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Current Affairs: The Next American Economy by William Holstein Technology Clusters and Ecosystems
The US Bureau of Labor Statistics reported an unemployment rate of 9.2 percent in June 2011. That number remains frustratingly consistent each month as millions of Americans struggle to find work. .
It is clear that many of the jobs lost in recent decades, and during the Great Recession of 2008, are extinct. It has been said that the definition of insanity is repeatedly doing the same thing but expecting different results.
Government stimulus packages and extended unemployment benefits are Band-aids for what William Holstein, author of the new book, “The Next American Economy-A Blueprint for a Real Recovery,” identifies as structural challenges in the American economy. Holstein has traveled the United States writing about globalization and the economy for major trade publications.
How will our country reinvent its workforce for the 21st century, and in which industries? Holstein believes that our economic renaissance lies in technological clusters and ecosystems.
The following is a cross-sectional synopsis of America and how it is revitalizing with technology clusters and ecosystems. Also discussed, are lessons for all American Holstein addresses regarding the current economic challenges of the country.
Clusters promote knowledge sharing and product innovation. They also learn technical and business processes by providing dense networks of formal and informal relationships within the organization. Clusters tend to happen by accident and are difficult to create.
Orlando’s technology cluster is based on computer simulation and modeling; and is rooted in part by the decision by the US military and major defense contractors in the 1950s to locate operations in the Orlando area. Disney’s influence in computer games and entertainment is also influential. Every cluster needs an idea factory and Orlando has about 140 research and development companies located near the university. “Cross-pollination” of ideas is easily promoted. Simulation and modeling are used in many industries. Healthcare is included, as it uses virtual reality to help rehabilitate stroke victims.
Pittsburgh is reinventing itself from a city of steel (the mills are non-existent today), to one of advanced robotic dominance. Making advanced robotic systems is complex and challenging. They go beyond performing repetitive tasks in an auto factory, which is simple and closed automation. The nascent industry lacks a Google or Apple presence in the city. But, area universities, engineers and government are among its collaborative cluster, committed to seeing the industry prosper and create new jobs.
San Diego is home to more than 600 life science companies and 700 wireless communications companies. In the 1970s, science and medicine rarely collaborated. Today, the blend of biotech expertise and massive computing power helps San Diego dominate in medical research and development, including Genomics. The opportunity is great for “creative collisions” between university students and professors, business leaders and the government of the area. San Diego boasts a high percentage of entrepreneurs at risk and venture capital funding, which is continuously pursued to spread more technological advancements.
Technology ecosystems are factories of ideas that embody different scientific and academic disciplines located in close proximity. They include a presence of large established companies that often invest in start-ups, license their technology, and/or sit on their board of directors. CEOs mentor the less experienced managers of small businesses. Government agencies are partners, but companies do not depend only on them. Angel investors and private sector investors are also key players. There are no guarantees in any ecosystem.
North Carolina spread its furniture, textile and tobacco industries. Today it is a state that small and medium enterprises are committed to export, which is key to creating economic growth, wealth and jobs. Companies that export generally pay higher wages and stay in business longer. Holstein says exporting is a huge untapped economic potential. America’s export promotion and financing system is fragmented and ineffective. North Carolina triumphs, as the agencies of the local, state and federal levels collaborate to promote the export. They provide information to small business CEOs about fairs in foreign capitals. They also play matchmaker with distributors and potential customers, and help companies translate their sales materials into local languages, among other things.
Atlanta, like many American cities that depend on manufacturing for economic viability, in recent decades has relied heavily on offshoring and outsourcing to reduce costs. Today, the city exemplifies companies that return operations to the territory of the United States, a trend known as “backshoring”. This is especially true of high-end technology, telecommunications and healthcare organizations. Jetting around the world to adjust production and design changes is both costly and time-consuming. Shipping costs, complicated logistics, political unrest and the threat of intellectual property theft are also motivators. Atlanta’s regional government ecosystem, universities and supplier and logistics experts are among those committed to reviving the area’s labor market.
Cleveland is at the forefront of the twelve hundred American community colleges for workforce retraining. Cleveland’s strength is the retraining of displaced workers in their forties and fifties, a demographic hit hard by global employment trends. Current and future workers need a higher set of knowledge-based skills to be competitive; and Cleveland gives. City community colleges treat education less like a business and more like school, allowing the unemployed to quickly transition into a viable new career. Cleveland’s educational ecosystem includes local business leaders and government officials. Community colleges can often be more flexible than four-year colleges. Funding streams from federal, state and local government, as well as private foundations.
Lessons for all Americans
Holstein concludes that America is the center of a global economy and the competitive pressure is permanent. We believe that we are a culture of creativity, innovation and freedom. Our comparative advantage is our ability to overcome existing technologies to be disruptive. To maximize this advantage, future generations need to master mathematical and scientific skills. It is the only way to thrive in a knowledge-based economy. “This is a defining moment for America, similar to the Great Depression, when we had to invoke a new vision of our future,” he says. “I really believe we can regain the optimism that many seem to have lost.”
To keep up with America’s future economy, visit http://www.williamholstein.com.
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