The Global Economic Diversification Strategies Interview Series are short interviews with political, energy, business, and civil society leaders. Interviewees have experience or thinking to share on how communities in economic decline – particularly U.S. coal communities, can achieve new economic diversification and growth.
Q: Tell us about and your background and personal experience in thinking through economic diversification strategies.
As the founder and chairman of A.T. Kearney’s Global Business Policy Council and a partner and chairman emeritus of A.T. Kearney, I help advise governments and businesses about how to prepare for economic changes, including through economic diversification strategies. Throughout my 25 years at A.T. Kearney, I’ve witnessed the global economy shift and sectors of the economy be shaken to their core by new technologies and shifts in consumer preferences.
Economic diversification can allow governments, both local and national, and businesses, large are small, survive shocks that would otherwise hurt their core interests. There isn’t a one size fits all approach to economic diversification, nor is there a strategy that you can set forward and sit back and watch. For each case, you must first understand your own comparative advantages, your competitor’s comparative advantages, and then set forth a flexible and adaptable strategy that can (and should) change as the market factors do.
Q: What do you think are the smart strategies of the future that communities in pursuit of economic diversification and growth should prioritize?
When first thinking about what steps should be taken in pursuit of economic diversification, it is important that communities first understand their own situation. That means taking stock of your comparative advantages, and that of your competitors to first know where to base your strategy. The stock taking needs to be done as a hard-headed dispassionate review and is probably best done by an outside objective observer. Understanding what factors (location, cost of labor, government policies, infrastructure, educational facilities, etc) are desirable and in the right position for success, along with what needs to be addressed. The review also should identify the goals of any steps to encourage economic diversification—to create jobs, bolster a specific industry, raise tax revenue, encourage outside investments in infrastructure.
Once the fundamentals are laid out, communities should identify what steps should be taken to get there and then business and government must work together. Creating an environment for economic diversification takes a whole of community approach since important factors are those that are often beyond the scope of just government or business. Once a strategy is set in place that fits the specific situation at hand, it must constantly be refined to improvise against changing trends, and to make adjustments where extra action is needed.
Q: Is there a leading example of municipal/regional/national economic diversification success that you think could serve as an example to communities in economic decline – particularly coal communities which tend to be rural?
Though it is an urban example, Denver comes to mind as a leading example of how a city and region has reshaped itself to thrive in the modern economy using economic diversification. Denver utilized its physical location near mountains and great universities, advantage in affordable housing, and already high quality of life for its residents, to attract businesses, entrepreneurs, and funds to expand its economic diversification. Denver as a city worked within the regional context overall, but they also worked closely with businesses already in the city, and those they were trying to attract in order to build up factors that were appealing to growth.
Q: Who led the economic diversification effort in Denver? Political leaders, business, the community or some combination of the above? How did stakeholders work together?
Denver’s Office of Economic Development has been a leader in identifying actions for the region. Working with the Mayor, the office has created incentives for businesses within the tax code, but have also identified non-business related factors that have made Denver appealing, including affordable housing availability. By focusing on more than just how to attract businesses, but also how to attract people, the city has been a magnet for talent and businesses alike.
Q: If you had one piece of advice to convey to Wyoming and Appalachia – U.S. coal-producing regions that are working to achieve economic diversification, what would it be?
My best advice is to first do a comprehensive diagnostic assessment before starting to act on steps toward economic diversification. Often communities aren’t able to see their own problems, or skills, until they take a step back to take stock of the overall situation. From there, my advice would be to move to technologies and industries of the future. Sticking to yesterday’s comparative advantage won’t help in tomorrow’s world. No amount of government assistance, or subsidy will be able to counteract global economic forces.