STRATEGIC ACTION PLAN:

ALPHA DRAFT

GREATER KOKOMO ECONOMIC DEVELOPMENT ALLIANCE

JANUARY 2009

Greater Kokomo Economic Development Alliance

IndianaWIRED
 Table of Contents
Executive Summary 1

Our View of the Future 2

The Winds of Change Sweeping North Central Indiana 2

The Innovation Imperative 3

Continuing the Transformation of Greater Kokomo 4

Our Strategic Process 4

Our Activities and Timeline 4

Our Strategic Framework 4

Our Strategic Assets 6

Our Process: Strategic Doing 6

Our Strategic Action Plan for 2009 7

Our Purpose 7

Our Vision 7

Our Values 8

Our Areas of Strategic Focus 9

Our Strategic Initiatives 9

Our Strategic Initiatives for 2009 10

Organizing and Managing Our Strategic Initiatives 10

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Beta Plan

i
Preliminary Team Initiatives 14

Action Plan for Implementation 18

Appendix A: Our Strategic Assets 20

Appendix B: Where We Stand 21

Appendix C: Open Source Economic Development 22

Appendix D: Economic Development Terms 25

Ed Morrison of the Purdue Center for Regional Development worked with the
Kokomo Economic Development Alliance Board, staff, members and others to prepare
this strategic action plan with funding provided by IndianaWIRED.

Kokomo Economic Development Alliance Alpha Plan

ii
 Executive Summary
‣ This strategic action plan provides a road map to take Kokomo Economic
Development Alliance to the next level of development.

‣ We focus on building open networks of collaboration in order to accelerate

innovation within Greater Kokomo and the North Central Indiana region.

‣ We propose four Transformative Initiatives. These initiatives include:

‣ Launching initiatives to boost college attainment and reduce high

school dropouts

‣ Become a test bed for new green collar certifications

‣ Creating an innovation zone around Inventrek and the “skunk

works” developing at Inventrek

‣ Expanding entrepreneurship and innovation investment networks,

focusing on alternative energy

‣ Developing new master plans for the Kokomo’s downtown and the
bypass

‣ Creating a new branding strategy around key characteristics of inno-

vation and inclusion

‣ Leveraging IndianaWIRED’s investments

‣ We recommend defining the responsibilities of the Board of the Alliance to

guide the staff, implement the strategy, leverage each board member’s exten-
sive networks of contacts, and provide meaningful opportunities for Board
members to engage in the work of the Kokomo Economic Development Alli-
ance. We recommend establishing clear performance expectations for Board
members.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

1
 ‣ We recommend a process of continuous strategic doing to refine the Kokomo
Economic Development Alliance strategy.

Our View of the Future

The Winds of Change Sweeping North Central Indiana
Our region faces serious challenges, and the Kokomo Economic Development Alliance
will help us meet them. The purpose of this strategic action plan is to define a leader-
ship roadmap for the Alliance.

The future of the Greater Kokomo will depend on how well we meet the following
leadership challenges:

• Building world class brainpower.-- No region can build an advanced economy

without world class brainpower. The connection between education and in-
come has become inextricable and powerful.

• Innovating and supporting entrepreneurs.-- Regions that innovate are quick to

turn ideas into valuable products and services. As we shall see, the ability to
innovate depends on thick regional networks of collaboration.

• Designing and managing quality, connected places.-- Like many areas of the
Great Lakes, the population in our region faces slow growth or even shrinkage
in the years ahead. The challenge will be to manage our physical development
in a way that develops quality, connected places. We need these places to keep
and attract our high quality talent.

• Managing the new stories of Greater Kokomo.-- We need to leveraged the sto-
ries of our past -- stories of remarkable innovation and inspiring pragmatism --
to create the new stories of “what will be”.

• Building new patterns of civic leadership and regional collaboration.-- Civic

leadership requires a complex set of skills unlikely to be found in any single

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

2
 leader. In today’s world, civic leadership is a broadly shared responsibility with
leadership passing from person to person, depending on the situation. Our po-
litical jurisdictions and organizational boundaries represent artificial lines
drawn in the dirt, invisible fences that too often constrain our thinking.

The Innovation Imperative

Advanced economies now depend on innovation to survive. As The Council on Com-
petitiveness has written,

In a rapidly integrating world economy where lower wage developing coun-

tries are quickly improving their skills and can access today’s technology, U.S.
prosperity depends on whether we can remain a moving target. We must con-
tinually improve our ability to identify and commercialize new products, serv-
ices, and processes.1

The report goes on to point out, “there are no ‘low tech’ industries—only low technol-
ogy companies that fail to incorporate new ideas and methods into their products and
processes. Innovation opportunities are present today in virtually any industry.”2

In recent years, a range of new reports has underscored the importance of innovation to
our economic future. These reports encourage us to develop new approaches to innova-
tion in order to continue building our prosperity.3

Innovations emerge from the prolonged and ongoing interactions among people across
a region: people from businesses, colleges, universities, government agencies, nonprofit
organizations, and other places. The regions that will prosper in the years ahead will
create the conditions for innovation to take place. They will encourage these interac-
tions in open networks of collaboration, what economists call “clusters”. Regions with

1 The Council on Competitiveness, The New Challenge to America’s Prosperity (1999), p. 5.

2 Ibid. at p. 12.

3 See, for example, National Academy of Sciences, Rising Above the Gathering Storm (2005); The Task Force on the
Future of American Innovation, The Knowledge Economy: Is America Losing its Competitive Edge? (2005); National
Association of Manufacturers, Looming Workforce Crisis (2005).
K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

3
thick networks of collaboration have distinct competitive advantages: People learn
faster, spot opportunities faster, align resources faster, and make decisions faster.

Continuing the Transformation of Greater Kokomo

We began down this path of innovation when we formed Kokomo Economic Develop-
ment Alliance. Our challenge now is to chart a path to take Kokomo Economic Devel-
opment Alliance to the next level. We need to focus our resources on a limited number
of transformative initiatives; engage the board fully; and strengthen the connections be-
tween the Alliance and the region.

Our Strategic Process

Our Activities and Timeline

[Use this section to provide a brief history of how the Alliance came together.]

Our Strategic Framework

Our strategic activities fit into a model of Open Source Economic Development. This
framework provides clear “strategy maps” for Kokomo Economic Development Alli-
ance to follow in designing its activities.

The Open Source model outlines that any globally competitive region must carefully
manage collaborations and investments. To accomplish our purpose and achieve our
vision, we will focus our activities in these areas:

• Building world-class brainpower

• Translating brainpower into wealth through entrepreneurship and innovation

networks

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

4
 • Creating and holding wealth in our region by developing quality, connected
places for visitors and residents

• Creating a deep sense of the Kokomo region expressed through effective

brands and promoting clear public policies to stimulate collaboration, innova-
tion and productive investment

• Promoting strong habits of civic collaboration to spot opportunities, align re-

sources and resolve disputes

Innovative Businesses

Brainpower Innovation
21 Century Talent Entrepreneurship
Networks

Dynamic Clusters
Creative People

Civic
Collaboration

Quality,
Connected Branding
Places Broadcasting

Hot Spots

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

5
Our Strategic Assets
We build our strategy around our strategic assets. Our future prosperity will be defined
by our ability to align, link and leverage these assets. We have begun to map these as-
sets in Appendix A.

Our Process: Strategic Doing

Our strategy evolves. We will conduct quarterly reviews of the Kokomo Economic De-
velopment Alliance strategy. Each of these quarterly reviews will evaluate our strategic
activities and set targets for the coming quarter. Each year, in September or October,
we will conduct a more detailed review of our strategy in order to prepare budgets for
the coming year.

This process recognizes that setting a strategic direction and executing on a set of stra-
tegic activities represents an on-going process of doing and learning. Far too often, stra-
tegic planning has become an empty ritual, rather than a continuous process of discov-
ery. To be successful, the Kokomo Economic Development Alliance must become an
adaptive enterprise open to continuous learning. The strategic learning and doing proc-
ess we propose involves:

1. Making assessments, gaining insights and making hypotheses about what could
work;

2. Focusing on a limited number of strategic “transformative” initiatives;

3. Aligning resources from inside and outside the Alliance to support these initia-
tives

4. Executing initiatives quickly and efficiently with metrics to measure progress

5. Repeating the cycle to renew the Alliance continuously.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

6
 The Alliance will follow the discipline of Strategic Doing to
translate ideas into action
Develop ideas about what we
can do together
Find

Evaluations Insights

Execute and Choose

measure Learn Focus what we will
results do

Action Plans Initiatives

Launch
Identify and align resources to
specific initiatives

Our Strategic Action Plan for 2009

Our Purpose
Kokomo Economic Development Alliance aligns and leverages resources to promote the
people and businesses of the North Central Indiana region.

We seek individually and collectively to transform our region by building collabora-

tions that promote innovation in a dynamic, sustainable economy.

Our Vision
Kokomo Economic Development Alliance strives to be among the elite innovative re-
gional economic development organizations in the country.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

7
We seek to have a transformational impact, so that we can leave to future generations an
creative, innovative, sustainable region with opportunities for anyone prepared to grasp
them.

We strive to be an organization committed to learning, measuring and improving our

performance. We will continuously evaluate our progress in achieving our vision
through a range of regular evaluations by our stake-holders and comparisons with lead-
ing edge organizations.

Greater Kokomo Economic Development Alliance

Strategic
Purpose Vision
Focus
Brainpower.-- Increase college
attainment and the acquisition of 21st
century skills

Innovation.-- Develop networks to

Become an elite support entrepreneurs and innovative
Align, link and economic companies, especially in alternative
leverage resources development energy
to build regional organization
prosperity through committed to Quality places.-- Develop hot spots
creativity, innovation building a creative, throughout the region of quality,
and sustainabillity innovative, connected places
sustainable region
Branding.-- Design and promote the new
stories of Greater Kokomo around
themes of innovation, inclusion and
collaboration

Leadership and collaboration.--

Strengthen habits of collaboration and
regional engagement

Our Values
As an economic development organization dedicated to civic leadership, we hold our-
selves accountable at every level of our organization for practicing our values of

• integrity and respect;

• mentorship and diversity;

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

8
 • innovation and entrepreneurship;

• partnership and civic leadership;

• efficiency and effectiveness; and

• continuous learning and improvement.

Our Areas of Strategic Focus

We focus these strategic activities into five areas:

• Building brainpower with 21st century skills

• Developing networks to support innovative companies and entrepreneurs

• Promoting the physical development of quality, connected places

• Strengthening the stories of creativity, sustainability, innovation and collabora-

tion that will define the future of our region

• Developing civic leaders with the skills to collaborate and lead complex eco-
nomic development initiatives

Our Strategic Initiatives

Within these areas of strategic focus we will undertake a limited number of transforma-
tive initiatives. Our transformational initiatives:

• Have a positive regional impact to improve incomes or reduce costs

• Include short term “wins” to build momentum toward transformation

• Promote collaboration among private, public and nonprofit organizations

• Align with our strategic framework

• Are guided by clear, measurable outcomes

• Are “owned” by a team guided by at least two Alliance board members

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

9
 • Include advisors or team members from diverse groups within our region

Our Strategic Initiatives for 2009

For the next year, we are focused on the following strategic initiatives:

• Launching initiatives to boost college attainment and reduce high school drop-
outs

• Become a test bed for new green collar certifications

• Creating an innovation zone around Inventrek and the “skunk works” devel-
oping at Inventrek

• Expanding entrepreneurship and innovation investment networks, focusing on

alternative energy

• Developing new master plans for the Kokomo’s downtown and the bypass

• Creating a new branding strategy around key characteristics of innovation and

inclusion

• Leveraging IndianaWIRED’s investments

We will add transformational initiatives as the board determines.

Organizing and Managing Our Strategic Initiatives

To accomplish an ambitious, focused agenda, Kokomo Economic Development Alliance
needs a new approach to organization. traditional hierarchies with rigid committee
structures are too inflexible to accomplish our purpose. While we need to start with a
stable Executive Committee to guide the organization, we need flexible teams to take on
different strategic initiatives.

The roles of the board.-- The Board provides three levels of support to the organization.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

10
 1. Serving on the Executive Committee.-- The Executive Committee, meeting
monthly, guides the operations of the Kokomo Economic Development Alli-
ance.

2. Guiding Teams.-- The Initiative Teams, meeting at least quarterly, are charged
with the responsibility of guiding Strategic Initiatives, as determined by the full
Board. At least two Board members serve as co-leaders of the each team. Initia-
tive Teams also include staff members, other Alliance Board Members and out-
side partners. The Initiative Teams provide opportunities for Board members to
guide the substantive work of the Alliance and provide the opportunity to
mentor younger leaders.

3. Serving on the Full Board.-- The Full Board, meeting quarterly, will review
strategy matters referred by the Initiative Teams and the Executive Committee.
An Initiative Team will not need approval of the Executive Committee to refer a
matter for Board consideration.

The role of the staff.-- The role of the staff is to execute the strategic and operational
plans of the Alliance. The staff also alerts the Board to potential operational problems
and strategic issues.

Schedule.-- The following schedule of workshops and meetings will be required to im-
plement this approach.

• Monthly Executive Committee meetings to review operations of the Alliance.

• Quarterly Team Workshops to evaluate strategies of different initiatives, iden-

tify tactics to overcome problems, and monitor results.

• Quarterly Board meetings to review strategic progress and make decisions on

matters referred to the full Board by Executive Committee and Initiative Teams.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

11
Team Charters.-- The relationship between the Board and the Initiative Teams will be
defined by a Team Charter. Two members of the Board will be designated as team lead-
ers of each initiative.

Each quarter, any confusion, conflicts, or disagreements about the charter must be re-
solved to the mutual satisfaction of the Team and the Board. The Team Leaders and the
Board will negotiate to change the initial mission, broaden or narrow its scope, or shift
its focus. The team charter provides a common vision that keeps a team focused on its
objective. The charter:

• Serves as a contract between the team and the Alliance Board;

• Defines objectives and intent of the team and reinforces alignment among team
members;

• Keeps the team focused and allows the team to determine if its activity is rele-
vant or off on a tangent;

• Defines boundaries and helps the team determine when to raise an issue with
the Board; and

• Helps control scope of team's efforts and re-negotiate its objectives or bounda-
ries with the Board.

Initial Team Charters.-- The following are the initial team charters. They will be refined
over time.

TEAM C H A RT E R

Regional Leadership and Identify opportunities for the Kokomo Economic Develop-
Collaboration ment Alliance to serve as a catalyst to foster regional col-
laboration; Develop and implement initiatives that
strengthen the region’s capacity to address innovation and
economic growth issues that cross political jurisdictions.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

12
 TEAM C H A RT E R

Brainpower Map and monitor the entire educational system in our re-
gion from Age 0 forward; Identify initiatives in which the
business community can add significant value to develop-
ing world class skills, especially in science and math;
Strengthen the career connections between students and
businesses.

Innovation Networks Recruit investment to build the region’s emerging networks

of innovative, growth-oriented companies; Strengthen con-
nections between higher education and the business com-
munity with the purpose of accelerating business develop-
ment; Promote emerging innovation networks (clusters)
within the region by continuously promoting connections
among different potential partners.

Regional Branding Participate in collaborative development and implementa-

tion of a regional branding strategy; Align Greater Kokomo
branding and communications strategy with the regional
branding strategy.

Quality Places Serve as a catalyst for the development of physical devel-

opment plans that emphasize “hot spots” where diverse
groups feel comfortable meeting and connectivity.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

13
 Preliminary Team Initiatives
We used the workshops to develop first generation initiatives, SMART Goals and action
plans for each Team. This work is incomplete, but it provides the framework for moving
forward.

TEAM AND METRICS T E A M I N I T I AT I V E S

Regional Collaboration • Complete the Alliance business plan and establish

the protocols for strategic doing
Key Metrics:
• Support the regional leadership Institute
Number of regional lead-
ers engaged • Promote leadership engagement in the emerging
Participant reactions IndianaWIRED networks in clean energy, zero

Number and scale of re- landfill manufacturing, healthy workforce

gional initiatives
• Open discussions with Lafayette, West Lafayette
leadership

• XX

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

14
 TEAM AND METRICS T E A M I N I T I AT I V E S

Brainpower • Implementation of Project Step Up

Key metrics: • Launch a test bed project for green collar certifica-
tion
College attainment

Percent of graduates with • Launch a dropout reduction initiative

a core 40 diploma

Number of students
dropping out

Certificates earned by
workers over 30 years old

Innovation and Entre- • Create a hot spot at Inventrek

preneurship Networks
• Expand informal venture capital networks and
Key metrics: commercial banking networks to support innovat-
ing companies
Inventrek space vacancy
rate • Establish a concierge service for innovating compa-
Investment in start ups nies (Reference: Charleston Digital Corridor)
and growing a Stage Two
companies (10-99 em- • Participate in the Indiana Energy Systems Network
ployees)
• Evaluate alternative energy strategies for the re-
Density of asset map of
gion
alternative energy com-
panies

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

15
 TEAM AND METRICS T E A M I N I T I AT I V E S

Quality, connected • Establish an innovation zone anchored by and then

places trek

• Align, link and leverage the resources needed to

complete a bypass master plan

• Align, link and leverage the resources needed to

complete a downtown master plan

Regional Branding • Define the key dimensions around the the region’s
brand: progressive, innovative, collaborative
Key metrics:
• Develop stories and proof points to support the
Regional dollars commit-
ted to collaborative mar- brand
keting
• Create an events strategy to support the brand
Web hits on regional
marketing sites

Audience surveys on
awareness and attitude
and behavior change

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

16
 The Alliance will organize around teams to get its work done
The Alliance Executive Committee
meets monthly to review Alliance Each Team includes at least two Alliance
operations and spot problems. Board members who agree to guide the
Full Board meets quarterly after team. Each team also includes other Board
team strategy reviews. members and outside partners. The Team
meets as needed and conducts a quarterly
Executive Committee strategic review to review progress and
Monthly Meetings identify issues for full Board consideration.

Each Team manages a series of initaitives

(projects) 1

Brainpower
Team
Alliance
1
1
Leadership
2
3 Team 2

Innovation
Network

1 1
Quality Branding
1 Place Team
Team 2
2 2
3
3
3

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

17
 Action Plan for Implementation
We are the Alliance from three free standing organizations into an integrated, adaptive
organization that relies more on networks to leverage resources, share information, and
promote learning. These changes will accelerate “strategic doing”: the quick translation
of transformative ideas into sustainable action.

ACTION RESPONSIBLE COMPLETE BY

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

18
 ACTION RESPONSIBLE COMPLETE BY

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

19
 Appendix A: Our Strategic Assets

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

20
 Appendix B: Where We Stand
‣ Strengths:

‣ xxx

‣ xxx

‣ xxx

‣ Weaknesses:

‣ xxx

‣ xxx

‣ xxx

‣ Opportunities:

‣ xxx

‣ xxx

‣ xxx

‣ xxx

‣ Threats:

‣ xxx

‣ xxx

‣ xxx

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

21
 Appendix C: Open Source Economic
Development
Our economy is moving from older, hierarchical industrial organizations to networks.
Companies are learning that innovation and customer value are now generated through
increasingly open networks of collaboration. Firms, through a growing array of part-
nerships, are turning to suppliers, customers, and universities for new ideas to grow
their businesses. Inside companies, managers are exploring new ways to build informal
networks in order to manage knowledge.

Michael Porter, a professor at the Harvard Business School, pointed to this trend some
years ago when he argued that clusters – groups of related firms and institutions – pro-
vided the innovation engine that moved regional economies forward. Clusters repre-
sent open innovation systems that operate within a particular geographic area. So, for
example, in Southeast Ohio, a cluster of food processing firms has evolved around Ath-
ens, Ohio. These businesses explicitly share their business networks to improve their
economic prospects.

The practice of economic development is slowly catching up to Porter's insights. Open

Source Economic Development is a new model designed to implement cluster-based
strategies at a local and regional level. The model is heuristic in that it provides insights
to guide civic leaders on how to build clusters. The open source model establishes per-
spectives from which to view a regional economy, and it guides leadership to new op-
portunities for collaboration. By generating simple, intuitive, and inclusive strategy
maps, the model both accelerates and focuses discussions on how to translate ideas into
action.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

22
The core of the Open Source Economic Development model is a high-level strategy map
that depicts a regional economy as a network of networks. To thrive in this environ-
ment, regional economies need balanced strategies that encourage new networks in the
following areas:

Strengthening Brainpower

In today's global economy, brainpower provides the only basis for sustainable competi-
tive advantage. This fact presents us with some clear imperatives. Advances in brain
science tell us that, in a knowledge economy, workforce development begins with a
pregnant mother. Every child needs pre-school education. Every child should be able
to read and comprehend well by the third grade. Dropping out of high school creates a
lifetime economic disability. In sum, education issues – from parental training and early
childcare to post secondary education and workforce training – stand at the core of suc-
cessful economic development.

Connecting innovation and entrepreneurship networks

These networks convert brainpower into wealth through new products, new services,
and new markets. Innovation provides the process and entrepreneurship provides the
skills to translate ideas into prosperity. Continuously weaving new networks that ac-
celerate business development provides the surest path to sustained economic growth.

Building quality, connected places

Smart people can live anywhere. They will choose to live in regions that respect sound
principles of physical development and offer the best combinations of “live, work, and
play.” Equally important, quality places have thick and effective connections to other
people, other markets. Investing in quality, connected places provides the best insur-
ance of retaining the wealth we build.

Promoting an effective brand

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

23
Prosperous regions have positive stories to tell. These stories create a unique experi-
ence, a special identity, a common understanding of core strengths, and a shared view
of future opportunities. Civic branding is particularly tricky because of the different
markets involved – visitors, investors, talent – and, because in the civic space, no one
can tell anyone else what to do.

Strengthening civic habits of collaboration

In a globally connected economy, no one can go it alone. Prosperous regions will de-
velop civic habits of thinking and acting together. Building collaboration and trust car-
ries real competitive advantages: the regions that collaborate will spot opportunities
and move more quickly than regions that do not.

Civic leaders can use these high-level strategy maps to generate additional maps to
guide their discussions, identify stakeholders, align activities, allocate budgets, and es-
tablish goals.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

24
 Appendix D: Economic Development
Terms
Economic Development

Economic development is a process of creating wealth with co-investments by two or

more partners among the public, private, and nonprofit sectors. These initiatives within
a regional economy form a portfolio of economic development initiatives.

Open Source Economic Development

The term open refers to new model of economic development designed to build clusters
of innovative companies and organizations. This model views a regional economy as a
series of networks embedded in other networks. Effective regional strategy involves
continuously aligning these networks. The model works as a heuristic; that is, it gener-
ates insights by providing civic leaders with guidelines or “rules of thumb.” The open
source model posits that a prosperous region or cluster must invest in 1) world class
brainpower; 2) innovation and entrepreneurship networks to convert brainpower into
wealth; 3) quality, connected places to retain wealth in the region; 4) effective branding
to shape perceptions by telling compelling stories; and 5) new habits of collaboration to
accelerate “strategic doing.”

Strategic Doing

Strategic doing is a management discipline that generates new collaborations and trans-
lates ideas about these collaborations into action. The process involves four steps: 1)
generating hypotheses about collaborations by exploring strengths and mutual oppor-
tunities; 2) defining a collaboration by specifying clearly the mutual benefits from col-
laboration, specifically how the collaboration will generate value, how value will be al-
located among the parties, and how parties can exit the collaboration; 3) aligning re-
K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

25
sources and developing action plans to implement the initial phase of the collaboration;
and 4) executing the action plan, and measuring progress and results.

Cluster

A cluster is a network of firms and organizations within a geographic region that pro-
vide products and services to a related group of markets. Clusters operate as open in-
novation systems in which participants regularly share ideas and resources.

Innovation

Innovation is the process of converting ideas into wealth. It involves the introduction of
a new or significantly improved product or service to the market, or the introduction of
a new or significantly improved process within a business. Innovation can be the result
of the introduction, adaptation, or adoption of new knowledge or technological devel-
opments. It can also be the result of the combination of existing technologies in a new
business model.

Traded Business

A “traded business” represents a business that generates more than 50% of its revenues
from customers outside a region. In economic development, a traded business imports
income into a region – we refer to this as “good money.” Typically, traded businesses
pay higher wages than firms that serve a local market. Traded business that relocate
employees and facilities outside a region are exporting capital – we refer to this as “bad
money.”

Sheltered or Local Business

A “sheltered business” circulates income within a local or regional economy – we refer

to this as “neutral money.” More than 50% of its customers are local. Sheltered busi-
nesses typically contribute to the quality of life of a regional economy.

Old Economy or First Curve Businesses (“Our Grandfather’s Economy”)

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

26
These traded businesses arose in the industrial age. Their business models depended
generally on the control of cost and building economies of scale through volume pro-
duction and vertical integration. By building volume and a relatively low cost position,
the largest companies became the most profitable. These companies tended to have the
highest stock market capitalizations in the ‘60s, ‘70s, and ‘80s, when the market valued
tangible assets the most.

New Economy or Second Curve Businesses (“Our Grandchildren’s Economy”)

These businesses represent a new generation of firms that integrate knowledge and in-
formation into their products and services. Indeed, they blur the distinction between
products and services. These firms rely on innovation (top line growth) to power their
business models. They build value based on networks, and they achieve their scale
through networks. Just as business models evolved, so has the stock market. The mar-
ket today values intangible assets (e.g. people and their ability to create intellectual
property) the most, rewarding these companies with the highest market capitalizations,
valuing.

Portfolio

In Open Source Economic Development, a portfolio is a collection of economic devel-

opment initiatives designed to work together and stimulate the development of brain-
power; open entrepreneur and innovation networks; quality, connected places; effective
branding; and civic collaboration. A region's civic leadership should balance and align
its economic development initiatives among these types of investments. A portfolio
also provides multiple dimensions in which to contrast and evaluate initiatives (e.g. ti-
meframes, cash flows, risk, wealth, jobs, etc.) There are many readily available software
tools available for managing portfolios and evaluating initiatives.

Collaboration

Collaboration represents a process of joint decision-making that achieves collective re-

sults beyond what participants could accomplish working alone. Collaboration in-
volves a range of activities, including communication, information sharing, coordina-
K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

27
tion, cooperation, problem solving, and negotiation. There are many readily available
software tools for helping organizations and people collaborate. Collaboration implies
innovation that leads to breakthrough results.

Brainpower

Brainpower represents mental ability. Recent advances in brain science reinforce the
notion that our brains continuously change throughout our lifetime, and that early
childhood experiences are especially important in determining long-term mental ability.
Neural networks that form the “hardware” of our intelligence increase with use and de-
crease with disuse.

Entrepreneur and Innovation Networks

These are informal networks within a region that accelerate idea and business devel-
opment. If these networks are weak, idea and business development measured by the
rate of business formation and survival, is relatively low. In contrast, regions that ag-
gressively and continuously build these networks have economies characterized by in-
novation, flexibility, and resiliency. The networks effectively move resources – people
and money – to areas of the greatest opportunity.

Quality, Connected Places

Quality, connected places refer to built environments that reflect principles of high qual-
ity design and sustainability. For example, quality neighborhoods are distinctive, acces-
sible, diverse, linked to other areas, and environmentally friendly. Quality commercial
districts include distinctive, balanced, and linked mixed uses. In addition, broadband
access has become a critical component of quality, connected places.

Branding

Branding represents the civic process by which a region explicitly manages the stories
that leaders use to describe the region to residents and outsiders. Branding involves de-
scribing experiences with these stories. Effective stories shape perceptions and alter be-

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

28
havior. Community or regional branding relies on these stories to build a platform from
which to launch different marketing campaigns.

Leverage

Within a specific economic development project or initiative, leverage measures the ra-
tio of one investment partner to the total amount of co-investment. In economic devel-
opment, leverage also measures the ratio of economic development investment to di-
rectly related private investment. (The private investment would not have occurred but
for the economic development investment.)

Civic Process

In Open Source Economic Development, a civic process is an explicitly designed series

of meetings and forums to generate ideas for collaboration and translate the best ideas
into action using an economic development process. A successful civic process includes
both open participation and leadership direction.

Economic Development Process

As a subset of the civic process, a region’s civic leadership should agree to share in the
development and use of a common economic development process that turns the best
ideas into action in a systematic, effective, and efficient way. A “best practices” eco-
nomic development process meets four criteria: it is recurrent; it involves coordination;
it can work in different ways but must always contribute to the region’s wealth (i.e.
must be measurable); and it must improve some aspect of the region’s ability to com-
pete. Implementing a good economic development process is key to 1) ensuring a re-
gion’s economic development organizations are adaptable, 2) finding and sustaining a
region’s competitive edge, 3) keeping costs and risks low in turning ideas into action
through the use of good tools (e.g. portfolio management and collaboration software) to
coordinate actions.

K o k o m o E c o n o m i c D e v e l o p m e n t A l l i a n c e Strategy Action Plan

29