Sunday, August 22, 2010

The Innovator's Dilemma And Workforce Development

More than a few times, I've made the vague assertion that today's workforce development policies are antiquated. The default assumption is that locally produced talent is supposed to stick around and answer local labor demands. Attracting outsiders is only necessary given tremendous job growth (e.g. Post-WWII West Germany). With industry tied to geography, this workforce development paradigm makes perfect sense.

From corporate structures to globalization, the current recession is demanding a lot of rethinking about how the world works. Yesterday's great ideas are today's liabilities. Via Aaron Renn's Twitter feed, "The End of Management":

Even the best-managed companies aren't protected from this destructive clash between whirlwind change and corporate inertia. When I asked members of The Wall Street Journal's CEO Council, a group of chief executives who meet each year to deliberate on issues of public interest, to name the most influential business book they had read, many cited Clayton Christensen's "The Innovator's Dilemma." That book documents how market-leading companies have missed game-changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of "bad" management, but because they followed the dictates of "good" management. They listened closely to their customers. They carefully studied market trends. They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.

The above passage resonates with my views on regional workforce development. Good practices now inform bad results. A better educational system robs your city of its best talent. Individual success comes at the expense of the community. If you will, regional talent management may be at an end.

The article offers a few ideas about how to tackle the needed transformation and I think they apply equally well to workforce development. Open innovation and collaboration are the buzz terms. That would seem to be Ed Morrison's wheelhouse. Chris Briem has mused about public access to data. The Buffalo Expat Network provides an avenue for the diaspora to help craft a vision for the city's economic redevelopment.

Current economic and workforce development efforts are too opaque. In Youngstown, a complete breakdown in communication:

John Russo, co-author of “Steel Town USA” and professor of labor studies at Williamson College of Business Administration at Youngstown State University, said local economic development agencies are not realistic.

“They are trying to put a good face on things. I don’t know what’s going to make Youngstown all that different from other places.”

Lifelong Youngstown resident and former Mayor George McKelvey called the competing economic development organizations “overdone.”

“It’s almost as though to solve our unemployment problem, we had to create a lot of economic development agencies to hire people to work in these agencies, and the only thing they were doing was developing their own jobs,” McKelvey said.

“When it’s all said and done, much more is said than done,” McKelvey said.

I've seen plenty of skepticism about the efficacy of economic development agencies. It's a transparency problem, much akin to what has plagued the World Trade Organization. What's going on behind closed doors? What are the good old boys scheming now? It's a fertile environment for conspiracy theories and public relations disasters.

For some people, leaving a region is the best career track. Such considerations are an anathema to traditional workforce development. The result is the stifling of geographic mobility, which is a horrible idea if you care about economic development. Formerly good practices are now generating bad results. Whose interests are being served? I'm certain the worker doesn't benefit from captive labor markets and depressed wages. I advocate for the needs of talent, not the talent needs of employers. But the two don't have to be mutually exclusive.


jonathan goldstein said...

I love reading your blog, Jim. It's mind stretching stuff. I think the idea of a healthy city being a city that encourages flow in and out is right on the money. P.S. Here's a blog post on Pittsburgh's South Asian community

Jim Russell said...


Thanks for the compliment and the link.