Loading...
HomeMy WebLinkAbout02252013 City Council Work Session Notes - Seward Economic Growth PlanWORK SESSION NOTES ON `jCWGU'o F(otiomic E�rowt� flan Purpose: J?j,viep) (9tC* Qui wj�o Present:( UVIQ KJ nP!)t t � �t Called by: 14 a Time Date OL C In 14sb i U Ca o v W t+ oYM}e�-v 1 �U o j WN U I raves -h� 'I'hi� _ .� la uti Coti1Ce.�t ; jam N J6 0j ow TM 04. N 1 9 0 ITelAlaska Fiber -Optic Network A AT&T 2002 B GCI 2004 ©® C AVTEC 2005 ® D Forest Acres 2005 „ 1� E Exit Glacier 2005 F Bear Lake 2005 G Seward Marine Center 2009 s H Nash Road 2010 I Middle School 2012 J Jesse Lee 2012 G ®� K AT&T Japp Creek 2012 L SMIC 2013 M Camelot 2013 N ARRC 2013 O Questa Woods 2013 P Stoney Creek 2013 e asa,0 Of Course You Can! 1 an American Broadband company (� Seward.,com 1Gasl<� STarisfcrc. 0strategy ASSETS TO OPPORTUNITIES . ikDe„eopnomt _. Seward Economic Growth Plan: Strategies and Action Plans for Renewing Our Regional Economy ❑re inlornradnn urNained in mi, Arum enl i, Privileged and Introduction mnOdemial. Or, to be Died oniv by we Sey.ard rnamner ,n Peter Drucker was one of the greatest thought leaders of the 20th century. A consultant, educator, and author, his l ourmerce. aria the people and organrrarions war ki, ith or management education. Drucker offered this advice to aspiring leaders and managers: supVmtive of it, (harnbe, for the sole pmpnw of developing di. "Don't solve problems. Pursue opportunitles.' of Seward esmmmy and that lithe v oun6r,g region. A,sS• Whether personal, business, or economic, it makes no difference. We can't grow by being more efficient or saving di,w towner,, di9nlw non. ropving, u se of th--terial M• ar,,oie more (time, money, or whatever). We grow when we recognize an opportunity, and pursue it successfully. other than the intendM rodpiewls) for any Pulp— other, than that Because they focused their effort and resources on their opportunities, not their problems. stated herein is nicily prohibited. Human ingenuity and entrepreneurship is the real source of all growth. It enables us to discover and seize the This do—inet i,to, informal."r, al and Planning °"r,ww,"",°. Laszlo Kozmon -- Strategy Stre-gy-Nels Services ft( and the l oi—ty el Ala.at net Irl! of statistics on trade gaps, debts and deficits, political bailouts and rebates, regulatory clamps and controls, and all -Nets fea'oodc0e elopmenl make nowa—tiece"pre"°"`°°"'d n Christi Bell UA Center for Economic tnisdncu.In, Entrepreneurship is about the future. Seward and its surrounding region will move into that future by creating an - Development TM nam. sofprod-1and —lite, herein am a naelen ks o1 wealth can rise up to displace old and moribund systems, and in which knowledge entrenched in the past will give Strategy Nets S,o, e, lit well f diel-i—r. Renamo—fothrr Version ALPHA and o,udur and —i r, ni-n red tun ebr may Ite we can work together to seize them. This first version establishes the foundation for economic growth. As we work Iompair radem,ofd,eirre.�ertis—nee, January, 2013 The Nrategk TJoinR process h an Of+'n source y,ojecl Sour e: fit Munisno, disnibuted under a Oevive Conrmons 10 Anribudm tkener. AA otter ru,nent [+Jnr 2-" Sl -Ne t, 11.. +ry inle(llertual property AR rights reserved Welcome to building our future. Seward Economic Growth Plan 2 ALPHA 12013 pn Introduction Peter Drucker was one of the greatest thought leaders of the 20th century. A consultant, educator, and author, his writings helped build much of the philosophical and practical foundations of the modern business corporation and management education. Drucker offered this advice to aspiring leaders and managers: "Don't solve problems. Pursue opportunitles.' The Seward Economic Growth Plan follows this advice. Growth and prosperity come from pursuing opportunities. Whether personal, business, or economic, it makes no difference. We can't grow by being more efficient or saving more (time, money, or whatever). We grow when we recognize an opportunity, and pursue it successfully. Why do some economies like China and Brazil grow, while others like Greece and Argentina struggle to survive? Because they focused their effort and resources on their opportunities, not their problems. Human ingenuity and entrepreneurship is the real source of all growth. It enables us to discover and seize the opportunities that will enrich our lives. It is about the future. Knowledge is about the past. Ina crisis, we tend to rely on knowledge that pulls us into the past. We analyze reams of statistics on trade gaps, debts and deficits, political bailouts and rebates, regulatory clamps and controls, and all other indicators reminiscent of the past. We devise and implement strategies and policies based on our knowledge that props up the past in the name of progress. Yet, we fail to make real progress. Entrepreneurship is about the future. Seward and its surrounding region will move into that future by creating an environment in which ordinary people have the opportunity to become extraordinary, in which new forms of wealth can rise up to displace old and moribund systems, and in which knowledge entrenched in the past will give way to innovation and with it new forms of knowledge from which entrepreneurs can learn. The Seward Economic Growth Plan is about entrepreneurship. Its about readily available opportunities and how we can work together to seize them. This first version establishes the foundation for economic growth. As we work the plan, we'll continually refine it, strengthen it, and enhance it based on what we learn from implementing it and the new opportunities we're going to uncover. Welcome to building our future. Seward Economic Growth Plan 2 ALPHA 12013 pn Background The Seward community and surrounding region has been facing economic challenges for a decade. Previous economic development plans identified many of these challenges and some of their root causes. These plans also proposed ways in which the community could address these challenges. Even though the economy continued to deteriorate, the community of Seward had a difficult time absorbing the recommendations and finding away forward. Considering the situation, some influential people in the community decided it was time to revisit economic growth planning and to take a different approach. In July, Seward's Chamber of Commerce engaged Strategy -Nets (S -N) and the University of Alaska's Center for Economic Development (CED) to: • Engage a cross -organizational group of people to guide the development and implementation of a regional economic growth strategy and, • Develop the first version of an economic growth strategy and action plan for transforming Seward's regional economy. Interested stakeholders representing various industries, non-profit sectors, and the city met with S -N and CED people in two interactive work sessions. People from S -N and CED reviewed prior plans and other relevant documents and records. They also interviewed select people to gain further insight into Seward's current situation, opportunities, and challenges. This document, the first version of the Seward Economic Growth Plan, is a result of the work we did together. Economic growth primer Seward economic growth strategy Seward action plan S.—d Economic Growth Plan 3 ALPHA 12013ian Seward Economic Growth Plan 4 ALPHA 12013 jan Regional prosperity follows the "S-curve" When a region reaches maturity, it either stagnates because its economy can't compete with that of other regions, or it successfully renews itself and starts to move up a new "S-curve". r- y I we o :o- r - I ore' �� Wsw.;.id o od fvrm new .� � 1Incubating here [,� Motbrohip relationship! Structures o000o ..SbrUMUres.: C I Our dvic structures ondprocessegare stuck here Connecting C 3 Social services, community development, and economic o development programs appear, paid for by brokered funds �r" t7 Replicating / programmed for individual programs. structure ograms c L bonds ed or specificproj projects. Ta esstartingtopay d for by mloining bonds issued for specific projects. Taxes starting to pay for 0) m services. 8psed on o Framework developed by Eric Abrohomwn, Colombia 8usinesa Uh-1 Regional economies evolve over time. At first, growth is strong. The region attracts investment capital and invests in industries of the future. High growth industries are well -represented. As businesses thrive, economic performance and asset values grow, as does the quality of life. This attracts more people and businesses. Civic structures are typically a very small part of the economy, with a low burden. They're aligned and focused on pro -growth policies. As the region continues to grow, a few sectors begin to dominate the region. These sectors command increasingly more attention in the region as it matures. This dilutes focus on the industries of the future, slowing growth. Although economic performance and the quality of life continue to increase, as does aggregate business and population growth, they do so at a slower pace. Although burdens also continue to increase, its not enough to hinder competitiveness. As these burdens increase, it becomes necessary to fund programs with debt. As the region becomes mature, it's characterized by an under- representation of the industries of the future and a public debt load that is becoming increasingly difficult to manage. Economic performance and quality -of -life begin to erode, increasing the size of the population in need. Eventually, businesses and people begin to leave the region, accelerating the decline in asset values and compounding the debt load. To stop the decline, regions must rethink the relationships between the various organizations in their community. Considering the abundance of information and the mobility of investment capital in a 2111 century global economy, people in the region must learn how to work together if the region is to compete effectively with other regions. If successful, the region will start to move up anew "S-curve", based on the unique assets in the region and the assets it can build in the future. Seward Economic G.wth Plan I Lj ALPHA 1 20Uan Economic renewal and growth result from pro -growth thinking, policies, and well - coordinated actions. As pro -growth changes focused on generating net (good 1 bad) money flows take root, economic growth will follow. Good Money Neutral Money A regional economy works like a balloon, where air represents the money in the region. Growth comes from innovation and entrepreneurship. The resulting new products and new markets are the sources of good money. Profits retained in the region, income from traded business exports, as well as investment capital coming into the region is good money. Just as blowing air into a balloon expands it, more money produced in and coming into the region expands the economy. Money flowing out of the region for goods and services that the region can produce competitively is bad money. Profits and investment capital leaving the region to be invested elsewhere is also bad money. Bad money shrinks the economy just as a leak deflates a balloon. If bad money flows exceed good money flows, the economy will shrink as will the quality of life in the region. Innovation and entrepreneurship can limit bad money flows. The amount of money within the region and how fast it turns within the region is neutral money. Although neutral money defines the size and vitality of the region, it has little influence on regional economic growth. Just as air is made up of molecules that interact with each other, constantly moving, money moves around inside a regional economy BUT DOES NOT GROW IT. Exciting the molecules increases the air's temperature in the balloon, making it "hotter". Similarly, policies that encourage money to circulate faster inside a regional economy will make it "hotter" and more attractive to businesses and people. Brainpower-, place-, and reputation -building activities are primarily neutral money. However, they build the region's potential for desirable good and bad money flows in the future. These money flows are indicators of a region's vitality and economic health. Seward Economic Growth Plan 1 6 ALPHA 12013ian Understanding and linking a region's assets in unique ways will uncover economic growth opportunities. Developing assumptions and targets on how innovations around these connections should improve money flows is the starting point for change. z Core Reeional Assets Supporting Regional Assets Invest in Innovation j m Removebarriers to Zones "and Innovation pbusiness Innovation Clusters'; increase the What works well m leverage ratio in the region today, attracting talent and capital? cHigh Potential Regional W Counterproductive Assets Re¢Ipnal Assets Invest in civic space Eliminate all public collaboration, new '- sector support networks, and new Q�y narratives i O LOW Regional Asset Advantage HIGH What are the region's measurable advantages in global competition? ' Strategy -Nets -designed people-, place-, and finance -based structures to encourage the proliferation of innovations and rapid learning, and to ensure thatfailuresfail fast and thatsuccesses are replicable, scalable, and sustainable. A rigorous assetanalysis will expose many regional strengths and weaknesses. These will challenge existing ideas and policies, causing considerable disagreement. Community leaders and policymakers must be strong enough to work their way through these challenges, prioritize objectives, and make actionable pro -growth decisions. These decisions won't make everyone happy, but they will narrow the scope and focus on those assets that can be best leveraged to achieve growth. Growth opportunities and innovations will be rooted in a region's assets and their unique combinations. These assets include people, their knowledge, and their ability to get things done. A regional asset analysis will expose the opportunities and the basis for the region to differentiate itself from competing regions and make it more attractive to investors, businesses, and people. Although innovation opportunities will represent only a small portion of the economy, their strategic importance in a growth context to the region will be high. For regional assets that are unattractive and have low growth potential: Deemphasize public support for market economy participants. Focus on making the regional safety net effective and delivering services efficiently at a low cost. For assets that are attractive but do not offer a competitive advantage: Consider how they support innovation and entrepreneurship, and then remove the barriers that do not encourage innovation. For assets that aren't strong but that have high future potential: • Engage the pertinent people and organizations in a conversation to explore options and find ways to strengthen the assets. For attractive assets that have considerable competitive advantage: • Engage and help interested people and organizations create the new collaboration -based relationship structures that will facilitate the region's move to a new 5 -curve. • Provide public resources in a limited, disciplined, and structured way to create a market for new ideas to flourish. An ideal structure for this is an Opportunity Fund", modeled after the successful SBIR program. Over time, this approach will yield market economy successes and increase the leverage ratio (private funds divided by public funds). d 7 Four asset classes form the foundation of a vibrant 21St century regional economy. Networks of people working together must create and sustain an environment to stimulate innovation around the regions assets within and across these asset classes. nr„ A regional economy consists of a market economy and a civic economy. The role of the Market economy market economy is to generate economic growth. The role of the civic economy is to Civic economy make it easier and less costly for the market economy to achieve growth. 220 Century Innovation and For economic growth to endure, community leaders and policy makers must pay attention to the four keystones of a healthy 2151 century regional economy. These are: Brainpower Entrepreneurship • Brainpower— to grow and better manage regional talent. A growing economy needs to develop a steady supply of capable, highly motivated, and productive people. • Innovation and Entrepreneurship — to grow the regional economy by mobilizing regional talent. Businesses need good people to create new products and markets, and to make existing products better and operations more productive. • Quality, Connected Places — to make a physical place attractive to people and Civic Collaboration businesses. The best people require better -than -average places to live and connect , with each other. • New Narratives and Brand — to attract businesses and people through new ways of doing things and working together. If nobody knows about the region and why it's attractive, nobody will come. A disciplined, structured approach to managing economic growth initiatives bind the four Quality, New cornerstones together into a cohesive whole. Civic Collaboration is the fastest, most Connected Narratives and productive way to oversee a regional growth agenda. Community leaders and policy Places Brand makers must learn how to work together across their organizational boundaries to unlock the synergies inherent in the region's assets. Often, the potential value of these assets and their various combinations are not at first apparent. A deep understanding of Source EdM—i—, d,W,bWedonder o regional assets and how they generate the money flows tat make up the regional Creative Commons 3.0 Attribution iicens.. economy must inform the communityto gain alignment and support. Initiatives managed in a portfolio necessarily involve the use of standardized approaches and metrics. These metrics -driven processes are the foundation for achieving clarity and for cohesive decision-making in designingand implementingan economic renewal agenda. 8 Pro -growth policies must differentiate between three types of innovation, creating the conditions for the three types to flourish in the right mix to keep the economy growing. r LL aI L? o s a z� F 0 i INNOVATION INA REGIONAL ECONOMY Empowering Innovation A deeper understanding of our regional assets will spur innovation. Innovation takes three forms. Ina regional economy, it comes from combining and continually recombining regional assets in new ways. Although an innovation may exist elsewhere, it's new based on its growth effect on the region when introduced into that region's economy. Civic Market Economy Economy The basis for this chartis a mapping of good, bad, and neutral money flows that make up a region's market and civic economies. The relative positions of the X and Y axes depend on the amount of money attributed to each quadrant. The chart overlays the three types of innovation to show where and in what rough proportion innovations are likely to occur. Empowering and sustaining innovations in the market economy are the primary sources of economic growth. N07E Based on VW.n M. Christ—en's th—its of innovation Efficiency innovations reduce the cost of making and distributing existing products. These innovations typically occur in mature and declining markets where companies need to invest to remain competitive. Taken together in an industry, efficiency innovations reduce net jobs but free up capital to be invested in empowering innovations. They yield productivity gains and fuel neutral money. The freed up capital acts as a buffer for future good money flows as empowering innovations take hold. When job and capital growth from empowering innovations exceeds that of efficiency innovations, economic growth will occur. As long as economic policies sustain innovations, the quality of life will continue to increase. Over time, industries typically transition through these three types of innovations. The challenge is to ensure the three types of innovation occur in the right mix to continually grow the regional economy. Seward Economic Growth Plan 1 9 ALPHA i 2013 jan Although the market economy drives growth, the civic economy supports that growth in crucial ways. Since the market economy takes care of itself, public investment must be limited to areas in which innovations can be publicly valuable but not yet profitable. Economic development activity here does not help v--- --------------- rivately Privately Not; Profitable Prafkable yed,l I Innovations and i. � economic development activity take place here Publicly 'ti•Publidyi Valuable ;,.ValuabN i '----fir----'�--- --- -- = Yl Where growth occurs qF__ h i I - WE MUST LEAD and PRIVATE SECTOR INVEST HERE ALREADY INVESTS 3 HERE 2 Y c a DO NOT INVEST DO NOT INVEST 0 i NO YES Is It Privately Profitable Today? As a rule -of -thumb, economic activity that is publicly valuable but privately not profitable occurs in the civic economy and is neutral money. In some cases such as the education and healthcare sectors, this economic activity has the potential to contribute to future net good money flows. To improve the productive yield of these regional assets, they must focus on where regional growth will occur and on speeding up neutral money flows. Traditional economic development typically focuses on infrastructure and non-profit service sector investments in the birth and growth stages of the S-curve, providing support for net good money flows. As a region reaches maturity, economic development increasingly focuses on market economy participants in sectors that are in mature industries, marginally profitable or worse, or those on a decline. These efforts are an attempt to stem eroding asset values and lengthen their life by keeping neutral money flowing. This does not grow the regional economy. Community development is different from economic development in that it focuses on neutral money flows. Today, this distinction is unclear in the field of regional development. The effect is that objectives and efforts are not aligned with growth, and scarce resources are not utilized productively from a regional growth perspective. From a public policy perspective, allocating public funds to areas that are or should be profitable creates moral hazard. A more productive use of public funds is to prune and align economic and community development, and only invest public funds jointly with civic and market economy participants in areas that have profit potential in the near-term and are publicly valuable. These public efforts and funding should narrowly focus on: • Strengthening only those parts of the civic economy that are most crucial to supporting business growth. • Reducing the civic economy (including government) barriers to business growth. • Convening the appropriate parties to enable better ways to work together and create the right conditions for innovation and entrepreneurship to thrive. Seward Economic Growth Plan 1 10 ALPHA 12013 Nn Empowering innovations transform complicated, costly products available to only a few into simpler, less expensive products available to many. These new Sustaining products create new markets and new consumption. Empowering innovations Innovation create more jobs, capacity, and capital. They have the most impact on good money flows, but also impede bad money flows to grow the regional economy. Sustaining innovations replace old products with new ones, mainly in mature Efficiency markets. They consume most of the capital in a regional economy and keep it Innovation healthy. The replacement aspect of sustaining innovations creates few net jobs and little capital growth. Exporting sustaining innovations enhance good No money flows and finding economic substitutes for imports impede bad money Innovation flows. They also fuel neutral money through continual productivity increases. Civic Market Economy Economy The basis for this chartis a mapping of good, bad, and neutral money flows that make up a region's market and civic economies. The relative positions of the X and Y axes depend on the amount of money attributed to each quadrant. The chart overlays the three types of innovation to show where and in what rough proportion innovations are likely to occur. Empowering and sustaining innovations in the market economy are the primary sources of economic growth. N07E Based on VW.n M. Christ—en's th—its of innovation Efficiency innovations reduce the cost of making and distributing existing products. These innovations typically occur in mature and declining markets where companies need to invest to remain competitive. Taken together in an industry, efficiency innovations reduce net jobs but free up capital to be invested in empowering innovations. They yield productivity gains and fuel neutral money. The freed up capital acts as a buffer for future good money flows as empowering innovations take hold. When job and capital growth from empowering innovations exceeds that of efficiency innovations, economic growth will occur. As long as economic policies sustain innovations, the quality of life will continue to increase. Over time, industries typically transition through these three types of innovations. The challenge is to ensure the three types of innovation occur in the right mix to continually grow the regional economy. Seward Economic Growth Plan 1 9 ALPHA i 2013 jan Although the market economy drives growth, the civic economy supports that growth in crucial ways. Since the market economy takes care of itself, public investment must be limited to areas in which innovations can be publicly valuable but not yet profitable. Economic development activity here does not help v--- --------------- rivately Privately Not; Profitable Prafkable yed,l I Innovations and i. � economic development activity take place here Publicly 'ti•Publidyi Valuable ;,.ValuabN i '----fir----'�--- --- -- = Yl Where growth occurs qF__ h i I - WE MUST LEAD and PRIVATE SECTOR INVEST HERE ALREADY INVESTS 3 HERE 2 Y c a DO NOT INVEST DO NOT INVEST 0 i NO YES Is It Privately Profitable Today? As a rule -of -thumb, economic activity that is publicly valuable but privately not profitable occurs in the civic economy and is neutral money. In some cases such as the education and healthcare sectors, this economic activity has the potential to contribute to future net good money flows. To improve the productive yield of these regional assets, they must focus on where regional growth will occur and on speeding up neutral money flows. Traditional economic development typically focuses on infrastructure and non-profit service sector investments in the birth and growth stages of the S-curve, providing support for net good money flows. As a region reaches maturity, economic development increasingly focuses on market economy participants in sectors that are in mature industries, marginally profitable or worse, or those on a decline. These efforts are an attempt to stem eroding asset values and lengthen their life by keeping neutral money flowing. This does not grow the regional economy. Community development is different from economic development in that it focuses on neutral money flows. Today, this distinction is unclear in the field of regional development. The effect is that objectives and efforts are not aligned with growth, and scarce resources are not utilized productively from a regional growth perspective. From a public policy perspective, allocating public funds to areas that are or should be profitable creates moral hazard. A more productive use of public funds is to prune and align economic and community development, and only invest public funds jointly with civic and market economy participants in areas that have profit potential in the near-term and are publicly valuable. These public efforts and funding should narrowly focus on: • Strengthening only those parts of the civic economy that are most crucial to supporting business growth. • Reducing the civic economy (including government) barriers to business growth. • Convening the appropriate parties to enable better ways to work together and create the right conditions for innovation and entrepreneurship to thrive. Seward Economic Growth Plan 1 10 ALPHA 12013 Nn There are five ways to grow a regional economy. Shaping pro -growth policies and developing strategies and action plans that link and leverage regional assets to support each of the five growth disciplines will minimize the risks to economic growth. FIVE BUILDING BLOCKS OF REGIONAL ECONOMIC GROWTH 5) Stimulate entrepreneurship to diversify the core -- - -- ----------- The Region's 2) Grow Economic Base the 1) Reinforce capabilities number to retain core and size of busi- businesses nesses in the core 4) Leverage 3) Attract related supply assets to grow networks and technologies into adjacent industries The region's economic base or "core', consists of three types of market economy participants. Family- or closely -held lifestyle businesses, for various reasons and mostly by design, have limited growth potential. Growth businesses, privately or publicly traded, strive to grow their revenue and continually raise and invest capital to fund growth and add new jobs. Some civic economy organizations (ex. education and healthcare sectors), usually not-for-profit, are also at the core of a region's economy. Usually neutral money service organizations, their ability to contribute directly to growth is limited. The most valuable assets in a region, growth businesses play a vital role in the five ways to grow a regional economy. 1) Reinforce the economic base (businesses that are at the core of the region's economy). Focus on retaining businesses that 1) bring profits and investment capital into the region from outside, and 2) excel at meeting demand inside the region. 2) Increase Industry concentration by growing the number and size of businesses in the core. Make the civic economy more responsive to business needs and attractive to similar busi- nesses outside the region. Encourage growth businesses to invest in sustaining innovations and efficiency innovations to produce good money flow and speed up neutral money flow. 3) Strengthen value networks surrounding the core to gain a greater share of industry profits. Recruit businesses that 1) serve the fastest growing upstream or downstream segments in markets served by the region's growth businesses, 2) supply the region's core businesses, and 3) provide crucial enabling technologies. Encourage efficiency innovations to free up capital for reinvestment into innovations that create economic growth. 4) Leverage core capabilities to access other profit pools in adjacent industries and markets. Attract capital into the region and enable job creation by 1) encouraging investment in empowering innovations, and 2) recombining and leveraging regional assets for similar use in complementary industries. 5) Stimulate entrepreneurship to diversify the core and create new profit pools. Leverage hidden and untapped regional civic and market economy assets to diversify the core economy. Recruit industry leaders unrelated to the region's core businesses. This invests in future growth. Seward Economic Growth Plan 1 11 ALPHA 1 2013 jan Defining and managing a portfolio of economic growth strategies is a learned discip- line based on collaboration. A portfolio ensures consistency with the five economic growth disciplines and unifies fragmented approaches so they complement each other. STRATEGIC GROWTH PORTFOLIO High ECONOMIC GROWTH ATTRACTIVENESS (Based on a weighted average set of factors such as expected Medium growth rate, relative Importance to the region's Juture, relative shortages, etc.) Low r Strong Average Weak ABILITY TO ENGAGE GROWTH LEVERS (LINKING AND LEVERAGING REGIONAL ASSETS( (Based on a weighted overage set of factors) PORTFOLIO INTERPRETATION • Each bubble represents a growth initiative that is consistentwith the five growth disciplines. • The size of each bubble represents the expected dollars, jobs, capital, or other basis that exemplifies growth initiatives. The wedge represents the percentage of completion, business participation, or other basis to gauge progress. INVESTMENT and MANAGEMENT IMPLICATIONS • All bubbles and zones need a basic level of conditioned investment. • Green zone is "grow and build"— allocate the most funds to these initiatives. • Red zone is 'harvest or ou tsource" —find others to fund and work these initiatives if they are necessary. • Yellow zone is "maintain and improve"— allocate enough funds to remain effective for a specific amount of time or until these initiatives move into either the green or red zone. • Monitorprogress, reevaluating the initiatives and the portfolio every six months. A portfolio of economic growth initiatives unifies the growth agenda throughout the region. What makes it strategic is that the initiatives that make up the portfolio: 1) establish pro -growth policies, 2) adhere to the five growth disciplines, and 3) strengthen the four keystones of the regional economy. A portfolio perspective helps community leaders and policy makers: 1) rationalize and unify today's fragmented programs and initiatives, and 2) repurpose the surviving ones to augment growth initiatives that are a result of a cohesive strategy. As a tool, a portfolio helps comm unity leaders and polity makers align and manage their opportunities and resources more effectively. A portfolio helps them: • Consider various initiatives as apart of the whole in a consistent and disciplined way. • Set the course and speed of economic renewal. Prioritize and fund the most promising initiatives in relation to each other. Evaluate progress and adapt to a continually changing global environment. Seward Economic Growth Plan 1 12 ALPHA 1 2013 jan }Y' L'wlwy aNrfyew. aad Good Money i Q9t ....._ ///� ^�•• WRAISSINuadu MNNMMmMnn 1 rn. Whutworls well •�. b'mn,....e^ N.w j mooµ ernuti, -5 NMratlreee,W uknt-drop"?i tlahPattmladuLmal ar.r _! Lml laml-AaRe Aum anlmtthnu ;awn;ea..r,R.r. I Lir�nW .. �aroea.rw,,no. 3s 9 LoA' agonal ASSetAMMap N1GN sad Mandy ---------'- ---- Whotort thereglonlrn muroblt pdvonuoes in olobdcompetition? Neutral Money FNE BUILDING BtocKs OF REGIONAL ECONOMIC GROWTH INIOVATIONINANEbONhf ECONOUr 5)SLYnulau mtreprtr�raflup MM2rfRy Me tart - The Reglon's LI Gra« Etvnomk Base ufe SMMrp '. Il hNnbrte caP.WK , ^ �� I� \ aM flet Ifs,Mbn la robin core wflaeua Llr! ww»- .. N. Mb..w. ayaK::` l�kf ti =ME MUST LEKA eM epY'QF SeCNR STRATEGIC GROWTH PORTFOLIO .. -... ... AL_.. .+aw.�No.... j pc Rm wvssr MMMAMS B NO YES B ItPrw wvlamtluale Tearyl Mfbn Economic growth primer Seward economic growth strategy Seward action plan Putting it all together for renewing a regional economy. Strategy -Nets is the first organization to develop a cohesive theory of regional economic renewal and change. The theory of regional economic growth in this primer defines what a good economic growth strategy should be about. Observing what works and what doesn't in the real world led to the development of the theory. Here are the lessons learned to guide Seward community leaders and policy makers committed to renewing Seward's regional economy. 1. Pursue growth opportunities. 2. Only solve problems to the extent that they hinder the pursuit of opportunities. 3. Strengthen the four keystones of the regional economy simultaneously. 4. Understand the value of your regional assets and their various combinations. 5. Understand how the three types of innovation influence economic growth. 6. Focus on net good money flows (good money minus bad money) and removing barriers to speeding up neutral money flows. 7, Develop pro -growth policies that enable innovation and entrepreneurship to flourish. 8. Devise and implement strategies consistent with each of the five ways to grow a regional economy. 9. Commit public funding only in areas that are publicly valuable and have profit potential. 10. Work together in a disciplined, structured wayl S—rd Economic Gro:vth Plan j 13 ALPHA 1 2013 Jan Sar+ard Economn; Growth Plan 1 14 ALPHA 1 2013 ian Envisioning our future. What do we want Seward to be? Seward is a great place to pursue opportunities for people who... NOTES: • Want to further their education in the disciplines that are crucial to our region's economic growth. • Have ideas about creating new businesses and improving existing ones to bring investment and Think in long timeframes and descriptive jobs into our community. terms that points picture of the future of the • Would like to live in a thriving and scenic small-town environment that is within easy driving Seward community and its surrounding distance from a large city and airport region. • Are passionate about living in our region and in Alaska. • Get involved in making Seward and our region a great place to live, work, and start something Review page 8 for reference and make sure new. the future you describe includes: Seward Economic Growth Plan 15 ALPHA 120131an Seward's values and guiding principles. What are the most important characteristics that describe what we want our future to be? What are the ptftes and beliefs that shape our vision and guide our priorities and decision-making? SAMPLE VALUES WHAT DO YOU REALLY BELIEVE? The best place in Alaska to get an education in Do you consider education AND ample XYZ; the best source for providing education in opportunities to make use of that education a XYZ to people outside of Seward. key success factor in Seward's future? Best -in -Alaska pro -growth, pro- By working together, can private and public sec - entrepreneurship, pro -innovation public policies, for leaders make this happen and prove it by the infrastructure, and business environment. numbers (see previous page success factors)? Regional perspective leads to strong regional Can others from outside Seward contribute to connections and relationships. our efforts? Are we better off doing this alone or with others? Can others benefit too? People -centered perspective leads to motivation • Brainpower People will consider Seward to be a success when... • Innovation and EntrepreneurshipQuality, can thrive. ;get the resources to build the infrastructure? Connected Places • The average age of our population trends younger and the average level of education trends New Narratives and Brand Culture of Civic Collaboration higher. ones, what made us prosperous in the past and • The number of new business startups exceeds the number of business closures per year, and When describing success, make sure you can average annual sales per business capita trends higher. measure what you describe. • The average property value trends higher and property taxes as a percentage of property values trends lower. • The number of people and businesses relocating to Seward exceed the number of people and Seward's economic renewal working groups businesses leaving Seward, and a growing portion of total businesses'sales levels are from outside will need to modify this 11' draft. the region. • An increasing percentage of Seward people and businesses are materially involved and working Making the Seward community vision together to grow the community's economic base and make it a great place to live. coherent and simple to articulate will help you gain institutional alignment and public People will consider us to be successful when we have achieved these measurable changes within a support. three year period. Seward Economic Growth Plan 15 ALPHA 120131an Seward's values and guiding principles. What are the most important characteristics that describe what we want our future to be? What are the ptftes and beliefs that shape our vision and guide our priorities and decision-making? SAMPLE VALUES WHAT DO YOU REALLY BELIEVE? The best place in Alaska to get an education in Do you consider education AND ample XYZ; the best source for providing education in opportunities to make use of that education a XYZ to people outside of Seward. key success factor in Seward's future? Best -in -Alaska pro -growth, pro- By working together, can private and public sec - entrepreneurship, pro -innovation public policies, for leaders make this happen and prove it by the infrastructure, and business environment. numbers (see previous page success factors)? Regional perspective leads to strong regional Can others from outside Seward contribute to connections and relationships. our efforts? Are we better off doing this alone or with others? Can others benefit too? People -centered perspective leads to motivation What makes an economy grow... people or and maintaining an environment in which they infrastructure? If you have the people, can they can thrive. ;get the resources to build the infrastructure? ',_�'Cl% Balance between traditional industries and new Will you continue to rely on the knowledge ones, what made us prosperous in the past and you've gained from the past or will you augment what will make us prosperous in the future, all that knowledge with new know-how gained taking advantage of Seward as a unique place. from pursuing new opportunities of the future? Our focus on growth, prosperity, and equal Does having meaning in the work of economic opportunity, and our work together to achieve it growth help rally and unite citizens behind a is meaningful to Seward citizens, our work common vision and a way to achieve it? Will groups, and to individual work group members. making it meaningful gain their participation? We are proactive and value learning our Are we doinga "one shot deal" or adopting a economic growth plans and work continually discipline to transform who and what we are as a adapt to a constantly changing world. community, making it part of Seward's DNA? NOTES: Look at the frameworks on pages 6 (money flows) and 7 (regional assets). When considering Seward's assets, know-how, and culture, what are the things you can realisticallysay is most important to your future? How do you need to augment that to achieve your vision of what Seward will be? These two frameworks focus yourdecision- making on the causal factors of economic growth that you can influence through public policy and resource prioritization. Consider the current basis for public policy decision-making and collaboration among businesses, and how they are likely to change. Considerhow the relationships between various business, government; and other institutions will need to change if you are to achieve your vision. The values and guiding principles you describe should reflect what in your assessment is: • Realistic in the context of economic growth requirements, • Likely to be embraced by the key people in the Seward community who will guide and influence the economic renewal effort. Seward Economic Growth Plan 1 16 ALPHA 1 2013i.. Seward's opportunities and the assets in our region that will help us achieve our visi What strengths do we have? Realistically, what growth opportunities match up well with our strengths? we combine and work our strengths to pursue and capture those opportunities and achieve our vision P to t' I G wth Are � o n is ro as (What new technology and market innovations could we pursue that has the potential for us to be a leader?) BRAINPOWER • Provide on-line education • In -Seward corporate training in areas of expertise (e.g. oil spill, sea life, etc.) ??? INNOVATION and ENTREPRENEURSHIP • Renewable fuels (marine, cellulose) • Fossilfuel movingand handling • Anything marine- andfishing-related • Additive manufacturing (3D printing) • Tourism • Data center operations QUALITY CONNECTED PLACES • Teleworking for remote employers • Call center operations • Sustainable development • Land use NEW NARRATIVES and BRAND • Deep stories and experiences • Kenai regional partnerships Seward � Comparative Strengths (What do we know, have, and do really well that is hard for other regions to copy and/or compete with?) WHAT WE KNOW • Marine and fishing • Tourism • Sea life science WHAT WE HAVE • Ice -free deep water port • Road and rail access • Favorable Alaska climate • Gateway location • Forested lands • People willing to work together • AVTEC • Sea Life Center WHAT WE DO REALLY WELL • Sea life science and management, including oil spill response and cleanup • Tourism management • ??? NOTES: Consider Tom Tougas' analysis (summarized here) and the Seward Economic Development Assessment done by UA's CED in 1010. As a nextstep, you should revisit and analyze the region's assets using the frameworks on pages 6 and 7 as yourguide. Answer the following questions as a starting point: • What regional assets can you best utilize to increase good money and decrease bad money flows? • What regional assets belong in the "core" category? The "counter-productive" category? The other two? • What realistic policy changes can thecity make to align relevant city budget items with Seward's most important assets? • Whatore the potential business combinations, joint ventures, and projects that could enhance the value of the region's assets? How do these assets and opportunities fit with your values and guiding principles? Do these narrow yourchoice of approaches on HOW you will leverage yourstrengths to pursue growth opportunities? .ren d Economic Gn—Ah Plan I 17 ALPHA i 2013 j - Linking and leveraging our regional assets to pursue the opportunities we identified. Our initiatives between six will require collaboration many parties. Some will require substantial funding. � these initiatives as formulated the best ones to pursue? Is this where the most energy is (people coming toge?her)? SMICDevelopment The objective is to build out full-service capabilities, marketing, and support infrastructure to attract businesses in marine - Project related markets (e.g. tourism, fishing, military, offshore oil and natural gas field services, marine research, etc.) This initiative leverages the ice -free deep water bay and SMIC marine -related service assets. It also links the rail termination and future Entrepreneur's Row" assets on the other side of the bay. Railroad Dock Extension Today, this is coal moving from rail to ship and passengers moving from ship to shore and back, with a few businesses that just (or Entrepreneurs Row) happen to be located there. Tomorrow, through asset expansion and modernization, and integrating SMIC will provide: • One-stop value -add support for intermodal transport and markets served by SMIC (see above). • On -demand services (including manufacturing) related to the maintenance and repair of vehicles using the port system. • Unrelated manufacturing services that benefit from the physical location in this area (e.g. the Seward Fisheries expansion). Alternative Energy The objective is to develop a cohesive and comprehensive approach to reduce total energy costs by addressing the sources and (Renewable Fuels to be cost of fuel (especially for heating), and achieving an economic balance between making and buying electricity in usable forms. more accurate) Renewable fuel sources (e.g. geothermal) will be an important component of a balanced and flexible fuel and energy portfolio. Is there an opportunity to link our marine assets and build expertise in applying synthetic and algae -based marine fuels? Broadband Creates a new regional asset based on existing broadband infrastructure - Alaska United fiber optic cable landing point that links Alaskan population centers with the lower 48 states through Seattle - to attract industries that need this digital asset. The biggest problems in the data center business are in energy consumption (linked with Alternate Energy) and cooling (our climate addresses this naturally). The additive manufacturing opportunity could benefit Seward by SMIC and dock -based businesses consuming output, and leveragingour intermodal transport support services and broadband infrastructure to export remaining capacity. Other services can relate to medical, marine research, education delivery, and other content -related services. Oil Spill Response (can Expands and leverages physical assets (e.g. Sea Life Center, the port, and SMIC) and know-how assets to become a "center of we broaden this?) excellence" in oil spill response and other marine disaster recovery services. The objective is to build a world-class cold weather response capability to serve, as appropriate, the west coast of the United States and the Bering Strait. City Permitting Process The objective is to reengineer city processes and align them with the rest of the region to make it easy and low- or no -cost for Renewal businesses to launch or locate in the city of Seward (and outside of the city's borders in the surrounding region). An effective and efficient process, surfaced in a single interface between the city and businesses, should accommodate permitting, licensing, inspection, and zoning. This will require a high degree of integration and automation, with a common Internet -based user interaction and experience. Seward Econ— Growth Plan 1 18 ALPHA 120131an There's comfort in what we came up with. It keeps things simple so we can learn how to work together and develop a better understanding of our assets and opportunities. If our energy is elsewhere, we should use it to augment our initiatives or redefine them. Growth Initiative Project Opportunities? Attractive Because? Unattractive Because? Expected Synergies? SMIC Development Marine services company attraction Leverages assets that have Capital investment needs Railroad Dock Extension Project • Securing use of surrounding land competitive advantage Retrofitting costs Leverages broadband and What else??? • Study value to businesses Whatelse??? Complex coordination transportation assets Study market opportunity (31) • Whatelse??? New types of partnerships What else??? What else??? Railroad Dock Physical area clean-up • AK Railroad partnership Capital investment needs SMIC Extension (or Rerouting tourism route • Concentration spurs Complex coordination Leverages tourism, trans - Entrepreneur's Row) Whatelse??? entrepreneurship Business disruption portation, and broadband • Whatelse??? Whatelse??? • What else??? What else??? What else??? Alternative Energy • Converting waterfront buildings Water/marine asset utilztn. New knowledge needed SMIC, Railroad Dock (Renewable Fuels to • Algae -based biofuels pilots New growth businesses Retrofitting costs Extension, and Broadband be more accurate) What else??? What else??? What else??? What else??? Broadband Study market opportunity (31) Fiber cable asset utilization New types of partnerships All other initiatives printing, tolework/education/medi- • Can monetize marine and New knowledge needed Leverages marine knwldg. cine, call center, data center, etc.) other Seward know-how Capital investment needs Enhances existing assets Brainpower • Regional partnership formation New growth businesses Outside of comfort zone? New prtnrshps. potential Entrepreneurship and • Whatelse??? Whatelse??? What else??? What else??? Oil Spill Response • Corporate training Water, marine, education, None? Leverages marine know - (can we broaden Regional partnership formation and Sea Life asset utilization For Seward, an how and related assets this?) AVTEC adoption and link to cold New niche businesses empowering innovation Lead to other business Entrepreneurship and water -related career pathways Whatelse??? opportunities innovation • What else??? ship to diversify the core. What else??? City Permitting Reengineer process; enact Low cost and fast, with None? All other initiatives Process Renewal regulatory and city organizational potentially large benefits ing innovation if new busi- All businesses benefit Entrepreneurship and changes Sends message of city lis- nesses develop, otherwise from lower cost and innovation tening to business needs a sustaining innovation impedance to their plans City Permitting Process Business retention For Seward, an efficiency 19 Our growth initiatives are a good start to constructing a portfolio ... at first glance, tlf, pass the initial tests for economic growth potential " Growth Initiative Primary Growth Discipline Primary Type of Innovation Primary Money Flow Impact Primary Prdject Emphasis SMIC Development Project Business retention Efficiency innovation Increases good • Increases industry because of focus on what Speeds up neutral concentration Seward already does well • Quality, connected places • Brand and new narratives Railroad Dock Extension (or Increases industry Sustaining innovation, but Increases good Entrepreneurship and Entrepreneur's Row) concentration could be all three Speeds up neutral innovation • Strengthens the value depending on synergy Quality, connected places networks surrounding with the broadband core Seward businesses initiative Alternative Energy Business retention (thru Sustaining innovation Reduces bad Brainpower (Renewable Fuels to be lower input cost) Empowering innovation if Speeds up neutral as Entrepreneurship and more accurate) Leverages core capabilities new technologies evolve businesses shift spending innovation to access other markets from the effort Potentially increases good Broadband Leverages core capabilities For Seward, an Increases good Brainpower to enter other industries empowering innovation Potentially speeds up Entrepreneurship and • Stimulates entrepreneur- neutral as business and innovation ship to diversify the core. people spending increases Quality, connected places Oil Spill Response (can we Leverages core capabilities For Seward, an empower- Increases good Brainpower broaden this?) to access other industries ing innovation if new busi- Entrepreneurship and • Increases industry nesses develop, otherwise innovation concentration a sustaining innovation City Permitting Process Business retention For Seward, an efficiency Speeds up neutral money Brand and new narratives Renewal innovation Reduces resistance to Quality, connected places good money Seward Economic Growth Plan 1 20 ALPHA 12013 jan The focus of our strategies within each initiative are driven by each initiative's primary growth disciplines (1 of 2).s Growth Initiative Primary Growth Discipline Example Strategies That Need Consideration and Planning SMICOevelopment Business retention 1. Determine what businessesvalue and tailor the SMIC value proposition to that. Project Increases industry 2. Establish complex relationship structures to make SMIC "sticky' for businesses (e.g. co - concentration locating suppliers and customers to benefit both). 3. Bond with businesses through emotional appeal. 4. Establish an ongoing way to pre-empt defections from the area (e.g. survey -and -respond system if value delivery falls below expectations, etc.) 5. Develop better information on Seward businesses and the economic pressure they're under. 6. Overcome competing region advantages by offering businesses superior value through: — Transparency (regulatory and tax clarity and simplicity) — Lower cost sourcing of people, assets, and supplies — Technology innovation (e.g. broadband) — Supply chain proximity (e.g. Seward businesses can get what they need locally). 7. Investigate novel -to -Seward but proven structures (e.g. enterprise zones, innovation zones, business roll -ups, etc.) as ways to offer monetary incentives to attract companies from outside the region. Railroad Dock Extension Increases industry Strategies 6 and 7 also apply here. (or Entrepreneurs Row) concentration 8. Determine and stay on top of the demographic and buying criteria trends driving the busi- ship to diversify the core. • Strengthens the value nesses that will be served from this locale (e.g. tourism trends, transportation trends, etc.) have" broadband access, and work together with GCI and other telecom suppliers to attract networks surrounding 9. Leverage Seward assets like the railroad and broadband locations, including the existing core Seward businesses global relationships served by rail and ship, to strengthen the position of Seward as a gateway that can make Seward a "center of excellence" for managing content on the network and for export and import. Alternative Energy Business retention (thru Strategies 1 through 5 also apply here (changing "SMIC" to "alternative energy"). (Renewable fuels to be lower input cost) 10. Develop relationships and pilot projects that share the risks and rewards with technology more accurate) Leverages core capabilities suppliers and customers (e.g. waterfront located organizations) to develop know-how that to access other markets can be monetized and exported. Seward Economic Growth Plan 21 ALPHA 12013jan The focus of our strategies within each initiative are driven by each initiative's pnmar)�_ growth disciplines (2 of 2). How will you address the strategies that are commo� across initiatives to avoid duplication and promote efficiency and productivi Growth Initiative Primary Growth Discipline Example Strategies That Need Consideration and Planning Broadband Leverages core capabilities 10. Develop relationships and pilot projects that share the risks and rewards with technology to enter other industries suppliers and customers (e.g. waterfront located organizations) to develop know-how that • Stimulates entrepreneur- can be monetized and exported. ship to diversify the core. 11.Cultivate relationships with venture capital firms to open up access to companies that "must have" broadband access, and work together with GCI and other telecom suppliers to attract those companies to Seward. Pursue companies that provide infrastructure -related services (like attracting a Google, Amazon, or Equinix data center or providing call center services) and that can make Seward a "center of excellence" for managing content on the network and developing related software -based applications. Oil Spill Response (con Leverages core capabilities Strategy 10 also applies here (changing customers to oil and marine shipping companies). we broaden this?) to access other industries 6. Overcome competing region advantages by offering businesses superior value through: • Increases industry — Transparency (regulatory and tax clarity and simplicity) concentration — Lower cost sourcing of people, assets, and supplies — Technology innovation (e.g. broadband) — Supply chain proximity (e.g. Seward businesses can get what they need locally). 7. Investigate novel -to -Seward but proven structures (e.g. enterprise zones, innovation zones, business roll -ups, etc.) as ways to offer monetary incentives to attract companies from outside the region. GtyPermitting Process • Business retention 1. Determine what businesses value; combine and tailor all permitting and related processes to Renewal that. 4. Establish an ongoing way to pre-empt defections from the area (e.g. survey -and -respond system if value delivery falls below expectations, etc.) 5. Develop better information on Seward businesses and the economic pressure they're under. Seward Econ—Growth Plan 1 22 ALPHA 12013jan Managing the four strategic risks to our initiatives and economic growth. Market Risk: With continual global economic and technological Empowering change, Seward's competitors and local markets will -� also change, creating new and evolving conditions to • Manage economic growth initiatives in a portfolio. which Seward must respond. Sustaining • Continually asses and skew initiatives toward the best opportunities based Competition Risk: on surrounding market and economic conditions by establishing a six- Seward's regional competitors, including Anchorage month cycles of planning, doing, and learning. (with superior resources and influence), may increase their capabilities to compete more Establish a disciplined process of collaboration and project management effectively with Seward. They may also respond within and among groups. irrationally to perceived threats and economic Clearly define and adhere to specific roles and boundaries between roles. changes. Boundaries are especially important between what an organization does in Economic Management Risk: its own work, and what it does as part of its participation in a group effort. Seward's and the competition's ability to understand Diversify across all four types of risk by making sure that each six-month and practice the tenets of regional economic growth plan in a way that encourages entrepreneurship and innovation. Seward's abilities must be better than its Seek, recruit, and motivate the best talent to participate as appropriate in competitors'. each six-month cycle. Civic Collaboration Risk: Establish a system of consistent and measurable metrics overwhich our Seward's and the competition's ability to align and work has influence. Gauge each six-month cycle by how they impact those motivate the most influential people and businesses metrics. to create and sustain the conditions that drive economic growth. Sewards abilities must be better than its competitors'. award Econ— Grov th Plan 1 23 ALPHA 1 2013 jan A "best guess" initial mapping of our "starting" portfolio. ��. This will need continual thought and updating. i I High E Medum No Innovation �V Thoughts on strengthening the portfolio positioning of our six initiatives: Plan SMIC, Railroad Dock, and permitting process renewal to dovetail with each other to secure all permitting needed to proceed at once: focus on what will move the permitting process initiative (6) up into the green zone. • Import or contract with broadband -related talent and expand the role of AVTEC and other Seward education- and knowledge -intensive assets to make sure broadband assets can play in the other initiatives: focus on what will move the broadband initiative (4) into the green zone. • Design different types of renewable fuels experiments to increase the probability of successes. How will alternative energy use change the input economics of businesses and people in the region to increase Seward's attractiveness to businesses? Import or contract with alternative energy-related talent and expand the role of AVTEC and other Seward education- and knowledge -intensive assets to make sure alternative energy assets can play in the other initiatives. Focus on what will move this initiative (3) into the green zone by making i t a stronger driver of economic growth while improving your capabilities in this area. • At first glance, the Oil Spill Response initiative (5) seems to be "low hanging fruit'. How can we expand this definition as we consider related Seward and regional assets to make it a stronger contributor to economic growth? 1. SMIC Development Project 2. Railroad Dock Extension (or Entrepreneur's Row) 3. Alternative Energy (Renewable Fuels to be more accurate) 4. Broadband 5, Oil Spill Response (can we broaden this?) 6. City Permitting Process Renewal ABILITY TO LINK AND LEVERAGE ASSETS Seward Economic Growth Plan 1 24 ALPHA 1 2013 jan Empowering -� Innovation Zy m Sustaining ( Innovation Efficiency Innovation Z i I High E Medum No Innovation �V Thoughts on strengthening the portfolio positioning of our six initiatives: Plan SMIC, Railroad Dock, and permitting process renewal to dovetail with each other to secure all permitting needed to proceed at once: focus on what will move the permitting process initiative (6) up into the green zone. • Import or contract with broadband -related talent and expand the role of AVTEC and other Seward education- and knowledge -intensive assets to make sure broadband assets can play in the other initiatives: focus on what will move the broadband initiative (4) into the green zone. • Design different types of renewable fuels experiments to increase the probability of successes. How will alternative energy use change the input economics of businesses and people in the region to increase Seward's attractiveness to businesses? Import or contract with alternative energy-related talent and expand the role of AVTEC and other Seward education- and knowledge -intensive assets to make sure alternative energy assets can play in the other initiatives. Focus on what will move this initiative (3) into the green zone by making i t a stronger driver of economic growth while improving your capabilities in this area. • At first glance, the Oil Spill Response initiative (5) seems to be "low hanging fruit'. How can we expand this definition as we consider related Seward and regional assets to make it a stronger contributor to economic growth? 1. SMIC Development Project 2. Railroad Dock Extension (or Entrepreneur's Row) 3. Alternative Energy (Renewable Fuels to be more accurate) 4. Broadband 5, Oil Spill Response (can we broaden this?) 6. City Permitting Process Renewal ABILITY TO LINK AND LEVERAGE ASSETS Seward Economic Growth Plan 1 24 ALPHA 1 2013 jan Relevant Strategy -Nets structures that could enhance our economic growth stra s Because of information abundance and technologies that facilitate information and capital mobility, network -based organizational strutfucrWe increasingly driving 2111 century economies. In this world, more and more companies are turning to their suppliers and customers, and trade groups and universities for new ideas to grow their businesses, building complex networks of relationships. These networks, groups of related organizations also known as clusters, provide the innovation engine with which regional economies evolve and grow. Strategy -Nets' Innovation Clusters and Zones provide the roadmaps and guidelines for: • Forming clusters at local and regional levels, • Learning and developing insights on what works and what doesn't, • Translating ideas into action through the use of Opportunity Funds as well as incentives provided by influential private and public sector entities. Innovation Clusters Innovation Zones OpportunityFund WHAT IT IS • A people- or idea -based network. • Organized around a specific technology or industry sector supply chain with 2+ partners at the center of the network. • Basic goals are R&D and either attracting a large industry player or may small players into the region: success based on how many products or companies the network yields. • A place -based network. • Organized around specific locations that encourage entrepre- neurial activity: 2+ locations at the center of the network. • Basic goal is to use these "hot spots" as gathering places for project work with existing organizations supporting entrepreneurs: success based on network yield per location. • A funds -based network similar to an angel investors' group. • Managed pool that provides tiered funding for publicly valu- able but privately not yet profitable early-stage innovations. • 3 stages of funding, with increasing private sector matches. • Funding in each tier depends on meeting specific requirements: success based on private/public sector dollars. WHERE IT IS RELEVANT TO US • SMIC, Alternate Energy, Broadband, and Oil Spill Response. Focus on marine -related services to start. • What are the renewable fuels and global communications opportunities? Marine service supply chain opportunities? • Entrepreneur's Row, SMIC, and Oil Spill Response (anchored by Sea Life Center); could apply to Broadband and Alternate Energy as they evolve and become more location -specific. • Focus on meeting places in the bay areas and involve Seward's major businesses in meetings to brainstorm and manage our initiatives. All initiatives except the City Permitting Process Renewal. Initially, focus on raising funds and the criteria for investing in new ideas; amount, required match, and the basis upon which funds are awarded. *For more information, contact Strategy -Nets. S.—d E—nni, Growth Plan I 2S ALPHA 12013 pn Determine the top five things we must accomplish and obstacles we must overcome in the next six months for our six initiatives to succeed. From our perspective, these have more to do with a successful startup than with the initiatives themselves. "MUST HAPPENS" NOTES: • Team approach with relationships between members formalized. As you think through your top five 'must happens"and top five obstacles, consider • Clear accountability and ownership of each initiative. Seward's past (what worked and what • Roles (most importantly, the Chamber of Commerce, the City, and the Core Group). didn't) and its recent experiences with trying to align various interested parties • Detailed and incentivized action plans, including project management discipline. and reinvigorating economic growth. Make sure you don't repeat the mistakes • Funding in place for 2013 and 2014 of the past as you consider how you will address the "must happens" and obstacles. OBSTACLES TO OUR INITIATIVES AND "MUST HAPPENS" Consider which organization will take the lead on each one and who specifically will • Best people (defined as those who can get things done) not participating. be accountable. Do you have the right • Lack of alignment among the region's most influential players. people involved? Are they motivated? Is the work meaningful to them? • Relying on the same old things and ways that have proven not to work. As you work off the top five, what are the • Value for dollars raised is unclear making funding hard to come by. next top five "must happens"and obstacles? There should always be a "top • Wrong metrics dilute our efforts, lower our productivity, and detract from our focus. five"for continual improvement! Seward Economk Growth Plan 26 ALPHA 120131an We'll need to establish a baseline of our "current condition" from which to gauge our progress as we move toward our "to be" vision of the future Seward. IF THE KEY METRICS ARE: The average age of our population trends younger and the average level of education trends higher. The number of new business startups exceeds the number of business closures per year, and average annual sales per business capita trends higher. The average property value trends higher and property taxes as a percentage of property values trends lower. The number of people and businesses relocating to Seward exceed the number of people and businesses leaving Seward, and a growing portion of total businesses' sales levels are from outside the region. An increasing percentage of Seward people and businesses are materially involved and working together to grow the community's economic base and make it a great place to live. THEN WE NEED ONGOING DATA ON: • Population numbers and age • Level of education attained per person Graduation rates of Seward citizens • Average immigrant grade level attained • Number of business startups and closures • Gross revenues claimed on tax returns • The number of properties and their value (from recent market transactions and assessed values) • Property taxes collected • The number of people and businesses coming into and leaving Seward. • The percentage of gross revenues claimed on tax returns from customers not located in Seward. • The number of people and the number of businesses involved in this effort • The number of business participating in partnerships formed between Seward businesses • Total people and business population Economic growth primer Seward economic growth strategy Seward action plan NOTES: Where will the data come from? Where must the analysis occur to maintain confidentiality if the data is private or proprietary(e.g. tax data)? Are the right players on board? As you collect the data, take a "snapshot"of what it is at the end of the 1011 or the date the latest data is available. The Core Group should "own" these overall metrics and keep them up to date. What action plans will each group implement as part of their initiatives (starting with the first six) that will have the desirable effect on these metrics? What will each group track to ensure their impact remains positive? Seward Econanic Growth Plan I 27 ALPHA 12013 jan Seward Economic Growth Plan 28 ALPHA 1 2013 jan Having framed our strategy, we need to move into action. Here's a summary of how we're going to start our work as we move into the next six months. • Use a discovery -driven approach to planning, execution, and learning. • Redefine the Chamber of Commerce's role. • Align the Chamber's budget with the economic growth plan. • Adopt successive six-month time frames for managing economic growth initiatives and transforming the current "no -growth" culture. • Form the following groups: — A Core Group that owns the economic growth plan and the growth initiatives portfolio, and coordinates each portfolio initiative. — Work groups that own each economic growth initiative implementation (each group must own at least one initiative). — A Finance Group that ensures good relationships with funding sources (another options is to run it as a project of the Core Group). — In the subsequent six-month periods, you'll most likely need a community engagement group to promote Seward's economic renewal and attract participants, and perhaps a government relations group to work with the State of Alaska and the Federal Government. • Utilize a proven group formation process. • Each group: empower the group through clear roles, boundaries, responsibilities, and processes. • Each group: establish a six-month work rhythm and work processes that help group members succeed. award Economic G—Ah Plan I 29 ALPHA 1 2013 jan Growing a regional economy is not a repeatable process. It's a practice that's unique to a region's assets, know-how, and people networks. To capitalize on these networks, we must take a discovery -driven approach to executing our economic growth strategy. Value To Us Discovery -Driven Planning Forces a time -based discipline we call "time buckets" — six-month • Knowledge domain not well known. timeframes in which we define objectives and firm work products to be produced, what "must happen" to achieve our objectives, and the obstacles • Make decisions based on recognizing patterns. we need to overcome. This drives all action planning and budgeting. • Make targeted regional economic growth By making assumptions and projections that are checked in each six-month ' projections. "time bucket", we can reevaluate our assumptions and projections based on • Develop assumptions based on what must what we learn. ' happen in the region and its economic sectors to Adjusting our plans every six months make our approach adaptive to achieve regional economic growth projections. changing global economic conditions and technologies. • Implement plans to 1) test whether the critical Encourages experimentation ... many small projects that try many things for assumptions are reasonable and 2) incorporate little dollars. Byfailing fast, we limit our financial risk and can focus our lessons learned in the next effort. activities and funding on what is proven to work. • Make decisions to invest based on reasonable By failing fast and concentrating on successes and building on them, we assumptions. learn and continual) improve with eve rysix-month cycle. By applying what • Formulate and implement growth initiatives to we learn, we create patterns that become replicable overtime and across move forward based on validated reasonable different groups and initiatives. assumptions. Successes eventually move to a scale large enough to accelerate economic growth and become self-funded through the private sector. award Economic Growth Plan 1 30 ALPHA 1 2013 jan Creating the conditions that lead to growth is best done through one organization. Seward's Chamber of Commerce is in a position to unify region -wide efforts by pulling together a Core Group to own and lead the economic renewal effort. 21. century anlaaaaen and Market economy aminpower I E,,,MprVWW$ dp Civic economy CONDITIONS Seward FOR ECONOMIC 44 Chamber of GROWTH Commerce ;C~e1ftdyNWw1JW. New andBrand SOURCES OF FUNDS Focus on this first All Seward- and Region -Based Non -Seward r'\ Private Sector (incl. Non -Profits) -, State of Alaska - Sources FederalSources othersources - Core Group Civic Collaboration Structurcad "'• 1 Strategy and Portfolio _ Pooled funds (run as an Op- portunity Fund' Traditional EDC capabilities 'fig in the blanla' USES OF FUNDS SMIC Development Entrepreneur's Row (RR Dods Developing and keeping a practical economic growth strategy up-to-date, and implementing it in a low-risk way requires an effective civic process and effective civic leadership. The Seward Chamber of Commerce is a good candidate for anchoring civic collaborations in the region. The Chamber, in an expanded role, should be the organization around which a Core Group forms (see pages 34 and 35). Consider setting up a Chamber subsidiary or independent organization that shares its management with the Chamber as a 501(c)(3) Economic Development Corpo- ration. This opens up access to new sources of funding your economic growth initiatives. By using civic networks of organizations that practice goal -driven, structured collaboration private equity approaches to investment, the Chamber will differ from traditional economic development corporations in four ways. CIVIC COLLABORATION (the Chamber must drive this) A structured and disciplined collaboration process, with the Chamber in the role of a hub through which information and funds flow. STRUCTURE AND PROCESS (the Chamber must drive this) Collaboration process leverages networks of people and organizations, enabling a Renewable Fuels low overhead and fast way to organize and implement projects. & Alt. Energy STRATEGY AND PORTFOLIO Broadband A portfolio management approach provides a low risk way to manage the coordination of policies and activities that will create the right conditions for economic growth to occur. 011 Spill Response OPPORTUNITY FUND A Strategy -Nets innovation that structures and operates a seed -stage investment City Permitting fund that uses a phased matching structure with strict qualification and Process Renewal performance guidelines. For more information, contact Strategy -Nets. Seward Economic Growth Plan 131 ALPHA 12013jan The Chamber of Commerce must recast its budget to reflect its broader role. By example, we're reducing the old marketing and economic development budget and adding economic growth leadership budget items for a total increase of $210,000. Sources of Funds: $555,300 Events — 32% City — 30% Membership —15% I Advertising —10% Sponsors —101/6 Tom Tougas — 4% A Current Budget: $536,000 5% 4% Recast Budget Structure: $746,000 3% 3% 20% 36% 4% ■ Salary & Benefits m Salary & Benefits ■ Marketing & Economic Development ■ Marketing & Economic Development (OLD) Events in Events Office Operations ■ Office Operations Building & Utilities ■ Building & Utilities w Core Group Activities NOTE: These numbers and New Narratives & Brand Activities budget line items and Economic Growth Leadership a Business Attraction Activities additional funding will Community Engagement need consideration. The ■ Digital Media Communications recast budget and Outside Professional Services structure is only an example. Seward Economic Growth Plan 1 32 ALPHA 12013 jan Adopt successive six-month time frames for managing economic growth initiatives and transforming the current "no -growth" culture... master the planning, doing, and learning pattern to ensure what you do maintains consistent relevancy. The economic growth plan is an adaptive, "living" roadmap. Our networks of relationships, know-how, and physical assets in our region, and the resources flowing into our region are also "living" maps. These change with the world and we must keep our maps up-to-date. We make decisions fast and act on those decisions in away that 1) validates or invalidates what we assumed when we made our decisions, and 2) gets something tangible and measurable done, and 3) provides us with a learning opportunity with which to improve our next set of decisions. We move fast to achieve measurable objectives everysix months. Updated every six months, the plan and our regional asset maps spell out clearly what we must achieve in the subsequent six months. Reevaluating plan metria, premises, and strategies every six months may result in changes to reflect new realities. This is a proven process. When meeting, always ask these questions to follow this pattern: 1) what could we do, 2) what should we do, 3) what will we do, and 4) what will we accomplish in the next 30, 60, and 90 days. This too is a proven approach to making decisions fast and acting on them. Its important for the whole group to meet at least every 60 days, preferably 30 days to calibrate their thinking, capture 'lessons learned", plan the next 30/60/90, and mobilize. All groups working on the economic growth strategy should come together in one big meeting facilitated by the Core Group every six months. PLANNING Meet and work together on developing a simple six-month action plan that consists of well-defined assumptions, objectives, (not to exceed 4 work products to be produced, "must happens", obstacles, task lists, responsibilities, due dates, and budgets. weeks) Think about contingencies plans and consider the four strategic risks (page 24) in your planning. • Formalize the first draft of the plan and begin to take action immediately on known items. DOING Perform the tasks on the task list. If funding is needed, make sure the funding plan is its own task list upon which other tasks (should repeat a depend. Utilize a simple project management approach to keep on top of the task lists. few times per six- Coordinate activities with other members in your group. month cycle) Communicate regularly (weekly, bi-weekly, or monthly depending on the tasks and the need to coordinate) LEARNING Meet and discuss'lessons learned"...document and store this for future use. (should repeat a Devise solutions to problems encountered... document and store this for future use. few times per six- In the last "learning" meeting of the cycle, determine whether the overall plan, and then what portions of the plan need month cycle) revising. Put plans into place to make the required changes. ADAPTING This step is primarily "hand-off" step that concludes each six-month cycle and begins the next one with Planning. • Celebrate your victories and the failures you proved NOT to be relevant to our growth plans. • Make sure you'll take corrective action in the next six-month cycle to address the failures that ARE material. ..award Economic GravAh Plan 1 33 ALPHA 1 2013 jan Set up self-governing work groups that will own each of our initiatives and coordinate among themselves to ensure progress and adequate resourcing. This is ow we address our top five "Must Happens". OUR FIVE "MUST HAPPENS" PROVEN APPROACHES THAT WORK Team approach with relationships Formal group formation, including a charter, well-defined roles and processes, and formal governance between members formalized. and resource allocation plans. People must be willing to share and each group will need a leader group Seward Econ—Growth Plan 34 At PHA 1 2013 jan members will follow. Clear accountability and ownership All initiatives owned by a single group made up of the relevant organizations and people who are of each initiative. passionate about their contribution. Each group committed to achieving relevant target metria and learning from their efforts. Roles (most importantly, the Because of the importance of civic networks, we're organizing our effort to follow a model of loose Chamber of Commerce, the City, hierarchy. Key characteristics include rich and frequent communications, relative lack of centralized and the Core Group). control, and flexible, task -driven memberships. Coordination and communication between groups happens through a "spanning" role (person participating in more than one group) and through a Core Group. Although there's some reporting hierarchy within groups, there is no hierarchy among groups. Each group has its purpose and they all fit into a whole that makes up the economic renewal effort. Detailed and incentivized action Put the plans in writing, with work products to be produced and who is accountable clearly defined. plans, including project Make sure there is meaning in the work of each person in each group. Meaning comes from continual management discipline. story telling on how their work helps others and themselves, getting members to establish their own objectives and work plans within the broader strategy, and using small, unexpected rewards to keep people motivated. Funding in place for 2013 and 2014 Dedicate a "Finance Group" to cultivate relationships with the sources of potential funds, and assist each of the other groups in planning budgets, expected returns, and making presentations for securing funding. Seward Econ—Growth Plan 34 At PHA 1 2013 jan Form the key groups to finalize the economic growth strategy and to begin implementation. Core Group PURPOSE Owns the economic growth plan and the growth initiatives portfolio. • Coordinates each portfolio initiative through the responsible work groups. SIX-MONTH Organize the group around the OBJECTIVES Chamber of Commerce. Develop Plan and • Successful startup. i' Leverage Networks • Finalize the strategy and action plan, and Funding including details for 2013. • Regional assets analysis in the context � ■ aaalwaaaaaa�IwrlaaM of money flows and the three types of Controls .. innovation • Engage influential "early • Help work groups break down barriers • Establish specific to progress KEY ROLES Leader (one person can Membership fill more than Communications and meetings one role) Librarian progress measures for • Each leader from all the other groups • Engage key people in • Audit Work Groups) • Own one or more economic growth initiative (each group must own at least one initiative). • Span into other work groups to ensure coordination and communications. • Organize the groups so they provide optimal coverage of the initiatives Seward will undertake in 2013. Detail chosen initiatives, including innovation opportunities to explore, and launch. • Leader • Membership • Communications and meetings • Librarian Spanner (sole purpose is to participate in other groups) • Initiative and project management • Relationship management Finance Group Ensure good relationships with funding sources. • Assist work groups to secure funding. • NOTE — should we run this as a Core Group initiative? • Identify sources of funding • Help work groups develop value propositions around their initiatives • Secure initial funding • Set up an Opportunity Fund" (contact Strategy -Nets for more information) • Develop a simple way to model Seward region money flows • Leader • Membership • Communications and meetings • Librarian • Spanner (sole purpose is to participate in other groups) • Relationship management In the subsequentsix-month period, you'll most likelyneed a community engagement group to promote Seward's economic renewal and attract participants, and perhaps a government relations group to work with the State of Alaska and the Federal Government. These could also be run as Core Group initiatives. Seward Econcmir Growth Plan I 3S ALPHA 1 2013 jan Utilize a proven group formation process and get in the habit of working together iQ disciplined way. ,y Change the Assemble and Secure Sponsorship Develop Plan and Narrative i' Leverage Networks Reach Agreement and Funding Program Mgmt. .�....-.:«...r.... �...»-.w.. ■ � ■ aaalwaaaaaa�IwrlaaM Controls .. • Start to think in terms of • Engage influential "early Define, develop, and • Establish specific • Define budgets based linking and leveraging adopters" document: performance and on each members' your networks • Form a leadership task ✓ The group's purpose progress measures for action plans • Engage key people in force focused on better and guiding principles group performance—this your network in defining the ✓ Charter is in addition to the • Ensure each member is preliminary discussions opportunities and then ✓ Agenda metria that are initiative- accountable for capturing them — in our Measurable objectives specific and the overall planned contribution • Brainstorm the case, mostly done ✓ Name and brand economic n i oomc growth metrics, • Document and opportunities in a structured, disciplined • Asses current resources ' Establish oversight • Document and communicate each way—in our case, the and tools and what's structure and board of communicate to all members' plans to all overall strategy and the needed governance members members six initintivec • Define rules overnin • F I t th h • Documentthe opportunities and begin selective promotion to other people in your network • Exchange information and focus on the commonality with other groups • Assemblean implementation -oriented team within the group to oversee the chosen initiative(s) g g use of collective resour- ces (those contributed by group members for use) • Ensure members have a say in the rules • Clearly define individual membership require- ments, roles, boun- daries, and expectations • Decide on the group's first initiative; detail the first 6 -month action plans ormu a e e approac to securing sponsors and funds • Develop the plan to match sources to the uses of funds • Recruit sponsors Seward Ewno— Growth Plan 1 36 ALPHA 1 2013 jan Devise ways to empower each group and make being a group member productive and meaningful. Use simple rules that govern behavior and simple processes to ensure learning and adaptation. SAMPLE GROUP PROCESSES • Leadership and govemance • Member recruitment and onboarding • Communications • Meeting planning and facilitation • Project definition and approval • Appropriation • Provisioning • Monitoring • Enforcement • Conflict resolution SAMPLE "BEST PRACTICES" • Experiment; publicize successes and failures • Install and manage public forums and shared spaces • Keep knowledge repositories updated • Review content and practices systematically • Report performance • Provide coaching when performance falls off • Facilitate events What we need to do next... Gain City Council support. MOTIVATION SYSTEMS • Recognize and reward contribution • Encourage discovery and experimentation • Implement a graduated system of sanctions for non-compliance RELEVANT KNOWLEDGE • Identify and acquire relevant knowledge • Define approach and implement tools; manage content and train people • Define and stick to update plans to keep knowledge current GOAL ACHIEVEMENT CAPABILITIES • Develop processes for repetitive activities • Define collaborative work practices • Constantly communicate expec- tations and progress; adjust course and speed as needed Identify who is missing from the effort and launch a recruitment drive. Secure funding to expand the role of the Chamber of Commerce and redevelop its business plan for 2013. Secure funding and retain outside help to increase success probabilities and keep things moving. Formalize the Core Group and each initiative, and decide what other groups the effort will need. Detail and finalize the economic growth strategy, initiatives, and action plans through the end of 2013, at which point the Core Group will need to update the Seward Economic Growth Plan. • Secure initial funding to move into action on the items we already know (e.g. reengineer the city permitting process). • Formalize all groups, with each one to detail their plans to address their "must happens" and obstacles to success; move into action. BROADER REACH • Provide access to all members' contacts • Facilitate outside -the -group interactions • Recruit new members as needed Seward Economic Growth Plan 1 37 ALPHA 1 2013 jan Economic Development _..�_.._ ®strategy Seward Economic Growth Plan 1 38 ALPHA 1 2013 jan Sewaripm IGas4; Sra.'rs ere. Questions? strategy r, ES a ASSETS TO OPPORTUNITIES 'E N K EECCOOffllom Development Tae mrnrnrauno romah,en In tm: enurmem is Pdvaeged and Laszlo Kozmon onbdendal. It is ro be uvm only by the Seward Chamber of Commerce, anJ rhe People and of gani[ations working wish m Managing Principal -- 440.247,8901 -- LKozmonfQStrategy-Nets.com NPPn ive nl McChanmer hn the wle Purpure 4f devebPag the City Strategy—Nets Nets of Seward economy antl that of th vnrAmdag reg on. My yy— Jiascminadon, ssb motion. coPyiiW, m u+e of tlriamaterial by anyone rnhrr than the imenJen r«giemlH Im any purpnse wher than tlxm sutra herein n widN gohlbi d' Christi Bell 3hl+dornmem is rm immmational anJ daru,mg rnnra>e+omv. Strategy Net Semr a LCC 0 Me University of Ala ka Centa fm Executive Director 907.786.5444 UAA.Alaska.edu Erm, — -- ancab5's —nevaloPmenmakenowarramies.cPressnrimPlkd,n this d ocument UA Center for Economic Development The name s nl vroMmts and sMice+ herein are trademarks nl Z. ea,ler:ices t1C and EJ Monist. The-1.1.0- henamesaloter6632 6632Chagrin River Road Chagrin Falls, Ohio 44022.3537 USA 1he. SUategir. Dmng process b an oveu sounc Protect Sm,re Ed Mr awn d-butedunde-Deal—Commas 30 www.Strategy-Nets.com ANr WUPn'We.. - All othercontent. E12012 Strategy Net. l l( Cmttalns W.Prtetary intellectual PmPerN. Alhghts reserved.