Trust Distance Decay

Another item from the Sunday NYT Business section, this one concerns the geography of trust. Investment decisions are influenced by "neighborly advice" or in some cases, local knowledge:

This possibility led the professors to devise a number of complex tests to determine the actual role of word of mouth in investor decisions. One of the more intriguing tests took advantage of a barometer designed by Robert D. Putnam, a professor of public policy at Harvard; it measures the level and intensity of social interaction in a community. States with the highest scores in Professor Putnam’s index were North and South Dakota; Alaska and Hawaii ranked lowest. Professor Ivkovich and Professor Weisbenner found significantly more herding behavior in high-ranking states.

While the herding mindset can be both good and bad for your investment portfolio, much of Putnam's research points out that our communities of trust are disintegrating. One force tearing apart our social networks is migration. The odds are increasingly long that we will toil in the same town where we grew up. Furthermore, for a variety of reasons, we are less connected to our neighbors.

Of course, other networks develop, such as at the office and online. However, Putnam contends that internet interaction is an inferior way of building trust (supporting a Spiky World geography). Trust over distance, for better or for worse, is an old problem. Throughout history, various technologies have overcome the impractical need for face-to-face interaction. What virtual communities need is a similar innovation that renders moot the fact we may never meet.

Taylor Ostrander Diaspora

In the Sunday New York Times Business section, Ben Stein beats the same drum I'm beating for Pittsburgh:

I KNOW that I have beaten this drum before, but let me beat it again. I wonder whether there is some well-organized human being in the government or private sector who could create an organization that would go into schools on a continuing basis and teach people how careers are made. I wonder whether there could be some link with teachers in schools in nonrich neighborhoods who could tell helpful men and women about boys and girls who need mentors to get them going into higher education and entry-level jobs, and then to counsel them about how to behave on the job and in school.

Mr. Stein offers a paean to his social network, namely his parents, particularly his father. He recognizes the value of his connections and how they define his success. What about the people who do not have any shoulders on which to stand?

As Mr. Stein laments, better fiscal and economic policy will not provide the leg up needed to address inequality. Those of us rich with connections might share our wealth with those bright and promising enough to make good use of them. The region with the best and most accessible talent network might win the migration game, in the Flat or Spiky World.

Flat World Follies

Via the Wall Street Journal's blog, "The Informed Reader", I learned about an article in BusinessWeek discussing an aspect of the developing Flat World economy. The story isn't exactly about a new migration pattern for the Creative Class, but the fight between struggling regions for a piece of the knowledge economy:

The digital titan, based in Mountain View, Calif., has been hunting for places to plant new server farms: vast, immaculate warehouses filled with row upon row of computers that allow Google to offer faster online searches and advertisements. Lenoir (pronounced like the woman's name Lenore) boasts resources at the top of Google's list: cheap, abundant electricity; excess water capacity to keep the computers cool; and lots of inexpensive land.

The problem is, like talent, the kings of the knowledge economy are highly mobile. Thus, regions are engaged in a cutthroat game of packaging incentives in order to attract industry. A Pittsburgh example was the successful courtship of US Airways to land the flight operations center, snatching the business from Phoenix and Charlotte. You might consider the Penguins power play as part of the same trend.

What is lacking is a true regional competitive advantage, which is what Richard Florida's Spiky World effectively maps. If you don't harbor some unique asset, you are vulnerable to the whims of a bidding war. Furthermore, the industry could relocate at some point further down the road, once again taking advantage of a lucrative opportunity.

Burgh Diaspora Business Model

The Wall Street Journal has an article about sustaining community symphony orchestras. A recent study investigated the efficacy of initiatives to maintain the fiscal health of these cultural treasures:

But civic boosterism itself isn't enough to sustain an orchestra. The delegates were told that the findings of a two-year study in St. Paul, Minn., and Pittsburgh suggests that orchestras' institutional health lies in the adoption of a new business model. Music managers typically think that their job is to present the highest level of musical performances possible and pay for them by selling seats and catching grants. It isn't. Sell all the seats to all your performances, market through every site on the Web and corral every foundation executive you can, and your orchestra will still face a deficit. Music executives' real business is developing communities of patrons. And educating their children.

The lesson for Pittsburgh concerning its Diaspora is that "civic boosterism" isn't sufficient to productively engage expatriates. Pittsburgh must cultivate a community, patrons who will help support the region.

Educating Burgh Diaspora children isn't a bad idea, either. I'm reminded of the introduction to Simon Schama's book, Landscape and Memory (great book, but I highly recommend his Embarrassment of Riches). Schama opens with a story from his days as a schoolboy in England and how the Jewish Diaspora community there helped him cultivate a sense of place in his ancestral homeland: Each child would sponsor the planting of a tree in Israel. Thus begins his treatise on the relationship between physical geography, national identity and artwork.

Pittsburgh Green Drinks

Pittsburgh Green Drinks Event Announcement

This Month's Gathering: Friday, July 20th at Bossa Nova from 5:00pm to 9:00pm

Join us in the REMIX of Green Drinks Summer Edition at our new home in Downtown Pittsburgh with complimentary tapas sampling from 5:00 to 8:00!

This month's host, Growth Through Energy & Community Health (GTECH), is an early stage social enterprise designed to reclaim blighted and underutilized urban land through the growth of re-mediating, bio-energy producing plants while serving to create a "Green Job" platform. As a three-pronged community development strategy aimed at land reclamation, biofuel feedstock production, and job creation, GTECH strategies serve as bridge from urban vacancy to value.This approach is based on the premise that proactive, holistic strategies have the ability to capture unrealized market potential.

Founded by three recent graduates of the Heinz School of Public Policy and Management at Carnegie Mellon University in partnership with Steel City Biofuels, GTECH's mission is to revitalize communities through social, economic, and environmental innovation.

Currently a brownfield scale project is underway at the Almono site in Hazelwood and a community based project is planned to commence in the East Liberty in partnership with East Liberty Development Incorporated. This project was featured in a recent Pittsburgh Post-Gazette article (http://www.post-gazette.com/pg/07191/800495-28.stm).

For more details on GTECH please visit:www.gtechstrategies.com or contact Andrew Butcher (Principal) at a.butcher@gtechstrategies.com.

Be sure to bring your friends and colleagues to have a couple of drinks with green folks like you - environmentalists, journalists, academics, elected officials, green builders, green business folks, health care professionals, doctors, chemists, developers, artists, students and just about anyone else who is interested a better Pittsburgh environment. Green Drinks is a social activity, so come enjoy an end-of-the-week drink with some really caring and talented people at Pittsburgh's green drink event.

What is Green Drinks?
Every month, people who work in the environmental field or have in interest in a greener planet meet up for drinks at places all around the world at informal sessions known as Green Drinks. We have a lively mixture of people from NGOs, academia, government and business. Come along and you'll be made welcome. Just say, "are you green?" and we will look after you and introduce you to whoever is there. It's a great way of catching up with people you know and also for making new contacts. Everyone invites someone else along, so there's always a different crowd, making Green Drinks an organic, self-organizing network.

These events are very simple and unstructured. Make friends, develop new ideas, do deals and forge a new organic future. It's a force for the good and we'd like to help its spreading to other cities. Pittsburgh Green Drinks meets on the 3rd Friday of each month from 5:00 - 9:00 PM...or later!! Put it in your calendar and count on it: Green Drinks is happening every month.

Pittsburgh Green Drinks Data Sheet:
WHAT: The world-famous Green Drinks (http://www.greendrinks.org)
WHEN: 5:00 - 9:00, Friday, July 20th
RULE: Third Friday of every month
WHERE: at our NEW VENUE -- Bossa Nova, 123 Seventh Ave Downtown
HOW: Walk, cycle, bus, boat, taxi or drive
WHO: Anyone working on environmental issues or who wants to!
WHY: Fun, contacts, alcohol, info, gossip, inspiration, business and pleasure
NEW: Just go up to someone and say "are you green?", and you'll be made welcome.
REMIND: To get on this email circulation list, send an email to announcements@pittsburghgreendrinks.org or visit http://www.pittsburghgreendrinks.org/lists to subscribe.
PRIVACY: This email list is ONLY for Green Drinks reminders. We will not give your email address to anyone else.
STATUS: Informal, self-organizing network.
GLOBAL: Now active in 224 cities worldwide! Every month globally since 1989, locally since 2005. Average attendance: 70
UK | USA | Canada | Australia | Germany | Sweden | The Netherlands | Argentina | Belgium | Brazil | Chile | China | Czech Republic | Denmark | Finland | France | Hong Kong | India | Ireland | Italy | Japan | Malta | Mexico | New Zealand | Poland | Puerto Rico | South Africa | Switzerland

URL: http://www.greendrinks.org

Ketchup Flavored Potato Chips Diaspora

I spent my entire youth in the shadow of the Canadian border. Both the Anglo-Canadian and French Canadian culture are a part of my identity. I've hitchhiked across the entire country and I was even anointed as an honorary Canadian during one beer-filled weekend in Ottawa. I understand the Canadian passion for doughnuts, but I don't recall encountering the ketchup flavored potato chips phenomenon:

Ed Krysiak, one of the owners of Wachusett Potato Chips, has been making potato chips for more than half a century. Krysiak told me over the phone that Wachusett has been making ketchup flavored potato chips on and off for about fifteen years. While not as popular as some of it others brands, Krysiak told me over the phone the ketchup brand does well in upstate New York “close to the Canadian border.” Ah, yes those Canadians. Indeed, many Canadians who live near the U.S. border find it cheaper to buy their gasoline and groceries in New York rather than in Ontario. And it certainly doesn’t hurt U.S. retailers if they supply a few bags of ketchup flavored potato chips for their Canadian customers.

You might say that the presence of such crisps is a good indicator of Canadian connectivity. As you might have guessed, there is a Pittsburgh link:

Of course, when one thinks about ketchup most people will immediately think about Heinz. Herr Foods, based in Nottingham, Pennsylvania just southwest of Pittsburgh, at the behest of its CEO and Chairman JM Herr, launched a ketchup flavored potato chip in 1996 with moderate success. However, when one of Herr Food’s seasoning suppliers approached them with the idea of putting in ketchup flavor from Pittsburgh based H.J. Heinz Company, creativity poured out like a Heinz ketchup bottle and the product was re-launched as Herr’s Heinz Ketchup Potato Chips in 1999. It has been selling well in parts of the Northeastern United States (particularly in Philadelphia and in New Jersey) and, surprise, surprise, in Canada. In fact, sales to Canada outpace U.S. sales as Herr’s Heinz Ketchup Potato Chips can be readily found in Sam’s Clubs and Costco’s stores. Melanie Coldiron, Promotional Events Coordinator for Herr Foods, attributes the success of Herr’s Heinz Ketchup Potato Chips to the esteem in which both companies are held in the marketplace. “As both companies have a great reputation for high quality products, Heinz and Herr Foods Inc. coming together in this partnership has led to the success of Herr’s Heinz Ketchup Potato Chips,” said Coldiron in an e-mail.

If you happen to see a bag, buy one and celebrate your inner-Canadian, not to mention your own Pittsburgh heritage.

Shrinking Cities Diaspora Paradox

The Buffalo Jewish community is shrinking, sparking a dialogue about merging the institutional infrastructure. The out-migration plagues almost all the usual suspects, exhibiting the now all-too-familiar geographic pattern:

Western New York is not alone in losing Jewish population — a trend that has hit cities such as Pittsburgh, Cleveland, Milwaukee and St. Louis just as hard. Meanwhile, growth states such as Arizona, California, Florida and Nevada are experiencing a corresponding boom in Jewish population.

The above article also discusses another aspect of the decline in numbers, secularization and intermarriage. Given this trend, would the Buffalo Jewish Diaspora desire a relationship with their hometown and/or Israel, once relocated?

Shrinking city Jews can connect in their new place of residence via established community organizations, displacing the need to network with other people who migrated from the same location. I could say the same thing about other religious groups, which raises a few questions about the value of place-based identity.

Is the Burgh Diaspora Network redundant and therefore unnecessary? Can a member of the Diaspora juggle two or more homelands? Where does Pittsburgh sit in your hierarchy of allegiances?

Pittsburgh, Australia

Australian investors see value in American real estate, particularly in markets such as Pittsburgh:

Record prices and falling yields from offices and trophy properties in New York, Chicago, Washington and San Francisco have sent Sydney-based Record Realty and Macquarie Bank to markets like Pittsburgh and Mineral Wells where initial returns are about 45 percent higher.

International financial capital is seeking greater returns far from the global migration winners. I would characterize such money flows as Flat World bets. While the Spiky World dominates the current landscape, opportunity is trending towards the shrinking cities and the nearby hinterlands.

Pittsburgh shouldn't bide its time, but the worm is turning.

Innovation Nation

Former professor at Carnegie Mellon University and a founder of Tartan Laboratories, William Wulf is preaching about improving the innovation ecology of the United States:

But learning and investment are not enough, Dr. Wulf says. An innovation economy depends on intellectual property law, tax codes, patent procedures, export controls, immigration regulations and factors making up what he calls “the ecology of innovation.” Unfortunately, he argues, in the United States too many of these components are unworkable, irrelevant, inadequate, outdated or “fundamentally broken.”

Instead of an "ecology of innovation," I would term it a "political geography of innovation." Dr. Wulf is railing against a political geography meant for a bygone era and economy. In many ways, he's describing Pittsburgh. I'm sure his experience at CMU, a la Richard Florida, did much to inform his policy critique.

Pittsburgh's political geography served the industrial economy well. What is needed is some political innovation, a new landscape to serve the knowledge economy. If you're wondering if such a model exists, try exploring the concept of transnationalism.

Connectivity Toronto

Chris Briem's recent suggestion that Pittsburgh look northward to Ontario and Toronto took a hit when US Airways announced that they will soon end service to Toronto. In swoops Porter Airlines, according to Pop City:

Porter Airlines takes a stylish approach to the business, offering attentive service and creative fare structures that allow customers to change itineraries without penalty up to an hour before flight time. Leather seats, free in-flight wine, drinks, and snacks, complimentary shuttle service to the downtown, and a beautiful, state-of-the-art waiting lounge in Toronto with Wi-Fi and business work stations are among the perks. While Porter is targeting the business crowd, its flights into City Centre Airport are a short and lovely ferry ride to downtown Toronto, attractive to visitors as well, [Brad Cicero, company spokesperson] adds.

The data I've seen indicate that Toronto is an under appreciated opportunity for Pittsburgh. US Airways no longer flying there supports that understanding. While I'm still bullish on orienting toward Washington, DC, looking northward to Cleveland, Buffalo and Toronto has enormous potential. That way, Pittsburgh will continue to haunt Richard Florida wherever he goes.

Laboratory Pittsburgh

The Post-Gazette features a story today on local innovation GTECH Strategies. GTECH is a good example of how Pittsburgh can get a return on its investment in geographically mobile intellectual capital:

GTECH -- Growth Through Energy and Community Health -- is a pilot-stage Carnegie Mellon University spin-off conceived by three recent graduates of the H. John Heinz School of Public Policy. The principals -- Andrew Butcher, Matthew Ciccone and Chris Koch -- are joined by principal and consultant Nathaniel Doyno, head of Steel City Biofuels, which brokers deals between makers and users of biofuels.

While the start-up is a great byproduct of CMU's program, at some point the venture might be better served in another region. However, the value proposition is decidedly local. GTECH is eyeing the region's brownfield sites as a source of biofuels.

CMU and Pitt would do well to solve regional problems, putting the intellectual capital cycling through to good use. Make Pittsburgh the opportunity landscape that the students explore. At the very least, encourage students to search their surroundings for inspiration.

Nursing Diaspora

Score one for Flat World. The Global Alliance for Nursing and Midwifery (GANM) Electronic Community of Practice (CoP) recently landed more funding for program growth:

"This fund is critically important to ensuring the GANM's forward momentum in using information and communication technologies to 'reach and teach' geographically dispersed nurses and midwives," [GANM CoP director Patricia Abbott] said. "Many of the world's most pressing health issues are occurring in places where access to best practices and knowledge resources are very low. Our online community has proven to be an effective tool in removing the constraints of geography."

When I write about tasking the Burgh Diaspora, I am imagining a community of practice like GANM's. A network of expatriates could connect Pittsburgh to "best practices and knowledge resources" for any regional task at hand. Missing some crucial piece for a local initiative or venture? Plug into Network Pittsburgh.

Actively Exporting Local Talent

In many parts of South Florida, you will feel as if you have left the United States. Miami's orientation towards Central and South America along with the Caribbean is not news. What is surprising is the regional effort to export talent overseas:

The presence of expatriates in Miami-Dade County is well documented and visible. Foreign consulates arrive at cultural functions in chauffeured Lincolns and wealthy foreigners who head the Latin America divisions of multinational corporations are seen hitting South Beach hot spots in Bentleys and Benzes. But, the other side of the coin - local executives who travel overseas to help companies launch initiatives, open new offices and start new projects - is far less visible.

Encouraging local talent to expatriate isn't quite "brain drain." The region is loaning its human capital in order to help local firms exploit new market opportunities. Given the multi-national (transnational) demography, South Florida is stocked with executives equal to the task.

The passive export of talent from Pittsburgh is decades old. The inadequate policy response was and is to trap the human capital in the area. Local universities are producing highly desirable workers and Pittsburgh-based enterprise gets first crack at them. There isn't enough demand or opportunity to employ most of the graduates in the region. Businesses headquartered in Pittsburgh would have a competitive advantage for attracting homegrown expertise. Said enterprise could then actively export this talent where there is a great demand for their services.

I would further suggest that local venture capital could follow this talent wherever it needs to go to find the best entrepreneurial opportunity.

Toronto, Florida and Geographic Mobility of Talent

Remaining thematically in Ontario and Canada... The Creativity Exchange is championing the efforts in Canada to deal with "transformational globalization." The story behind this story is more than a passing interest in Canadian strategies to take advantage of global opportunities. Reportedly, Richard Florida is heading to the University of Toronto to help propel that region to the highest tier in the world city hierarchy:

The guru of urban economic development, best known for his argument that post-industrial cities should focus on cultivating a "creative class" of writers, painters, musicians, software developers, engineers and doctors, is moving up to Canada.

"That's the plan," said Amanda Styron, Prof. Florida's spokeswoman at the Creative Class Group, a Washington-based think tank he founded for innovative business practices in business, government and communities.

I find Dr. Florida's migration instructive. The University of Toronto's gain is George Mason University's loss, but that's the gamble you take chasing after highly mobile talent. If the grass looks greener, there is little in the way of barring you from exploring an exciting new career environment.

I gather that Toronto is more spikier than Washington, DC. How can Pittsburgh or Savannah, GA possibly compete? Fact is, Dr. Florida can tackle projects at the U of T that few other R1 institutions could support. Furthermore, Toronto is a great city in terms of quality of life and cosmopolitan disposition. Score another one for the Spiky World.

Pittsburgh, Ontario Update

Hamilton's Pittsburgh Steelers will represent Canada in New Orleans for the flag football world championship. In an apt defensive battle, the Steelers edged the Edmonton Hurricanes 7-6.

Brain Gain and Marketing Denver

And you thought Pittsburgh had problems... Enter Denver and its blighted national image:

When Denver civic and business leaders try to attract highly skilled, well-educated people to work here, they still sometimes encounter negative stereotypes.

"Everything from 'It snows all the time' to 'Do they have flush toilets?"' said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.

I'm going on a decade of living in the Front Range of Colorado and Mr. Clark is not spewing hyperbole. The climate and culture here are often misunderstood. The natives may lynch me for writing this, but the Denver winter is one of the easiest to weather in the United States. I've been on a Boulder rooftop beer garden in January enjoying seventy-degree temperatures in shorts and a t-shirt.

This story is rich with irony, including the model for the Denver booster program: Brain drain victim Louisville, KY. Think carefully about the lesson. Louisville suffers from an out-migration of talent. One solution employed is attracting domestic migrants from other locations, giving them a taste of the quality of life beyond the typical university experience. The aim is not to keep local human capital from leaving. The goal is to establish the region as an upper echelon destination like "New York, Boston, Washington, Los Angeles and San Francisco."

Pittsburgh, Ontario

Since Chris Briem thinks Pittsburgh could pay more attention to Ontario, I'll do my part pointing out that Hamilton's very own Pittsburgh Steelers advanced to the NFL/CFL Canadian Flag Football Championship held in Winnipeg. The winner of that tournament then travels to New Orleans for the World Championship. I'll see if I can find out the results of the Canadian Championship tomorrow.

Network Economy

I've suggested networking the Burgh Diaspora for purposes of economic development and increasing Pittsburgh-related entrepreneurial activity. There are a number of impediments to distance collaboration, but an audit of talent and assets among Pittsburgh expatriates is much less daunting. Consider I.B.M. and its initiative to organize global expertise to solve complex problems anywhere in the world:

The idea is to build networks for producing and delivering technology services much like the global manufacturing networks that have evolved over the last couple of decades. Look inside a computer or automobile and the parts come from all over the world. High-end technology services projects increasingly will follow that formula, combining skills from across the globe and delivered on-site or remotely over the Internet.

Talent converges at the site requiring service, a reverse outsourcing migration. Instead of sending the job to Bangalore, labor is flown to where it is needed. The connection between place of residence and where you work is further dislocated. Of course, some tasks can be done remotely and only require labor to telecommute.

The resulting economic geography is a landscape that Pittsburgh is uniquely positioned to leverage. The cost of living in the region is low, but the quality of life is high. There is an ample local supply of expertise in conjuncture with a large number of expatriates acting as a reservoir of talent that could be flown to Pittsburgh (or other places) for certain projects. I.B.M.'s business model would be ideal for the region.

Bank of Burgh Diaspora

Watch out PNC Bank, peer-to-peer lending is a booming business. Virtual marketplaces are springing up every day, challenging the dominance of established enterprises and venerable institutions. At the forefront of the financial side of the amateur revolution are online communities of trust:

For those who'd rather not borrow from friends, families, or strangers, there's Lending Club, a Sunnyvale, Calif., firm, launched in May in cooperation with the popular social networking site Facebook. Lending Club, which says it has already issued over $100,000 in loans, leverages Facebook's affinity groups. These groups, formed by millions of Facebook users, are built around shared interests -- attending the same college, for instance, or working at the same corporation.

Lending Club borrowers are put through a credit check. But they're also ranked according to their membership in Facebook groups. Lenders who belong to a Facebook group get a listing of creditworthy borrowers who belong to the same group.

John Donovan, Lending Club's chief operating officer, said group loyalty will ensure that borrowers repay the money. Besides, he said, lenders will feel more comfortable investing money with fellow Facebook group members. "It just goes back to the way it was a thousand years ago, when you lived in a certain village," said Donovan. "You know from experience whether you can trust a person in that village or not."

Having trouble finding capital for a new small business? You could approach other members of the Burgh Diaspora who have the means to help you make your dream come true. Like venture capital, trust paves the way for transaction.

Financial institutions have endeavored to develop metrics that allow them to measure risk without the benefit of local knowledge. As microlending has demonstrated, all the number crunching pales in comparison to a neighborhood network. Thus the 20-minute rule for Silicon Valley venture capital. In the faceless environment of the internet, heritage and shared experience can overcome the problems of distance.

Cinthia Ritchie Diaspora

I'm not feeling all that serious today, a rare break in the mood for this blog. The internet is full of personal diasporas. What if I contacted all the "Jim Russells" or "James Russells" I could turn up in a Google search? Cinthia Ritchie has an answer for me:

I never particularly liked my name until last week, when I Googled myself and found other Cinthia Ritchies -- Cynthias and Cindys -- across the country. Each time I discovered another one, I felt an instant connection, the way I used to feel in elementary school when I noticed a girl with the same lunchbox and knew we would be best of friends.

When I called and e-mailed a few of them, they were equally excited.

"Another Cynthia Ritchie," they said, followed by "How many of us are there?"

I'm sure such vanity searches are common. But I appreciate that Cinthia took the next step, establishing a new community. The same process is at work for bloggers. Many of us are seeking others who share an issue, idea, or world view.

Diaspora literally means scattered. While I champion Scattered Pittsburgh, I have a passion for all dispersed communities, including the Cinthia Ritchie Network. Trust cultivated over space, beyond the practical possibilities of face-to-face relationships, is the exception. Distance is its own Tower of Babel.