Addressing coordination failure

One of the strongest arguments for the federal government being involved in regional development policy is ‘coordination failure’. This is economic jargon for the failure of initiatives because of the inability of different stakeholders to coordinate their actions for their mutual benefit.

This is a BIG problem, and the strongest argument why Australia must have an ongoing regional development policy. Coordination failure arguably stems from four factors:

 The sheer size of our continent combined with modest population.
 The confrontational nature of the Westminster system, which works against getting agreement on most things. .
 The competitiveness of most federal and state programs.
 The lack of collaborative people, despite our belief that we’re easygoing and matey.

The last point is the most important, and the hardest to explain. The Cockatoo Network exists to connect the dots and find pathways for regional development projects. In our experience the ingredients of a collaborative person is someone who:

 Is naturally inclined to work through a problem, and who has the confidence and ability to share information.
 Is willing to take risks because of a belief that the proposal is a worthy one.
 Can see the light at the end the tunnel, and know it’s not a locomotive.
 Has loads of patience and perseverance.

These were once key attributes for jobs in the federal arena because of the belief that a national perspective could help in addressing coordination failure. But sadly this is no longer the case. And in any case federal officials now seem consumed by process, rather than product.

This was proved this month when we tried to get any one of four agencies – the Departments of RDA, Innovation and Agriculture plus the Murray Darling Basin Authority – to assume a leadership position on food value adding agendas across the Murray Darling Basin and beyond. Each agency said that while the agendas we had highlighted (regional branding, labelling, supply chains etc.) were very interesting, it wasn’t their role to lead or coordinate issues in this space.

This is arrant nonsense – but until there is a change, there is a marvellous opportunity for groups of councils and regional development boards to step into this space.

Collaborator Profile: David Irwin (Northhumberland, UK)

Who/Where?

My name is David Irwin, based in Northumberland. I am a social entrepreneur, and a consultant in enterprise and economic development working with clients such as DANIDA, Department for International Development, Sainsbury Family Charitable Trusts, World Bank, Gates Foundation and Esmee Fairbairn Foundation. I work with organisations that wish to develop initiatives, in turn, to help new and growing businesses. I wear lots of hats, including trustee of Sunderland Youth Enterprise Trust, a member of the Investment Committee of Oxfam’s Enterprise Development Program and a Visiting Fellow at Teesside University Business School.

What is exciting you at present?

Most of my work at the moment revolves around helping trade associations in their attempts to influence public policy – in Kenya, Mozambique and Tanzania. Most need considerable help, and governments tend to be capricious, but they can make a difference and the impact can be considerable when they get it right.

Top three tips on collaboration

1. Share information and network widely. Too many organisations, especially in Africa, see information as power – but passing on information is not like giving away money. You share the information, but you still have it as well, so now many more can benefit.
2. Be especially generous in sharing information with the public sector as they often do not have access to accurate information and so base decisions based on perception rather than on reality.
3. Proactively look for opportunities to collaborate rather than waiting – you might wait for ever.

Collaborative projects?

I am particularly interested in what it is that makes some trade associations successful while others are much less successful, not least because identifying the characteristics and features of success will make it easier to offer training programs so that all can benefit. I would be interested in thoughts about what leads to success for trade associations in developed countries.

David Irwin, Partner, Irwin Grayson Associates david@irwin.org – irwingrayson.com – mob +44 7785 901020

Collaborator Profile – Christian Saublens (Brussels)

Who and where are you?
I am Christian SAUBLENS, Executive Manager of Eurada, the European Association of Development Agencies, based in Brussels, seat of the European Institutions, Belgium.

What’s your job?
To advocate the European Union institutions (mainly the European Commission) to draft and implement legislations and financial programmes which are friendly to regional development agencies and by boomerang effect to all regional stakeholders. We try to pass the message that building strategies is useful, but that good implementation mechanisms are even more important. We also try to avoid any JIMA syndrome (‘Just In My Administration’).

Our main dialogue partners are the departments working on issues such as regional policy, financial and non-financial support to enterprises and entrepreneurs, R&D+I, high education, social inclusion, environment, energy, State aid controls, ICT policy. In parallel, we are facilitating exchanges of experiences between the members on various issues related to the management of public intermediary organizations and to the design of new ways to provide support services to enterprises.

Over the years, we have been able to put on the agenda of the EU Commission and members issues such as business angels, investment readiness, crowdfunding, financial engineering, benchmarking, business retention, regional innovation strategy, clusters, vouchers, technology showcase, regional intelligence, impact assessment tools.

What’s exciting you at present?
The preparation of the next EU programming period i.e. 2014-2020, requires a lot of energy because a great number of regulations in the field of economic development have to be adapted before mid-2013. Pinpointing current barriers and identifying potential new ones is critical at this stage of the European legislative moment.

Moreover, the financial crisis will oblige all regions to do more or better with less budget. This means to develop new skills to detect the real assets of a region and to build a new set of unique competitive advantages in the global economy. At the same time, regional stakeholders will face an increased demand for regional wellness and responses to societal challenges. They will have to invent “proximology” support services i.e. create a regional societally-responsible economy offering citizens alternative choices to those offered by the current charity/donation economy or the pure financial market one.

What are your top 3 tips on how to collaborate?
1. To listen to the partners’ needs.
2. To share knowledge for a mutual benefit.
3. To exchange views on new ideas and concepts.

What collaborative projects would interest Eurada?
Any projects helping enhance capacity building in the field of regional development.

Contact details:
Email: christian.saublens@eurada.org Tel. +32 2 218 43 13

Collaborator Profile – Chris Gibbons (Littleton, Colorado)

Who and where are you? – I’m Chris Gibbons, Director of Business/Industry Affairs, City of Littleton, Colorado USA.

What’s your job? I am the co-creator and director of our Economic Gardening project, which is an entrepreneurial approach to economic development. I oversee a staff of three specialists: market researcher, search engine optimization and web marketing analyst and Geographic Information Systems specialist. We provide these services to businesses in Littleton to help them grow.
What’s exciting you at present? We are evaluating a number of new tools in the overlapping areas of network analysis, data mining, big data, network mapping and watering holes.
What are your top 3 tips on how to collaborate?
1. Build relationships one informal meeting at a time
2. Do start with projects or hot topics on the agenda.
3. Understand your partner’s world: outlook, constraints, objectives, culture.
What collaborative projects would interest Cockatoo readers? Littleton has a number of collaborative projects that have received national and international attention: economic gardening, the youth program established after the Columbine shootings, our immigrant integration program, our risk intervention group, our health committee.
Contact details cgibbons@littletongov.org U.S. phone no: 01 303.795.3760. We’re Mountain Time Zone.

Germany’s social partnership

The following might be viewed as a self-serving analysis, but the fact is Germany and its President are the rocks of Europe – Editor.

Germany recovered quickly from the economic slump in 2009, mainly because German industry managed to keep its skilled workforce during the crisis. This was possible because the German government sponsored short-time work, or a reduction of working hours, thus avoiding lay-offs. This measure was possible only where decent wages and management-union trust existed, what Germans call a “social partnership”. Now, despite some growth in non-unionised companies and income inequality, the export-oriented manufacturing model of social partnership is strong.

Those who believe unions, high wages and workers rights are a burden for business should consider that this sector has been Germany’s most successful. Instead of trying to out-compete global markets in cheap goods, German industry specialised in high-quality products and kept its share in a growing global market as other European countries, Japan and the US lost shares to China. This strategy is possible only with highly skilled and motivated workers and requires managers who promote a constant evolution of improvement in products and processes. Strong union representation on the shop floor, in the form of “work councils”, and on supervisory boards ensures that workers’ interests are always considered.

German manufacturing workers’ representation remains strong despite global competition. It proved successful because it incorporated the knowledge of workers and their representatives, countering change with fewer conflicts.

By contrast, the way the US has treated its workers has helped create a highly precarious socioeconomic reality. Half of Americans are in poverty or low-income, and the US is experiencing the highest income inequality since the Great Depression, a gap that mushroomed in the past 30-40 years because of trade, tax and labour policies. US trade policies undermined America’s working class through the outsourcing and offshoring of US manufacturing and the erosion of labour protections. US tax policies moved wealth from the majority to the minority, thanks to low capital gains and dividends taxes, thus favouring non-labour wealth creation. US labour policies failed to increase minimum wages for the majority of America: the minimum wage is worth less now – adjusted for inflation – than in 1968 when the inequality trend started to take off.

Source: Michael Shank (Institute for Economics and Peace) & Thorben Albrecht (Social Democratic Party of Germany)

Mike Enright’s visit to Canberra

Professor Mike Enright (Hong Kong University) was in Canberra recently on business, and the Cockatoo Network convened a dinner to get an update on competitiveness, clusters, China etc. etc. And it was a stimulating session.

Mike was a key researcher on Porter’s ‘Competitiveness of Nations’ project and has since notched up 16 years in Hong Kong, where he provides a valuable East-West bridge for not only his students but the corporate world via his consultancy business.

Points of particular interest:

1. Apart from resources and agriculture, Australia lacks the scale to be competitive on the world stage. However it does have sufficient complexity of systems and arrangements to have projects with sufficient scope to be of world interest. The capacity of Australian managers to be engaged across the full scope of their business in Australia is a factor in their international success.

2. In a similar vein, Mike said that one advantage Australia might have in the region was our ability to generate ideas, solve problems etc. This was possibly linked with Australia’s relatively well educated workforce and inclusive/sharing social norms and work practices.

3. Mike suggested Australia’s competitive advantage in Asia is indeed the ability of our senior managers (who are there in big numbers) to act as ‘integrators’ i.e. to manage the integration of people and resources from across different nations and cultures. Managing a value chain! We agreed that since Australia is losing its presence in manufacturing, it makes sense to build a name in such a field. For example, Americans are known for their marketing flair, the Nordics for design skills, the Germans for engineering excellence, the Latins for food and flair. The unanswered question is what policy levers might be pulled to consolidate Australia’s skills in this field.

4. However Mike noted that the integrator function goes unobserved. The discussion turned to the possibility of Lighthouse Projects that could highlight international alliances and Australia’s role as an integrator. Mekong River Bridge is now a 20 year old example.

5. The upcoming Manufacturing Statement was discussed, and the possibility of it featuring clusters. Mike correctly feels that Treasury thinking holds sway in public policy in Australia, and recommends that the best way to sell clusters to Treasury types is to explain their role in addressing market failures e.g. managerial myopia, under-provision of public goods, coordination failure.