Vision of Economic Development

economic-developmentby Rob White

Much groundwork has been laid over the last few decades in developing an economic development vision. I recently came across a report from 1992 titled “Business Development in Davis” that suggested several strategic activities necessary to develop a strong economy. Many of the activities listed as important to developing fiscal sustainability and the rationale for the efforts are still pertinent today.

Though much has been recently written and discussed about economic development in Davis, it is important to note specifically that City and community leaders have been working diligently over the last few years to develop an economy that leverages unique opportunities. These activities have led most recently to the discussion of developing the emerging innovation ecosystem and identifying the key strategic goals that can be accomplished with limited resources. And although I am aware that active collaboration across sectors is required to accomplish these goals, let me discuss the efforts from the perspective of the City.

There is no roadmap or time-tested set of actions that make up the development of an innovation economy, especially as it pertains to efforts by a municipality. So staff has had to work diligently to outline a roadmap that is pertinent to Davis. Specific actions taken by the City over the past year in enhancing the Davis ecosystem might best be described in the book by Victor Hwang The Rainforest, where he outlines the elements necessary to creating an innovation ecosystem that will lead to economic vitality:

1.      Innovation comes not from the basic ingredients of economic production, but from the way that people interrelate to combine and share ideas, talent, and capital. The community that facilitates such relationships is a biological system we call a Rainforest. Its animating process is creative reassembly.

2.      Certain individuals and organizations we call “keystones” have the special ability to integrate disparate people, influencing them to act in ways that impact the entire system. They glue people together in the Rainforest.

3.      People do not connect easily. Social barriers – based on geography, social networks, language, culture, and distrust – create transaction costs that prevent people from finding each other and working together. Human beings are wired to distrust one another.

4.      A system can overcome barriers to human collaboration when people are motivated by extra-rational motivations, and when the transactions are less costly due to social norms we call the Rules of the Rainforest.

5.      The Rainforest Recipe demonstrates how such systems are constructed, based on diversity, trust, motivations, and norms. Diversity is enhanced by mixing people from different social groups. Cultural behavior is learned through the Rainforest tools: real-world practice, role modeling, peer-to-peer interaction, social feedback loops, networks of trust, and making norms explicit through social contracts.

6.      Capital must be designed as a service integrated into the Rainforest, not as an end in itself. It must be part of the social fabric, not distinct from it.

7.      We measure the health of the Rainforest by watching the waves, not just the atoms or the overall ocean. The flow-form model – based on robust biological systems – emphasizes the velocity of ideas, capital, and talent flowing in the system. Lowering social barriers is like opening arteries to accelerate their flow.

(The Rainforest, by Victor W. Hwang and Greg Howard, published by Regenwald, Los Altos Hills, May 2012)

Using these elements as a guide, City staff have been focused on the unique opportunity to be a “keystone” in the Davis innovation ecosystem. By enhancing and developing partnerships and collaborations it is possible to leverage networks to induce activities that will more readily lead to sustainable economic vitality and quality of life.

The current City Council Goals that are supported by work on innovation and economic development include:

  • FISCAL STABILITY:  Ensure short- and long-term expenditures and revenues are equivalent, matching community resources to needs without reliance on growth.
  • ECONOMIC DEVELOPMENT:  Promote economic development consistent with our community values and niche as home of a world-class university.
  • SUSTAINABILITY:  Enact policies that strive to meet the needs of the present without compromising the ability of future generations to meet their own needs.
  • DOWNTOWN DAVIS:  Ensure downtown Davis remains the vibrant economic, cultural, and social center of the community.
  • COMMUNITY STRENGTH AND EFFECTIVENESS:   Create an environment at all levels of the City that encourages effective engagement and results in quality customer service delivery.

While economic development activities are most specifically outlined in the second goal above, the activities by staff engaged in innovation and economic development have impact on all of the listed goals by adding to the overall quality of life and economic vitality for the community.

Additionally, the City has broadened the use of the term Sustainability to encompass the three-pronged approach of environmental, economic and social sustainability, which is in line with current Davis values, Commission recommendations and Council efforts. This terminology is similarly being used by federal and State agencies and has been adopted across California by business groups and economic development leaders.

Based on these goals and concepts, staff are suggesting that the most effective use of resources by the City to conduct economic development activities would be to focus in the following strategic areas:

1) Facilitate Technology Business Development,

2) Increased University Engagement,

3) Expand Support Network for Local Business,

4) Strategic Branding and Marketing, and

5) Regional Leadership

Each of these activities is focused on the enhancement of Davis’ quality of life objectives and requires a cross-departmental approach inside the City to achieve service delivery. Economic development staff is often tasked to initially lead programs and activities and as priorities shift, the appropriate City department is engaged for continued support and implementation as required. It has also become the norm for staff to work with local and regional governments and business organizations to help bring focus and additive resources to that implementation.

Due to the cross-departmental nature of economic development activities, staff is requesting City Council input on the efforts of the innovation and economic development team so that staff can further implement a 24-month strategy working towards 5-year goals that leverages minimal resources for maximum outcomes in support of Council goals and priorities. Staff seeks Council support a focused, outcomes-directed economic development strategy due to limited staffing and the need for maximum impact in support of revenue growth that leads to enhanced quality of life and economic vitality for the citizens of Davis.

Davis has also demonstrated new regional leadership by working collaboratively with regional partners and creating a focus on Davis that highlights its unique culture, quality of life, and human capital.  Coordination with regional, state and federal legislators has also led to early recognition for Davis and has resulted in evolving roles as a leader in the advancement of innovation, economic development and technology.

More recently, Davis companies and organizations have been increasingly recognized by the media and regional business organizations for their efforts that have helped to build an innovation and knowledge-based economy. These include recognition of several local companies and their founders as businesses leaders of the year, key appointments of local leaders in positions of regional leadership, and continued recognition of UC Davis for ongoing global efforts in research and development.

To take advantage of Davis’s unique position and regional leadership opportunities in building the innovation ecosystem, the City’s economic development strategy should be focused on the City’s strengths as a facilitator working in partnership with our local and regional business partners. The municipal leadership role is likely most effective in helping to create an environment for business success by determining and removing barriers that don’t serve a purpose for the common good. In that facilitator role, local government is most likely to be additive in achieving community-based strategic goals by creating the framework from which an innovation economy can thrive.

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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18 Comments

  1. Nancy Price

    This is a very interesting article. I have read The Rainforest several times and find that while the ecosystem model might be very important for discussion, in my view it is seriously flawed. There are many aspects of ecosystems in nature that are not presented either in the book nor in this overview by Rob White and can not be subsumed in the concept of “sustainability.” In fact, the whole point about invasive species is that they overturn the notion of sustainability of the ecosystem overall, unless you measure sustainability by the fact that the “invasive species” at some point reaches a point of “sustainability,” however at the expense of the rest of the ecosystem.

    My point is: that survival determines much that goes on at the level of ecosystems in nature.

    In my opinion “human” ecosystems must be based on values or principles that are a product of human culture – I would prefer that a concept of “sustainability” would be well-defined – not left for us to assume the content. For me at this stage of discussion, I suggest that we need to invest that concept with really clear values or principles which local and global democracy movement are rallying around and these are: human rights and economic, social, and environmental justice. How, at our community level, these values might be discussed in terms of the “Rainforest” model and be embraced as foundational to community and economic development is worth discussing.

    I for one would recommend for this discussion another book by Chris Williams, Ecology and Socialism: Solutions to Capitalist Ecological Crisis (2010).

    1. Matt Williams

      Nancy, would you consider writing a counterpoint article that lays out an alternative. Building a collaborative consensus may well come from the point – counterpoint dialogue that would result.

    2. Rob White

      Nancy, fair points. No model is perfect (thus its reason for being called a model). I tend to gravitate towards ecological models when discussing innovation and economic development. This probably has much to do with my background as a geologist, where you have to be good at visualizing the what ifs to see the past, current and future strructures. But again, I admit is not a perfect view of the world.

      By having a geologic sense of the world, you see change as rampant and many times uncontrollable. But you also see rebirth and opportunity everywhere. When David talks about a redevelopment idea for the commerical space in South Davis (most specificly Interland), I can see his point with the more effective densification to 2 and 3 stories, much like Berkeley has experienced.

      I will surely read the book… I love to gather new ideas that will help shape my own world view. I am smart enough to admit that I don’t know it all!

  2. Steve Hayes

    “…There is no roadmap or time-tested set of actions that make up the development of an innovation economy, especially as it pertains to efforts by a municipality. …”

    Sure there is! The buzz-word rich “rhetoric” contained within this piece is right out of the ICLEI playbook. To see where this effort is ultimately going, please check out the “One Bay Area Plan” that continues to be implemented with the assistance of ICLEI over the objections of the citizens residing within the nine county Bay Area. There, individual communities have forfeited their ability to plan and implement their futures to regional non-elected entities such as ABAG, The Department of Transportation, and others. Remember, Davis is a proud ICLEI City!

    1. Matt Williams

      Steve, you have brought up this point on a number of occasions; however, you have never laid out an alternative to the kind of cross-community collaboration described in Rob’s article. Can you share with us your alternative vision?

    2. Rob White

      Steve, thanks for the comments. I have no interaction with ICLEI nor do I base my thoughts on anything that they may be discussing or promoting (as I have not read their platform). If any of my ideas are similar or duplicative, it is shear coincidence. My thoughts here are based on three major sources: 1) lots of reading on industry practice and innovative ideas; 2) lots of broad experience at local, regional, state and federal levels with both economic development and innvoation; and 3) (and probably most important) lots of discussion with community members – policymakers, businesses, social organizations, land owners, residents, and employees. But I do agree with Matt, do you mind laying our some of your concepts and ideas?

  3. Davis Progressive

    i like a lot of these ideas.

    first, the idea that innovation does not come from basic ingrediants of economic production goes against the conservative model of economics and moves us toward a more communitarian viewpoint.

    second, people do not connect easily, which is the challenge the city is having on other fronts right now.

    in terms of your five goals, perhaps we have put community strength and effectiveness on the wrong end. perhaps the other four tenets flow from the fifth and we need to focus on that one first.

    1. Matt Williams

      DP, my personal view is that the goals are interdependent and supportive of one another … especially in the Davis/Yolo/UCD community (“the community”) … and they flow from the five elements. When Michael Harrington makes his arguments that we have to honor our existing community character, I believe that sentiment connects very closely with the first of those elements:

      Innovation comes not from the basic ingredients of economic production, but from the way that people interrelate to combine and share ideas, talent, and capital. The community that facilitates such relationships is a biological system we call a Rainforest. Its animating process is creative reassembly.

      That community character is built (in my opinion) on the two most prominent core competencies of the community … education/academic research and agriculture. The University by definition is combining and sharing ideas and talent. With its commitment to its 2020 Initiative: A Path to Academic Excellence and Economic Opportunity UCD is building on its existing strengths and resources to partner with the communities outside its borders in technology transfer so that the private sector can add capital and resources to maximize the value of UCD’s research products to society.

      While ther trajectory of that technology transfer from UCD is known (agricultural innovation, applied mechanical engineering and healthcare being most prominent), the velocity of the transfer is not as clear. Part of the volocity uncertainty can be illustrated by a microeconomic supply/demand curve. By that I mean there is a robust supply of pure research and applied research “product” available within UCD, but the demand for the transfer of those research products has not been organized. Therefore, the research product either says on campus as a purely academic exercise, or it leapfrogs the Davis/Yolo/UCD community boundaries and goes to Texas or St. Louis or any one of a number of communities that are more committed than our community is to combining and sharing ideas, talent, and capital.

      That brings me full circle back to Michael Harrington (and all the Davis residents he acts as a proxy for. If we are indeed a community whose core competencies are education/academic research and agriculture, then creating an organized infrastructure (an Innovation Park ecosystem) that articulates “demand” that matches UCD’s “supply” of technology transfer “products” is wholly consistent with, and honors our community character.

      On the other hand, if a business park is created that loses the Innovation focus and brings in businesses that do not synergize with and leverage the community’s core competencies, then the community character will not have been honored.

      I am firmly confident that with leadership like Rob White’s we can avoid the “other hand” and make our community both better and more fiscally sustainable.

    2. Rob White

      Thanks DP. I confess, the order of the goals was completely driven by the ideas that I think the community thinks about the most. I don’t disagree that regional leadership should likely be at the top, but as such a new (or really, reclaimed) role for Davis, it may take time for the rest of the region to see us that way.

      You nailed it on innovation – The norm for corporations is to be siloed and secretive. But open source successes have shown us that shared information will result in better, more stable outcomes. In my mind, this means people have to break away from the lowest common denominators of fear and ego, and I am encouraged everyday to be in a community like Davis that generally seems to want to make progress in that direction.

    3. Rob White

      DP, just realized I read your comment wrong! Haha, see what I get for no sleep!? On the Council Goals, they again are not in a specific order, but your point is well taken.

      1. Davis Progressive

        i appreciate that… let me ask you an unpleasant question, if pinkerton leaves, does the rest of the region look at davis and ask wtf? why does that community drive off competent leadership over petty differences? i guess, what’ i’m asking you is does losing pinkerton mean others will question whether davis can do as you lay out?

        1. Matt Williams

          DP, I’m not inclined to think that is an unpleasant question … a challenging question, but not an unpleasant one. The reason I feel that way is that in his tenure here in Davis, Steve has taken proactive steps in order to surround himself with very talented and experienced people, and then empowered those people to make good things happen. I strongly believe that Yvonne Quiring, Herb Niederberger, Mike Webb and Rob White and the people who report to them will not miss a beat if the City Manager position becomes vacant.

          That is one of the benefits of Pinkerton’s mangement style. He is not a Jimmy Carter style micro manager. The Council and Pinkerton have given those managers and departments their 2014 Goals and they are working hard to achieve the milestones associated with those 2014 Goals. I think the other jurisdictions in the region will not only see the continuity of purpose and performance in Davis … but also be impressed by it.

          JMHO

          1. Rob White

            DP – At the risk of being accused of completely side-stepping the question, I’m gonna say I mostly agree with Matt. I enjoy working for Steve, and it is for the reasons listed above. It’s also because he understands economic development and the opportunities we have here in Davis.

            I really don’t think the region (or the North State for that matter) will have much to say, though I do believe Steve will be missed if he decides to go. I work with many orgs across CA and CMs come and go pretty frequently (probably more than any of them would like).

  4. Doby Fleeman

    Rob,
    A great summary. Let’s get rolling. First thing I see is you will need some kind of grant funding if we are going to be honest with ourselves about what it will take to conduct a first rate community engagement process with professionally developed economic research and visioning tools to help us understand the associated opportunities and risks involved. in the case of the 1992 Streng report, it was preceded by a series of professionally developed studies. My point being, our recent approach to Poor Boying the Economic Development effort is not up to our traditional standards. I don’t know what it takes to get the City Council to understand that point – they seem to get it when its about a POU, or a water project designed to protect the Delta, or the resources required to help complete our bicycle and safety infrastructure.

    Why would they think we can bootstrap a viable community engagement on the subject of economic development with any fewer resources committed? Is it that they really that they just don’t want the issue to come up on their watch – it’s being too controversial and all?

    I commend you and the staff for all you have done. Hopefully, the City Council will see the wisdom in providing some much need support to your efforts.

    1. Nancy Price

      As I see it, proposals for whatever it is under discussion, could, should or might be discussed AND evaluated in terms of a grid of core values/principles of the sort I raised above: human rights and social, economic and environmental justice. If these were accepted as foundational, then need to be “fleshed” out in terms of a specific sub-set for each one in the core.

      1. Rob White

        Nancy, While I don’t disagree with your ideas, I think we are a few steps back from that level of analysis. I am suggesting everything we do be done using the lens of sustainability, but i think we need to increase our local capacity for economic development discussions before we can go to much deeper. We are a smart community, but economic development (in any form) has been a foreign idea for most of Davis for sometime. We are moving fast, but we have to bring everyone along for the adventure. I wouldn’t mind meeting for a cup of coffee and hearing more of your ideas, if that ever struck your fancy. As most people that know me would say, I love to hear concepts and others ideas.

  5. Steve Hayes

    Rob White February 6, 2014 at 12:21 pm:Steve, thanks for the comments. I have no interaction with ICLEI nor do I base my thoughts on anything that they may be discussing or promoting (as I have not read their platform). If any of my ideas are similar or duplicative, it is shear coincidence

    Rob:THANK YOU for your kind, reasonable, and prompt response to my previous (February 6th) posting. I regret implying that your specific, detailed actions may have been out of the ICLEI playbook. Unfortunately, the ICLEI playbook played a heavy, top-down hand during the implementation of the recently approved One Bay Area Plan (also known as Plan Bay Area). There, ICLEI provided support and partial finding of facilitators (sometimes known as innovation officers) within Bay-Area communities to work with elected officials to facilitate approval and initiate implementation of that Regional Plan. I am pleased that you are not part of a similar process here. Thank you once again for your comment, and Take Care, Steve Hayes

    1. Rob White

      Steve, No worries! I am always happy to engage (though sometimes my work delays me from responding as promptly as I want to). I do remember hearing some about the effort in the One Bay Area Plan while in Livermore, but honestly, most of the inland East Bay cities just ignored them. We have much more to accomplish here, so I am proposiing that we look at our opportunities right on our front door step. Thanks for the info Steve!

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