North Louisiana’s New Economic Engine

Ed Morison
Economic Policy Advisor
Purdue Center for Regional Development
February, 2009

Louisiana, like the rest of the country, is confronting a fundamental

transformation: the way in which we build prosperity is changing dra-
matically. In the past, we relied heavily on business strategies de-
veloped in our grandfather’s economy. We chased after large, vertic-
ally integrated and hierarchically managed corporations, capable of
producing large volumes of low-cost, mass-produced goods, like auto-
mobiles and appliances.

Our grandfather’s business models were designed to minimize costs.

Traditional practices of economic development spoke directly to these
businesses by emphasizing low-cost land, labor, and capital, bundled
into a good "business climate". The legacy of recruitment strategies
and the deep (and for the most part unproductive) economic develop-
ment incentives that fueled the strategy still dominate most economic
development organizations throughout Louisiana and the South.

Beginning about 20 years ago, new business models began to emerge

based on networks. In the 1980s, Fortune 500 companies began to
build global manufacturing networks. With improvements in telecom-
munications and logistics, supply chain integration emerged as an im-
portant strategy. This shift had tremendous implications for places like
Shreveport, when AT&T moved its residential telephone manufacturing
business to Singapore.

In the 1990s, companies started connecting with their customers in

many of the same ways they had been connecting with suppliers. Cus-
tomer relations management emerged a critical strategy. In the mid-
1990's, the Internet exploded with the invention of the Web browser.
The strategy of connecting to customers took off like a rocket. The in-
teractivity of the Web made pure network business models, like Google
and eBay, possible.

We are now faced with some clear realities:

1. Traditional economic development strategies based on low-cost

competition are no longer effective. Low-cost land, labor, logistics and
capital are increasingly available anywhere.
2. Sustainable competitive advantage for a company or a regional eco-
nomy is rooted in the capacity to innovate. Innovation leads to busi-
nesses that can sustain higher incomes in a region.

3. Increasingly, innovation is taking place outside the four walls of any

one organization: in open networks. Collaborative innovation emerges
within regional economies among clusters of related firms and support-
ing organizations, like community colleges and research universities.
These clusters form complex regional innovation systems to share in-
formation and resources.

4. To accelerate regional innovation, economic developers need to fo-

cus on building these regional networks with colleges and universities
as their hub.

5. Open innovation networks become the key feature of competitive re-

gions. Regions with thicker collaborative networks learn faster, spot op-
portunities faster, and align their resources faster. In short, they are
more competitive. Building more entrepreneurial regions comes down
to developing these networks with new tools and resources targeted to
the needs of high growth companies.

6. Competitive regions also need more effective networks for building

brainpower with 21st-century skills. The skill demands of high-value
jobs are increasing, yet our public educational systems have only made
marginal improvements over the past 20 years. At the same time, the
retirement of the Baby Boom generation creates serious skill shortages
in professions demanding post-secondary education. The connection
between educational attainment and economic prosperity is strong,
clear and irrefutable. Regions that learn to innovate in building brain-
power and boosting educational attainment will prosper.

7. New approaches to regional leadership are also emerging. In the

past communities and regions relied on a handful of regional leaders
capable of projecting a "command and control" presence to lead a
strategy. Now, the responsibilities of regional leadership are far more
distributed and shared. Regional leaders can emerge from almost any-
where, based on their talent, integrity and energy. These leaders are
just as likely to lead from the rear as from the front.

8. Colleges and universities play a number of critical roles, as regions

develop innovating networks. They are a major source of brainpower to
power a regional economy. They often have access to important ex-
pertise and technologies useful for high-growth companies. They can
provide strong entrepreneurial resources to accelerate the volume and
velocity of startup companies. Alumni networks provide informal cap-
ital networks to support emerging companies. Equally important, col-
leges and universities provide a neutral space where regional leaders
can convene to conduct the often difficult conversations needed to
shape effective regional strategies.

At the Center for Regional Development at Purdue University, we are

developing the models and tools of Open Source Economic Develop-
ment to enable economic developers to understand and accelerate the
development of open networks within their regional economies. (We
are also working on a close cousin, Open Source Workforce Develop-
ment, to create innovating networks among schools, post-secondary
institutions, and businesses.)

We have identified the five key networks that regional economies need
to prosper. We have developed new disciplines of strategic doing to re-
place the slower, more expensive, and increasingly ineffective prac-
tices of strategic planning. (In complex systems like a regional eco-
nomy, strategy becomes a matter of following a handful of simple
rules. Strategic doing is a simple, but not easy discipline of following a
set of simple rules.)

We are also evolving new protocols for making economic development

investment decisions. We are designing new data tools for business
cluster and occupational cluster analysis, so economic developers can
understand the deeper systems driving their economies. In workforce
development, we are focused on two areas: 1) improving the productiv-
ity of re-employment networks within regional economies; and 2) ac-
celerating education transformation through open innovation networks
and strategic doing.

Across the country, college and university networks are forming to

provide the innovation infrastructure that regions need to compete in a
global economy. Two weeks ago, I visited Louisiana Tech University to
brief members of the Consortium for Education, Research and Techno-
logy (CERT) on our work at Purdue. CERT is an established network of
post-secondary institutions from across North Louisiana. It represents
the single most important economic development resource for the 22
parishes of North Louisiana.

During the meeting, I learned of the drastic budget cuts in higher edu-
cation now under consideration by the state legislature. These cuts, if
enacted, will drive North Louisiana’s economy toward Third World
status. This prediction is not hyperbole. International comparisons
already demonstrate that the US economy is slipping from the top rank
in education and innovation. Global competition is gaining on regions
like North Louisiana… fast.
Here’s a modest three part proposal:

1) State government should legislatively recognize the valuable role of

collaboration between higher education and private sector in creating
the environment of innovation Louisiana’s economy needs to survive
and prosper. State economic development resources should be focused
on a strategy that supports creative collaborations. This step would un-
derscore that the state recognizes education and innovation are the
key drivers of prosperity for our grandchildren’s generation. The best
way to stimulate innovation is to invest in higher education.

2) The Board of Regents should adequately fund CERT and replicate

this network throughout the state to accelerate collaboration among
state post-secondary institutions. CERT, Established in 1997, repres-
ents one of the first in the nation networks of colleges and universities.
Yet, CERT stands perilously close to collapse. If properly funded, CERT
becomes North Louisiana’s most effective recruitment tool for new
business.

3) Local economic developers across 22 parishes of North Louisiana

should suspend their recruitment activities and pool their recruitment
budgets to work with CERT. By creating an opportunity fund to stimu-
late regional innovation, North Louisiana can join 39 other regions
across the country which are moving down this pathway. Working with
CERT, economic and workforce development professionals can dramat-
ically improve post-secondary career pathways across North Louisiana.
If North Louisiana can build a reputation for education innovation and
transformation, companies will come.

We at the Purdue Center for Regional Development are eager to work

with CERT. It’s time now for civic leaders across North Louisiana to
shift their thinking. Colleges and universities are the drivers of the new
prosperity. Old economic development strategies no longer work. CERT
is the region’s new economic engine.