Innovation Archives - Colorado-based Business and Economic Research

Michael Porter Highlights Colorado’s Strengths and Weaknesses in New Study

March 8, 2011May 31, 2014 horvath Leave a comment

Harvard Business Professor Michael Porter is widely recognized for his research in the competitiveness of cities, states, regions, and nations. His studies have emphasized clusters, specialized skills, infrastructure, and commerce as distinguishing factors that delineate the prosperity of these areas.

Most recently Porter measured the performance of clusters within each of the states at the National Governors Association Winter Meeting 2011 (February 26). At that meeting he talked about strategies that would allow the states to become more competitive in the future .

In addition, Porter prepared economic profiles for each of the 50 states. The 50-slide PowerPoint presentations, which were released at the NGA meeting, are formatted in a way that allows for easy comparisons between the states.

For example, it is to match Colorado’s biotech cluster against others in the nation. In 2008, Colorado was ranked 25th in biopharmaceuticals, with 2,032 employees and 11th in medical devices with 13,440 workers.

Each presentation begins with a performance snapshot with a position and trend ranking, by quintile, in five key areas. As well, Porter identified the “strong” clusters for each state.

Colorado’s overall prosperity rating was in the second quintile; however, it was rated in the 4th trend quintile. Essentially the state has strong output per capita; however, it is trending downward. This might suggest Colorado’s competitive position might be in jeopardy.

A second area of possible concern is labor mobilization (labor force/civilian population). On a positive note, Colorado is in the top ten; however, it is in the fourth trend quintile. Again, this is a strength that is trending downward.

There is better news for Productivity (average private wages) and Innovation (Patents per 10,000 workers). Colorado was ranked in the second quintile in both strategic categories. From a trend perspective it was also in the second quintile. These are areas where the state has maintained its strengths and remained competitive.

Finally, the state was ranked in the second quintile for cluster strength and in the top trend quintile. This points to increased strength, as defined by greater market share, in its “strong clusters”.

Porter identified Colorado’s top five clusters as:
• Business Services
• Distribution Services
• Entertainment
• Oil and Gas Products and Services
• Aerospace Vehicles and Defense.

The presentation highlights subtle strengths and weaknesses not mentioned in this brief overview. As such, it is recommended reading for any one interested in understanding the opportunities and challenges Colorado might face moving forward.

Colorado’s Bottom-Up Economic Development Strategy

February 11, 2011May 31, 2014 horvath Leave a comment

The first week in February Governor Hickenlooper (call me “John”) hosted the ninth stop in his Bottom-Up Economic Development tour across Colorado. For about two hours, the region’s top economic developers discussed job creation, economic development, and steps for increasing government efficiencies.

The most frequently discussed topic was transportation and the top priority was to complete FasTracks in a timely and cost effective manner. In addition leaders made a case for completion of the final leg of the beltway (between Broomfield and Golden) around the city, expansion of commercial air, maintenance of our bridges and highways, and reduction of congestion along I-70 into ski country.

Panelists felt that innovation and the attraction/retention of primary jobs was critical if we are to maintain our regional and national competitiveness. They also cited the need to have a well-trained workforce and an efficient, accountable, and adequately funded education system. As well, it is imperative that Coloradans work together to maintain the quality of life that makes the state so attractive. This will require leaders to address issues related to our water supplies, develop parks and recreation areas, invest in infrastructure, and utilize the state’s unique assets to attract commerce.

The metro area’s economic diversity was evident as leaders spoke in support of industries and clusters endemic to their region. For example, they addressed the need for the state to be more “military-friendly”, consider construction of nuclear power plants, understand the importance of refineries, realize the value of our construction and extractive industries, and support gaming and tourism.

As the Bottom-Up discussions continue, it would be beneficial to reflect on past economic-development successes. For example, consider the public-private partnership, the former Colorado Advanced Technology Institute (CATI). During the late 1980s, CATI was established to guide the development of science and technology and the growth of select high-tech clusters. Specifically, the group’s work laid the groundwork for the state’s photonics, materials, hardware, software, telecommunications, and bioscience clusters. While it may not be appropriate to resurrect CATI as it existed, there is merit in having the an organization that would fill many of CATI’s roles in fostering long-term growth.

Four years ago, a state job cabinet was formed, town meetings were held across the state to gather input, and plans were put in place. While that effort was well intended, it did not have the desired impact. Hopefully this Bottom-Up Planning approach with be more successful.

A well-thought out economic development plan couldn’t come at a better time. Colorado employment remains below the 2001 peak and it will be years before state payrolls return to the pre-Great Recession high mark.

Delivering The Next American Economy

December 23, 2010May 31, 2014 horvath Leave a comment

In early December the Brookings Institute sponsored the Global Metro Summit – Delivering the Next American Economy . The purpose of the event and webinar was to discuss their vision for long-term growth to occur in the U.S.

The foundation of their vision for short-term job growth and long-term economic success is better utilization of the strengths of our top 100 cities. To illustrate this point they cited a series of statistics. For example, two-thirds of the U.S. population lives in the top 100 metro areas, three-fourths of the GDP is generated there, and 94% of venture capital funding occurs in these focal points of business.

Bruce Katz, Brookings Vice President identified the following as the means for better utilizing the U.S. centers of commerce:
• Innovation is essential in delivering the “next economy”. The development and implementation of new ideas is essential for positioning the U.S. as a global leader, both in economic and social reform. On the economic side of the equation, this will allow American companies to develop distinct competencies. From a social perspective, innovation also has the potential to raise the standards of individuals with lower incomes. American innovation is most likely to occur in our top metro areas.
• Increased global demand and the growth of third world countries will result in increased exports. Today, the top U.S. cities will have a chance to develop strategies with other cities (rural and metro), states, and regions to take advantage of this opportunity.
• The energy revolution will bring about change through the use of alternate energy sources. It is essential for the world to develop cleaner and more diverse sources of energy, particularly for use in the top 100 cities.

While Katz’s notions are well conceived and thought out, time will tell if they will become the driving force of the next economy or if they are great ideas that will be celebrated by urban leaders, scorned by rural communities, and ignored by political leaders because they are perceived as too self serving.