Cleveland, Part II: Re-Constructing the Comeback

Yesterday, in Part I, I talked about how, despite the Cleveland region’s significant assets, the Greater Cleveland Partnership’s strategy is failing to transform its economy. Today I’ll focus on the strategy’s five weaknesses, and how to fix them.

First: The Wrong Approach To Achieving Scale
To be effective, economic development initiatives have to be big enough to make a difference. Traditionally, this has meant building bigger organizations. The Cleveland leadership is following an economic development model based on hierarchies.

What worked 30 years ago does not work so well today. Across the business landscape large, vertically integrated organizations are breaking apart. In economic development, this transition means that civic leaders need to build regional scale by developing networks. In a world of increasing economic complexity, regions that have strong, trusted networks will be more competitive. They will learn faster, spot opportunities faster, and will align their resources more quickly. And they will make faster and better decisions. Cleveland’s civic leadership can be far more effective if it learns the power of social networks. A number of good books explore this topic; The Tipping Point should be required reading.

Second: Misunderstanding Public-Private Partnerships
Over the past decade, Cleveland’s business leadership has revealed a startling misunderstanding of the nature of the two categories of public-private partnerships that drive economic development.

Publicly-led and privately-supported investment projects typically involve large infrastructure, as well as projects in which public financing represents over half of the total development budget, such as stadiums, museums, libraries, and community sports complexes.

The second category involves privately-led and publicly-supported investment projects. Here, the private sector takes the lead, but the public sector provides support and guidance. Good examples include tax increment financing districts, business improvement districts, and virtually all economic development incentives.

Cleveland, during the Voinovich Administration, executed well on publicly-led and privately supported projects. A new baseball stadium, the Rock and Roll Hall of Fame, the Science Museum, the new basketball arena, and the Cleveland Browns stadium are all examples. Starting in the mid-1990’s this capability degraded rapidly, so that it has taken over ten years (with no end in sight) to complete the last of the Voinovich projects, the convention center.

But when it comes to privately-led and publicly supported investment, the business community has proven itself inept. It took ten years for it to establish a business improvement district around the new baseball stadium and arena. The signature downtown shopping mall, Tower City, has no anchors, no street visibility, and terrible parking.

The easiest way to learn how these partnerships can be successful involves visiting other cities. Not surprisingly, Cleveland’s civic leadership does not regularly take leadership visits, a common practice among dynamic metro regions.

Third: No Strategic Framework, No Theory Of Change
Foundations are fond of asking for a “theory of change”. In other words, they want their grantees to orient themselves within a broader system. They want a simple, clear explanation of how a proposed intervention will transform the system to better performance.

Cleveland’s leadership has no apparent theory of change. Overwhelmingly, the strategy is now driven by individual projects. These projects, pushed by the real estate interests that dominate the board of the Greater Cleveland Partnership, confuse real estate development with economic development. This leads to the “Big Thing Theory” of economic development: Prosperity results from building one more big thing.

The economy has shifted under the leadership’s feet. We are rapidly moving toward an economy of networks embedded in other networks. With an economy driven by knowledge and networks, economic development is more than land development, real estate projects, and recruiting firms that move from Michigan to Mexico.

Today, economic development begins with brainpower in 21st-century skills, and Cleveland’s leadership largely ignores the role of developing brainpower. The next version of the Cleveland+ strategy should explain how the city-region will innovate to build these skills. The best places to look: Milwaukee, Cincinnati, Syracuse and Kalamazoo.

Prosperous regions must also develop thick, trusted networks to convert this brainpower into wealth through innovation and entrepreneurship. Cleveland’s top-heavy development organizations need to shift toward network-based strategies that are more lean and agile. That will put investment toward more productive use. Good examples to follow: Ann Arbor Spark and the Milwaukee 7.

In order to attract and retain smart people, regional leaders need to develop quality, connected places, “hot spots” that attract people and “smart growth” strategies that efficiently leverage scarce public investments. In Cleveland’s case, the city needs more coherence to its physical development, one that embraces the city’s inevitable shrinkage in the years ahead.

To create a buzz, effective regional leaders build their brands, not with clever logos, but with powerful experiences and stories that help people to connect their past to a prosperous future. Action, authentic stories, and networks are changing Akron, Youngstown, Kalamazoo and Milwaukee, all cities facing the same challenges as Cleveland.

Fourth: The Wrong Mindset For Making Decisions
If you live in a world of hierarchies, you live in a world of two directions: top-down or bottom-up, with top-down the preferred direction. It’s the direction of command-and-control; of predictability and stability. Bottom up is the opposite. It implies disorganization and chaos, inefficiency and fragmentation, confusion and uncertainty. If you approach economic development from a top-down perspective, you want to limit and control public comment. Civic engagement is a carefully circumscribed event, not a process; a meeting, not a collaboration. Anyone who has attended a school board meeting understands this point.

There’s only one problem. The top-down world does not exist in economic development. Complex public/private strategies are developed in a “civic space” outside the four walls of any one organization. Within the civic space, no one can tell anyone else what to do. Strategies born in a top-down mindset are doomed to fail.

Networks have no top or bottom, only nodes and links. Strategy is an exercise of aligning, linking and leveraging assets across a network. Transformation takes place when enough people in the network align themselves toward a specific outcome, through purposeful conversation. To traditionalists, conversation is a distraction or a waste of time. In the years ahead, the challenge for places like Cleveland will be to manage complex conversations.

At Purdue, we are developing the new disciplines of "Strategic Doing", an approach to select and test transformative ideas in complex environments quickly. Traditional approaches of strategic planning are too linear, time-consuming, inflexible and expensive. Strategic Doing offers an alternative. By translating ideas into action quickly, the disciplines of Strategic Doing build both collective knowledge and trusted connections. They lead us to “link and leverage” strategies that multiply the effective power of our assets.

Cleveland’s leadership has a long way to travel down this road. There’s a naive ineptitude in the civic deliberations on complex issues. For over ten years, the Greater Cleveland Partnership has been fiddling with a convention center decision. In the long run, the upside for the city is minimal, while the downside grows each day. By following traditional top down management models, the city’s leadership, if it’s lucky, will build a 30-year-old idea 10 years late.

Fifth: Weak (Or Nonexistent) Metrics
In traditional world hierarchies, metrics are the primary instrument of top-down control. It’s not surprising that, as a rule, economic development professionals tend to shy away from measurements. Relatively few regional strategies include them.

In a networked world, metrics serve different and more important functions. They help clarify outcomes, and add coherence by promoting alignment. Visions are difficult to translate to action. More specific outcomes and metrics mark the direction in which we are heading. They help us learn “what works”. Economic development is inherently an inductive process of experimentation. Without measurement, we have no way of knowing whether or not our underlying assumptions are more right than wrong.

Creating The Comeback
Cleveland can find a new path to prosperity, but it will take new leadership committed to transparency and different ways of thinking and acting. With new leadership, Cleveland can do better. It will find prosperity with initiatives that embrace brainpower, creativity, innovation, sustainability, collaboration. These are the foundations on which Cleveland’s future can be built and created.

Ed Morrison is an Economic Policy Advisor at the Purdue Center for Regional Development. This article draws from Royce Hanson, et.al, “Finding a New Voice for Corporate Leadership in a Changed Urban World”, a case study from The Brookings Institution Metropolitan Policy Program (September 2006).