Prospericity

Economic gardening

“You need to grow the garden that you have.”                                                      (Sara Garretson, Industrial Technology Assistance Corporation)

Potatoes

Potatoes from a successful gardening project at the Mitchell-Redman house in Sacramento

The above piece of wisdom from my former boss , longtime Industrial Technology Assistance Corporation (ITAC) President Sara Garretson, has for years stuck in my head as a good operating philosophy for any kind of ethical, effective economic development initiative focused at the level of the firm. I worked for Sara in New York City in the late 1990s, at a time when a group of us were trying to identify what we called “burst growth” manufacturing companies. The basic idea was that such burst growth firms would be the ones that had outgrown the management capacity of their initial owner-founder. These would be the companies most likely to add significant numbers of jobs to the local economy in New York. They would also be, we hoped, the very firms most likely to demand ITAC’s industrial extension services – especially, as focus group research revealed, targeted assistance with sales and marketing.

There is a whole story to be told here about extension as a longstanding and uniquely American economic development model, with roots dating back at least a century in the form of college and university-based agricultural extension services. Another story that could be told relates to the Manufacturing Extension Partnership (MEP) program, a quiet but well conceived federal initiative through the National Institute for Standards and Technology at the US Department of Commerce (ITAC is the New York City MEP affiliate). Yet another story relates to the perils and promise of using Dun & Bradstreet data to identify fast-growing firms. I eventually hope to tell at least part of all these stories, but today I’d like to focus on Sara Garretson’s gardening metaphor. This is because, as I learned recently from friend and current ITAC board member David Hochman, a parallel economic development approach to the one my ITAC colleagues and I were working to establish in the late 1990s had existed since the late 1980s in an entirely different part of the country. Interestingly, this approach also used the gardening metaphor.

Economic gardening is a term coined by Chris Gibbons, currently associated with the Michigan-based Edward Lowe Foundation but formerly business development director for the city of Littleton, CO. In the late 1980s Littleton faced mass layoffs at the town’s biggest employer, the Martin Marietta Corporation. In the face of this crisis with roots at a faraway corporate headquarters, Gibbons bravely decided to focus effort not on recruiting a new big company to Littleton through tax breaks, but instead on fostering homegrown companies with real ties to the city. Even more, he decided to focus narrowly on what, borrowing a term from MIT economist David Birch, were called “stage 2” companies. These were basically they same kinds of “burst growth” firms we got interested in ten years later at ITAC – firms with between perhaps 10 and 100 people and with revenues above $1 million. Not large corporations, but not tiny microenterprises, either.

The idea was to offer these stage 2 companies high quality technical assistance, especially in the area of research related to entering new markets. By focusing on market research, it seems to me that Littleton (consciously or otherwise) was trying to turn a subset of its local companies into “traded” firms exporting goods and services outside the local area.

Over time, economic gardening produced bountiful results for the City of Littleton. In a June, 2014 article, for instance, Governing magazine pointed out that in the first 25 years since the economic gardening approach was implemented, Littleton’s population increased by one-quarter. Meanwhile, “the number of jobs tripled and the city’s sales tax revenue went from $6 million to $21 million.”  Littleton, borrowing Sara Garretson’s terminology, had managed to grow the garden that it had beyond the wildest hopes of city leaders. (Click here to see the article in Governing).

One would think, given this kind of track record, that economic gardening would have by now become a primary economic development approach at cities large and small throughout America. But while many economic development insiders are now at least familiar with the term “economic gardening,” the approach has hardly begun to displace traditional tax incentive-based attraction and retention initiatives. Most economic gardening efforts, including those in California cities ranging from San Bernardino to Oakland to Chico,  appear from my preliminary research to be in the experimental or pilot phases. Perhaps due to the pressure to compete in the tax incentive wars, few cities seem to have followed Littleton’s footsteps and had the will to truly commit to making economic gardening their primary business development approach.

This does not, however, reduce the significance of economic gardening as a policy model and especially as a useful rhetoric for an enlightened economic development policy focused at the level of the firm. In a country so totally resistant to anything smacking of industrial policy (though the US pursues many de facto industrial policies), the term “economic gardening” implies in the very softest, most humble way that there are real choices to be made in investing scarce economic development resources.

Plus the approach just makes sense. It makes sense at the most basic level that cities ought to keep tabs, somehow, on the successful small firms within their local economies (whether one wants to call these firms “Stage 2” or “burst growth” or “gazelles” does not matter). It further makes basic sense that cities (or extension services like MEP affiliates or universities) would want to provide some kind of technical assistance services to these firms, especially if there is a need not being filled by the private marketplace. Finally, since it’s in the interest of all urban regions to nurture traded companies that export outside the local area, it makes sense to focus especially hard, as does the economic gardening approach, on technical assistance with sales and marketing.

All in all, economic gardening seems a perfect means for cities and regions to begin the process of disarming from the ruinous business tax incentive wars that afflict US economic development policy, and to adopt a robust, positive way to grow their own gardens of innovative companies.