economic growth is difficult for politicians— and economic developers—to address. Technology companies–and the Silicon Valley model–remain the Holy Grail of community leaders. The reality, again, is much more complicated. At TIP, we have been arguing for years that the job growth potential of tech companies is nowhere near what the economic development world assumes it to be. Jerry Davis, a professor at the University of Michigan’s Ross School of Business, makes this point convincingly in an article for Brookings, in which he points to research documenting the growing disconnect between high-valuation companies and job creation. (See table below.) With the exception of Walmart, the top five US corporations in terms of their market capitalization in 2012 employ a fraction of the workforce that firms at the top of the list did 50 years previously.

Top Five Market Cap

Source: Compustat, as published in “Capital markets and job creation in the 21st century,” by Jerry Davis for the Center for Effective Public Management at Brookings, December 2015


Corporate (and stock) valuation is not a function of employment and hasn’t been for some time. Interesting, then, to compare corporate valuations with the income growth graph. To put it bluntly, there is a negative correlation between the use of technology and the need for workers—skilled or otherwise. It may be regrettable that none of our presidential candidates are willing to tackle this issue, but it will be front and center in cities and regions across the country.

Energy, equity, and technology are sure to be pressing issues in 2016. We would do well to rethink the relationship between economic growth and employment growth. Let that be our New Year’s resolution.

TIP Strategies Announces Seattle Office Expansion

January 18, 2016

By: TIP Strategies

Ashton headshotAshton Allison, CEcD, joined TIP Strategies’ Seattle office as a consultant this month. Ashton has over 14 years of experience in marketing and economic development in the private, public and nonprofit sectors. He specializes in economic development marketing, including historical marketing analysis, strategic communications planning, branding, copywriting, media strategy and placement, community relations, and earned media strategies.

Before joining TIP Strategies, Ashton worked as an economic development practitioner and director of marketing for the Amarillo Economic Development Corporation (EDC). During his time there, Ashton was responsible for creating and managing the organization’s annual plan of work, strategic communications plan, and lead generation program. His work earned a Gold Award from the International Economic Development Council (IEDC) in 2011.

Prior to working for the Amarillo EDC, Ashton served as the executive director for Entrepreneur Alliance, a consortium of organizations promoting entrepreneurship and providing assistance to small business owners in the northwestern-most 26 counties of the Texas High Plains.
He started his career and spent over six years at a full-service marketing firm, where he served as a manager and copywriter for the Amarillo EDC account.

Ashton holds a Bachelor of Business Administration degree in marketing from Baylor University. He achieved his Certified Economic Developer (CEcD) designation through the International Economic Development Council in October 2014.

Tom Stellman, TEDxBrookings, and the Geography of Recovery

January 15, 2016

By: TIP Strategies

TEDxBrookings
In October, TIP Strategies founder and CEO, Tom Stellman was featured as a speaker at the independently organized TED talk event, TEDxBrookings. His presentation was part of the “Origins of Community” session and has recently been released on YouTube. Tom’s talk addressed the changing geography of jobs before, during, and after the Great Recession.

The changing landscape of jobs is a topic we return to regularly at TIP Strategies. Beginning in the spring of 2008, we sought to visualize the answer to a seemingly simple question: How did the impact of the recession play out across the country? Our original interactive map, The Geography of Jobs, (revamped in 2014) became a widely distributed illustration of the dramatic gains and losses of the Great Recession. Yet we felt that part of the story was still missing. While the media were touting the “recovery” of all jobs lost since the start of the recession (a milestone achieved at the national level during the second quarter of 2014), we were seeing a different picture on the ground.

Our latest visualization, The Geography of Recovery, seeks to illustrate the cumulative impact of the Great Recession. Using the same data that fed the Geography of Jobs, we’ve taken a different approach, comparing employment levels in each metro area to the number of jobs reported at the beginning of the economic downturn. The result is decidedly less dramatic visually, yet a striking revelation is exposed: the unevenness of the recovery. As of July 2015—more than one year after the country returned to pre-recession employment levels—fully one-third (120) of the more than 300 areas analyzed had not yet recovered the number of jobs lost during the recession.

TIP Strategies Featured at the Buenos Aires Global Summit: Economic Development Districts

October 2, 2015

By: Jeff Marcell, Senior Partner, TIP Strategies, Inc.

Innovation Districts, Prosperity Zones, Creative Districts or Tech Towns—no matter what the terminology, the concept of concentrating industries, technologists, companies, entrepreneurs, and R&D within a definable geography is top of mind for many in the economic development community. Prime locations are usually dense urban environments offering mixed-use real estate, allowing residents to work, learn, and have fun all in the same neighborhood. Examples and elements of these districts are being studied by economists, think tanks, and economic developers alike. Best practice models are scattered around the US, often led by public-private collaborations. Examples include Seattle’s South Lake Union, Detroit’s Downtown and Midtown developments, and recent developments in downtown Las Vegas. Sometimes these districts are executed by formal, organized efforts with specific boundaries, and sometimes they grow from an organic process with informal boundaries. However they take root, successful districts have generated a lot of attention and inspired many communities to pursue similar approaches in hopes of stimulating job creation.

The Summit

In September, I was honored to join some of the most knowledgeable and successful thought leaders in economic development from across the US to participate in the City of Buenos Aires’s Global Districts Summit in Argentina. The Summit was driven by the city’s motivation to share best practices in the creation and sustainability of economic development districts with a focus on public policy, entrepreneurship, and international business development. My fellow US delegates included leaders from the Research Triangle Park, Ann Arbor SPARK, Creative Oklahoma, the University South Carolina, IAE Business School, and the Center for Strategic International Studies out of DC.

The conference began with a full day tour of the city’s five creative districts dedicated to technology, audiovisual, arts, design, and sports/entertainment. The districts were established in 2008 to address blight, unemployment, and poverty in economically disadvantaged areas. The goal of the districts program is to attract new investment, jobs, and redevelopment. A daylong workshop followed, discussing the districts’ accomplishments and ways in which the city could improve and expand on what has been completed. The summit culminated in a half-day public forum attended by over 200 dignitaries, business leaders, and city officials. This forum is where I and other delegation representatives shared our thoughts on lessons learned from other districts around the world and suggested opportunities the Buenos Aires districts could pursue in the future. An enthusiastic keynote address, about the possibilities that innovation holds for Argentina, was given by Guibert Englebienne. Guibert, who is regarded as the Steve Jobs or Bill Gates of Argentina, is co-founder of Globant, the country’s largest technology company with more than 4,300 employees serving clients like LinkedIn, Zynga, and Google.

The Takeaway

At TIP Strategies, we think about successful economic development efforts in terms of Talent, Innovation, and Place. These three components are critical to a successful economic development district as well as to the region in which that district is located. What follows is an outline of some of what is happening in the City of Buenos Aires and its creative districts, as well as ideas that were shared by the delegation, as they relate to Talent, Innovation, and Place:

Talent: Buenos Aires exudes excitement and energy. Its architectural beauty, vibrant art, culture, and nightlife act as a magnet for the creative class. The city also has over 30 universities and colleges within its boundaries. Buenos Aires has made meaningful commitments to strengthen its talent base. One effort is a partnership with three universities, including the prestigious Technology Institute Buenos Aires, to collectively build a new campus in the heart of the technology district. The production of more trained engineers is imperative; roughly 40% of engineering graduates from local schools leave the country to work elsewhere. This is an unacceptable loss of a precious asset. The delegation agreed that all efforts must be made to keep and grow this engineering talent if the districts, city, and country are to be successful.

Innovation:The rapid success of Globant is proof that innovation and entrepreneurship is alive and well in the Buenos Aires region. The city has received international recognition for its growing software industry, drawing attention from companies and technology leaders in places like Silicon Valley. But recognition and international contracts for only the largest firms is not enough. Technology businesses within the district primarily serve back-office functions for business and government clients within Argentina. If businesses within the district are going to succeed, their customer base must be larger than the opportunities within the country’s borders. The city can help attract international business for its emerging tech cluster. Additionally, the city’s university system has focused its energy on the production of skilled students, which is vital, but not enough to achieve success. The conference’s US delegation encouraged an emphasis on research and development and technology commercialization out of these institutions as well.

The city also has a fledgling entrepreneurship program. The program has limited staff and resources with a broad directive to help the people of Buenos Aires create their own business. The US conference attendees recommended that the program narrow its focus to just serving entrepreneurs in the sectors that align with the districts, rather than a more general approach.

Place: Buenos Aires benefits from attributes that create fertile ground for innovation districts: a dense population and mix of residential and commercial activity, served by mass transit. In this respect, the city is fortunate; it didn’t have to create this environment, like many other cities with similar ambitions have to do. In 2008, the city took bold steps to establish the creative districts, identifying areas of focus, setting boundaries, establishing tax incentives to encourage investment and relocation, and making the catalyst investment of building a new state-of-the-art city hall in the technology district. The new city hall not only serves as an architectural gem, it is a statement that the city is committed to the districts’ success. Many businesses have responded—with over 200 firms locating in the technology district alone. They are all benefiting from incentives and infrastructure investments made by the public sector. The US delegation unanimously agreed: if the districts are to meet their potential, the business community must now take a larger leadership role. We encouraged a new formal partnership between the city and the business community with dedicated staff and programming to address the districts’ opportunities and ongoing needs. This kind of initiative would require that the city give up some control; this is necessary to achieve the city’s goals for the districts and ensure their sustained, long-term success.

The concept of innovation/creative districts translates around the world. Concentrating industries, entrepreneurs, and technologists creates an abundance of opportunities that may produce new businesses, investments, and jobs. The Buenos Aires creative district program was established just seven years ago, and they have already generated palpable success. These districts serve as an inspiration to communities everywhere. If it keeps on this path, the city will reach its ambition of being the unquestionable technology capital of South America and will provide jobs and opportunity to its people. Buenos Aires is a place economic development practitioners need to watch.

To learn more about the City of Buenos Aires creative districts visit:
www.turismo.buenosaires.gob.ar/en/article/economic-districts
I welcome the opportunity to discuss innovation districts with you and learn about the economic development efforts in your community. Please feel free to contact me at jeff@tipstrategies.com.