Washington Post

Like many entrepreneurs, I am increasingly ambivalent about electronic communications. I use them every day in my business activities. But I am also buried by inbound communications from strangers wanting me to do something for them. I hate being rude, but I can’t keep up. This week I had the moment that made me ask if I am really obligated to try.

I took at a look at my LinkedIn page and noted the many unsolicited connection requests I get, and how many of them suggest meeting for coffee so the sender can “pick my brain.” The commonalities in approach and tone struck me as orchestrated and formulaic. Well, a quick Google search revealed that they most likely were both of those things.

I was astounded by the number of self-proclaimed experts who offer advice on how to write emails that will be answered, how to use LinkedIn to get a meeting to find the next job and generally how to use social media or email to get a business benefit from a stranger you perceive as useful. The experts assert that most people hate to to be rude so they are likely to respond to an unsolicited communication if it sounds friendly. So, they advise taking advantage of people’s better natures to get them to respond to what they might otherwise immediately dismiss as junk mail.

Was my desire to be a good person being used against me as a tool for someone else’s business development?

I reached out to a broad group of entrepreneurs (I knew them all personally, I promise!) to ask them about my reaction. They told me they were often in the same position and that I should stop feeling bad about not responding to everyone who sent me a message. Janet Van Pelt, chief executive of CourseMaven, an educational software business, put it succinctly: a stranger cannot unilaterally create an affirmative obligation for you to respond.

Moreover, they all felt it was OK for me to consider these requests annoying, since we all earned our livings from personal expertise and our networks. My entrepreneur friends told me they viewed most networking and advice-seeking messages with suspicion as just thinly veiled attempts to get something valuable for free. A few considered such requests presumptuous.

But what about people who are legitimately trying to meet with me to start an exchange of mutual value? My colleagues suggested that they tended to filter messages by whether the sender was referred from an existing relationship of trust or whether the sender’s personal circumstances resonated in some way. Sid Banerjee, founder and viceChairman of Clarabridge, a data analytics firm, captured the consensus view, saying “if they’re introduced through someone I know and care about – I’ll consider it. Otherwise, it has to be interesting to me or I ignore.”

At the end of my conversations, I ended up feeling somewhat better. There was a clear differentiation to be made between acceptable behavior in the real world and online. I would never ignore a polite approach from a stranger on the street or at an event, even if I would ultimately say “thank you, but I am not interested.” Yet that level of courtesy is apparently unnecessary online.

Still, this left me with a nagging question: how did we get to a point where a person’s desire to be open to new relationships and opportunities is overwhelmed by a constant stream of electronic requests. I suppose one could take the view – “Oh poor you, that’s the price of being in the public eye.” But I think that misses the point.

We have seen how the ease of electronic communication has cheapened and devalued information so that the value of facts has been undermined. I think that a similar thing has happened to making new contacts to expand personal opportunities. I am sure that some of the many requests that I receive are from people I would ordinarily like to meet, but there are just too many requests for me to spend the time to figure it out. I am another casualty in an arms race for attention.

I expect that this cycle will mean that broadly available online networks will eventually be of little use in establishing meaningful connections. I am not sure whether this will result in an online sea of software bots talking to each other while those of us with things to do are otherwise engaged or a return to making connections by engaging in long term and valuable relationships.

But in the meantime, don’t expect a networking response from me online if I don’t know you. I feel bad about that, but apparently, it’s the only reasonable thing to do.

Read more

Over the last few weeks, I have been interested to see how consumers have caused businesses to take overt political positions on social issues even when doing so alienates other potential clients. Business leaders are finding this new environment challenging, to say the least.

But businesses cannot run from this fact, says Richard Levick, the founder of Levick, a public relations and crisis management firm. The Supreme Court has expanded corporations’ rights to exercise freedom of speech and businesses have taken advantage of that expansion. Levick believes that with the right of free speech comes accountability.

Businesses now have what Levick calls a “corporate personality” that goes beyond the brand. The corporate personality reflects how a business conducts itself in commerce, and it is something that consumers can and do evaluate.

Beth Johnson, founder of RP3 Agency, a creative advertising firm, agrees with this observation about accountability, although she isn’t sure that you have to go as far as imputing a personality to a business. CEOs should focus on the reality that their business “will always be associated with the company you keep.” And not just for controversial associations. She sees every association as potentially relevant, since any association can have meaning for a particular customer.

The most recent example of businesses being aware of the issues of association and accountability is what has happened since the Parkland tragedy. Some businesses have severed their associations with the National Rifle Association and weapons manufacturers, ending corporate affiliation or marketing arrangements. Other businesses with relationships with the NRA or weapons manufacturers did not end or modify the relationships. Whether a business changed its relationships or didn’t, its actions did not receive universal approval; some people are very displeased. But these businesses felt that they had to make a choice and were willing to alienate at least some potential customers.

Interestingly, some businesses didn’t just curtail marketing or co-branding arrangements; they actually limited the revenue they could receive from their operations. Certain retailers unilaterally determined to limit access to certain firearms. At least one retailer stopped purchasing a manufacturer’s popular outdoor products because a sister company is a weapons manufacturer. Again, a choice to please some consumers while alienating others.

In some instances, they are forced to take these actions by consumers. Levick believes that because people are now so politically engaged, a business should be proactive and assume that everything it does will eventually be known and reflected on by consumers through their own political prisms. Levick sees this as an opportunity to better connect with consumers and create more loyalty. He calls this process “mercantile activism.” Mercantile activism is not political action to make changes. It is taking a political position to reassure and attract consumers.

How will businesses choose which political positions to take? Levick suggests that business leaders will need to watch political conversations and balance the size of constituencies for various viewpoints. They will need to make strategic choices and balance the commercial benefit of embracing some, while turning off others.

Does this mean that business leaders should now be watching public opinion polls? Johnson doesn’t believe we are at that point yet. However, she does think that “CEOs need to understand that these days consumers feel that one of the ways they can make a difference is with their wallets.”

All of this creates a very challenging moment for businesses. For years they have been able to pursue regulatory policies and social policies in their self-interest without any real accountability to their customers. This would appear to no longer be the case, at least for highly charged social issues like gun ownership.

The question is how much more broadly this phenomenon will spread. Will the consumers’ use of their collective buying power affect businesses’ campaign contributions and lobbying? Will it lead them to pay attention to their customers’ interests as much as to their own? Will they start thinking of the two as parallel instead of as opposed to each other? Could Americans resolve their frustration with political gridlock by voting with their dollars and supporting businesses whose values they respect?

These are questions that are worth watching. Maybe the democracy we cherish will ultimately be saved by consumer spending.

Read more

Last week, the Trump Administration proposed tariffs on imported steel and aluminum and the resulting public discussion suffered from a “forest-tree” problem. International trade economics are just the trees. The forest – the big picture – is that this is just one more data point confirming the Trump Administration’s anti-growth world view.

Although we take growth and an increasing standard of living as expectations for a well-functioning economy, neither are an absolute certainty. In fact, for most of economic history, economic growth was slow or nonexistent.

Technology changed that. In a common business pattern, new technologies are invented and brought to market by small, new businesses. Some of these technology products and services will be such high demand that sellers can change premium prices and earn high profits. Those profits are the fuel that lets them compete successfully with established competitors.

At some point, even if there is a period of intellectual property protection, a sophisticated technology product will become progressively less unique, as new sellers enter the market offering similar products. Eventually, enough new sellers enter the market so that their products won’t differ very much, if at all (personal computers are a good example of this move from new and high priced to cheap and undifferentiated). Their products’ fungibility limits each seller’s ability to charge a high price, because their respective products are no longer special. This lack of specialness means businesses in a commodified market must drive out or acquire enough competitors to allow them to raise prices by limiting supply. Or they can become more efficient than their competitors so that they can remain profitable at lower market prices. In either case, commoditization rewards scale and efficiency and not introducing new or competing technologies.

This cycle of technology introduction and commoditization has shaped the world economy since the late 18th century. With each new technology wave – steam power, electrification, oil and natural gas, automobiles, aviation, software and telecommunications are some examples – new businesses generated stupendous profits and wealth and eventually turned into commoditized industries.

U.S. businesses led substantially all technology adoption cycles and industrial development from the late 1800s through the 1970s. National wealth increased dramatically. Other countries participated in new technology industries as followers; they competed on the basis of efficiency, relying on lower wage costs and less stringent regulation.

From the United States’ perspective, this cycle has changed in two significant ways since the 1980s. First, many fewer revolutionary technologies have reached the market. Many things hailed as new are just iterative, not world-changing, and don’t command extraordinary prices or generate extraordinary profits. Second, the United States originates less of the new technology than it used to, as Japan and China in particular have taken leadership roles in many technology areas and are positioning themselves to lead emerging opportunities. Meanwhile, commoditized industries have increasingly dominated the U.S. economy. This introduces into the political process a strong bias in favor of preserving their market power and expecting policy makes to adopt policies that discourage new entrants or alternatives. Meanwhile, the focus on protecting the status quo means helping U.S. companies beat foreign competition at its own game, either by lowering wages and lessening regulation at home or by allowing them to build products abroad and bring them back to the United States for sale.

The commoditization of our existing technology industries has very much shaped the viewpoint of what business wants from government. The voices for protecting what we have, rather than creating what’s new, are very loud.

Tariffs, lax environmental regulations, policies to depress labor costs, tax changes that favor passive income and other current policy positions now promoted by the Trump Administration all are a consistent part of a world view that favors existing and commoditized industries. They are touted as policies that will allow the economy to recover the high growth rates that prevailed at an earlier time. But they are not designed to recreate the conditions that actually created that growth. Instead, they are largely designed to protect the status quo.

History shows that the U.S. economy grew fastest when it was at the leading edge of new technological waves. Adopting policies that hinder this growth, whether by imposing tariffs that lead to retaliatory tariffs on our most desirable exports, by not funding basic science, or by adopting tax and regulatory changes that favor existing industries will not take us forward.

Looking backward to the time when our now-commoditized industries were dominant will not help them regain their former glory. The cycle of technology cannot be reversed. Failing to examine where our growth comes from and adopting policies to promote the status quo can only be explained by ignorance or a willful decision to avoid an inconvenient truth.

Either way, looking backward is not a strategy for success. It is a strategy for stagnation.

Read more

At the core of our national consciousness is a shared belief that we achieve economic growth by meeting consumer demands in a market economy. What isn’t shared is a common frame of reference of whether external consequences must be included in this analysis. This is particularly true for technology.

Consider some current conversations about the application of technology and their related broader consequences. Does the broader impact of planted stories lessen Facebook’s utility to consumers? Should we be concerned with the environmental impact of consumers purchasing SUVs? Is the displacement of human labor for robotics justifiable if goods are provided at lower prices? In each case, the market provides commodities that consumers value. But in each instance, there are effects on society that go beyond the user’s own satisfaction.

Recently, I’ve been struck how politicized the discussion of whether we should even consider these effects has become. The mere willingness to ask questions that go beyond consumer satisfaction is now seen as a partisan act. How did we get to the point where an honest discussion of social considerations is seen as anti-capitalist or partisan?

I think that this split stems from how we talk about market efficiency. There are two prevailing views, both shaped by a few hundred years of economic and political thought.

The first view – admittedly somewhat oversimplified – is that simply should not consider social costs and benefits (what economists call externalities) when evaluating market efficiency. What matters for market efficiency in this view is consumer prices – the cheaper the product and service, the better. Because social consequences have traditionally been difficult or impossible to value in dollars and cents, they are not considered; they are irrelevant to this view of market efficiency. To the extent that social consequences are addressed at all, they are assumed to be the maximum social benefits possible in an unregulated free market. The reasoning is that if the social consequences of buying and using a commodity are high, consumers will stop by buying it.

The second view – also oversimplified – is that no discussion of market efficiency is complete without discussing and evaluating broader social consequences. In this view, the market and social consequences are intertwined, even if some of these consequences are not reflected in market prices or financial results. It is not the lowest consumer prices that is most important – it is the broader social benefit from economic activity.

The challenge we face is that these two contrary views of market efficiency leave us with no agreed framework to talk about consequences, and no consensus even on whether we should. One view thinks they are essential, and the other believes them irrelevant.

Unfortunately, neither viewpoint provides an ideological framework to continue to grow our economy. An honest look at many emerging technologies raise legitimate concerns that externalities may overwhelm their overall utility to our society. If people are unhealthy, unemployed or disengaged, they will not be able to spend money on products no matter how low the price. How do we balance this challenge?

I am an unabashed believer in free enterprise and capitalism. My concern, however, is that a blindered view of how the economy works will ultimately undermine our political system or inhibit our ability to use new technologies effectively. Being unwilling to address the consequences of how we apply technology and do businesses won’t make these consequences go away. Failing to acknowledge that consumers care about lower prices more than social consequences will not make them willing to pay more for products that might have more social utility. For example, studies have shown that consumers don’t “buy American” when cheaper alternatives are available.

Our continued failure to share a common view about market efficiency often leaves our international competitors in a better position. Our unwillingness to address consequences also creates resentment in the nation. This is true whether the person is a displaced worker or a motivated environmentalist.

We must understand that talking about whether we should talk about consequences, instead of actually talking about them, doesn’t just marginalize discussion and action. It also allows those who know that their business interests create social consequences to avoid difficult discussions.

Bringing consequences into any economic decision isn’t partisan. It’s sensible and necessary for a democracy.

Read more

Our region has a vibrant innovation ecosystem that is one of the most important in the United States. Advanced technologies that drive the country’s economy are nurtured here and further developed and deployed by our highly talented workforce and entrepreneurs. People often don’t see the scale and depth of our innovation and entrepreneurship activity because they focus on the wrong metric.

Many people use a region’s level of venture capital funding as a proxy for the level of innovation. This is a good criterion for evaluating a community centered on the venture-backed start-up business model: businesses are started by angel investors who work with founders to advance a technology to the point of commercial application; venture capital is used to fill out the team and provide multiple rounds of growth capital.

When people apply this criterion to our region, they see a comparatively low level of venture capital activity and conclude that our region must not be a driver for innovation. They couldn’t be more wrong.

What powers our region is its proximity to Washington, D.C. As the seat of government and an international city, it draws peoples’ attention and dollars. People come here to change the world or serve the public interest. That positive reality has become obscured by the cynicism that many feel about government. But that doesn’t change the many positive aspects that this proximity creates.

The first such positive feature is the access to federal research and development money and output. Our region gets a very large share of federal R&D funding – tens of billions of dollars each year. In addition to paying for many highly skilled technologists, this funding often creates market-leading businesses. This happens because substantially all that funding is for applied, not basic, research, meaning that our technologists build things that have utility. There are many examples of this, including Medimmune, which commercialized biotechnology technology developed at the National Institutes of Health, AOL which effectively commercialized the world wide web started by the Department of Defense, and Invincea, a venture-backed start-up that commercialized cybersecurity technology funded by Defense Advanced Research Projects Agency.

Tens of billions of dollars in additional funding is spent in our region on technology services, solutions and products. People outside the region look at these purchases as largely being consultants cobbling together technologies and not innovating. First of all, that is not true. Many of the technologies that we now take for granted – GPS and video conferencing as two examples – were developed by local companies under government contract. Yet even when they are applying or supplying more established technologies, these countless companies, large and small, build significant businesses and train talented technologists. And as an ancillary benefit, government purchasing practices have also created a nation-leading community of successful women and minority technology business owners.

Even when the government is not directly involved as a funder or a customer, entrepreneurs often use proximity to it to grow their businesses. Some gain key insights into market regulation and coming regulatory changes to build businesses. For example, Capital One, which revolutionized the credit card industry, MCI, which challenged the status quo on long-distance phone calls and disrupted the telecom industry, AmeriChoice, which brought managed care to Medicaid recipients and the Inova Schar Cancer Institute that is seeking to treat cancer on a genomic level are all companies that apply in concert technology and regulatory insight. Others create businesses that explain or communicate the goings on of a national and international capital, such as emerging media businesses like Vox and Axios, or veteran companies like the Washington Post.

Because our innovation businesses can often grow with government funding or by being proximate to power, they tend to be more mature and established before they need or want venture capital. They also have tangible, usable technology to utilize. This means that when our local businesses do turn to venture funding for growth, they are much better investments. The data shows that our region’s venture capital funding generates better returns for investors than do those of other U.S. regions.

In sum, our region’s model of developing innovation-based businesses is broader and more durable than a system solely centered on venture capital. Moreover, it has created an ecosystem that applies technology and takes a practical approach to technology creation. This process is funded at a level that exceeds the amount of venture capital that is deployed in any region of the United States.

Application of technology supports a broad diversity of industrial clusters in our region — media, energy, advertising/PR, advocacy, cybersecurity, precision medicine and more. Our technologists are driving advances in genomics, machine learning, robotics, virtual reality and advanced software. Viewing our region in its totality, the conclusion is clear: the greater Washington region has an innovation community that is unique and exciting. We have a workforce that knows how to create advanced technologies and apply them, and start-ups that build compelling businesses.

For any business that is looking for technology talent or for new technologies to acquire, this region is incomparable. Once you see its merits, how you could you not want to be part of it?

Read more

Our region rarely speaks with one voice when it comes to economic development. Its many political jurisdictions more often compete with each other than cooperate in their common interest. A current effort to address Metro’s funding challenges — the MetroNow Coalition — shows how our region can unify to solve big economic challenges. If it is successful, it may also eliminate the excuse that our region’s complex jurisdictional environment makes coordination impossible

Locations such as Denver, New York, the Raleigh-Durham area and Nashville all have added jobs and entered new industries through coordinated economic development policies and investments. They have grown faster than our region has. Why isn’t our region pursuing large coordinated economic development efforts like our competitors?

The answer most often given is that these regions do not have to deal with the jurisdictional complexities we face here; it’s easier to work within a single state than to coordinate across state lines.

I don’t agree with this argument. Political boundaries are not what  stand in our way; it is the unwillingness of business leaders to stop playing jurisdictions against one another. If you look closely at each successful regional economy around the nation, growth is usually fostered by the business community deciding to work together to improve the local economy and to make investments in the locations with the highest potential for success. Politicians don’t lead these efforts, because they are elected to represent voters who live in a single district. Business people look across geographic and political boundaries without having to worry about satisfying constituents. They are not looking to get elected. They are looking to grow their businesses.

MetroNow, as a collective activity led by business groups to support permanent funding for Metro, could be a model for successful business-led efforts for regional economic development. But will this opportunity be realized? Beth Johnson, founder of RP3 Agency and an expert in branding and public relations, looks at MetroNow and wonders whether business and community leaders will indeed take the time to lead. She is optimistic that they will. But they’ll really need to want to convert words into action, as it will take significant time away from their “day jobs” to drive economic change.

Yolanda Cole, owner of Hickok Cole Architects and chair of the Washington chapter of the Urban Land Institute, believes that the threat to our region from a failing Metro is so profound that addressing the problem will overcome local inertia. Business and community leaders will invest the time and energy, “because our long term economic well-being depends upon world-class transit.”

Clare Flannery, campaign director of MetroNow, says the direct advocacy that many MetroNow coalition members are undertaking in Richmond, Annapolis and D.C. shows a high level of personal commitment by business leaders. Coalition members are talking directly to the region’s elected officials and giving them specific legislative proposals and funding targets. Most importantly, they are speaking with a single voice.

If these efforts are successful, the potential benefits go beyond saving Metro. Bob Buchanan, chair of the 2030 Group, another group leading the coalition, believes that successfully addressing Metro’s funding in this way creates trust, understanding and success that will “lay the groundwork for action in the future.”

Will MetroNow be a template for further success? Or does the fact that Metro is a single, indivisible transportation network that can’t be broken up into jurisdictional parts and continue to operate — make it a unique situation?

I am not sure that we know the answer to that question today. However, one thing is abundantly clear. Whether we chose to act collectively in the future or not, if MetroNow succeeds, our community will no longer be able to point to our unique jurisdictional geography as an excuse for inaction. For that reason alone, MetroNow’s success would be a really big deal.

Read more

Millennials – people born between 1980 and the late 1990s – are now the largest segment of our national workforce. Within a few short years, they will be more than three quarters of all workers. This makes it essential that our region be attractive to them.

Last week, American University’s Kogod School of Business released its newest Millennial Index. The index helps us move our discussion of millennials away from clichés to a conversation based upon objective data. Far from being a generation that is motivated by trendy restaurants and bike trails, the index gives us a picture of millennials as an age group looking for jobs that offer high salaries and career progression while living in communities that provide affordable housing and to some lesser extent other lifestyle amenities.

This picture of millennial aspirations should get our attention, particularly as our region competes to attract Amazon HQ2 and other technology employers. When asked to rank the most important factors they use to evaluate where to live, millennials rank jobs as most important (40 percent), affordability as next important (24 percent), followed by career and education options (18 percent), amenities (10 percent) and people (8 percent). This ranking shows clearly that millennials will be less likely to stay here because of people or amenities, if there are better economic opportunities or cheaper living elsewhere. This is a group that will vote with its feet and move away or never come at all.

Indeed, we are seeing some voting against our region right now. In the aftermath of the Great Recession, our region benefited as its economic stability attracted millennials. But in 2017, our region saw a 0.2 percent drop in millennial residents, despite a 1.5 percent increase nationwide.

What will attach millennials to our region for the long term? The Millennial Index suggests that financial security is a large driver. For millennials who are high earners, this region has become their permanent home. They own homes, have children, and are satisfied with their lives and with life in our region. Simply put, their career ambitions are satisfied, and they can benefit from the positive amenities of our region because they can afford them.

However, many millennials don’t have high paying jobs. For them, this region is becoming less and less desirable. The high expenses of life in our region cause many of them to live paycheck to paycheck. And for a good portion of them, getting a better education to find a better job may not solve the problem. Or, indeed, getting that education might be the problem.

This is because millennials as a group face a challenge that prior generations have not: the prohibitive cost of obtaining higher education. Gabrielle Bosché, a national expert on millennial behavior, points to student debt as the major challenge for her generation, describing it as creating financial instability that “cripples my generation’s investing power.”

Jennifer Ives, a seasoned executive and workforce development expert, echoes this view. She notes that particularly for millennials who haven’t gotten high-paying jobs, our region is “too expensive (with their loans) so they prefer second and third tier cities with interesting jobs.”

Stephen S. Fuller, founder of research institute at George Mason University’s Schar School of Policy and Government, has for years been urging us to recognize that our region’s job growth lags that of competing regions. Moreover, the jobs we are creating are not high-paying jobs. Combining his insights with the Millennial Index yields a disturbing picture: our largest workforce demographic is motivated more by financial security than by attachment to people and surroundings, at a time when other regions may have cheaper living costs and offer comparable (or better) economic opportunities.

We pride ourselves as a place that has many world-class universities and community colleges and point to our highly educated workforce as a distinguishing reason why employers should locate here, and new businesses will grow. But, if we don’t work to lower the costs of education, or otherwise help students with crushing debt burdens resulting from developing the skills our economy needs, I fear that our region will lose out to places where millennials can better manage their debt burdens as they pursue their careers.

As we talk in our region about offering economic incentives to attract new employers, shouldn’t we also be looking to apply some of those incentives to solve the problem of student debt

Read more

 

The challenge of knowing whether what you read online is true has gotten national attention. It is proving harder and harder to separate factually based writing from intentional misinformation or click-bait. This problem is about to get exponentially worse.

We should all be concerned about living in what Peter Horan, a long-time veteran of the Internet industry, describes as a “post-truth society” — a society where “whether or not it has a foundation in fact, anything that is repeated often enough is believed to be true.”

The Internet has driven down the cost of producing content and distributing it broadly to effectively zero. It has also made the cost of reviewing written information for probity and integrity higher in comparison. Sadly, insuring that something is true requires more time and expense than making something up.

Until recently, the cost advantage that drives the ubiquity of false written information did not prevail for video images. A recent study by the Belfer Center at Harvard highlighted that since the invention of the photographic camera, “the technology for capturing highly reliable evidence has been significantly cheaper and more available than the technology for producing convincing forgeries.” This allowed people seeing images of a politician taking a bribe, a celebrity staring in a sex tape, or other sensational images, to be relatively comfortable that the depicted event actually occurred.

Last week, a number of technology blogs alerted us to the proliferation of inexpensive video editing software that creates realistic pornographic videos of celebrities. As inexpensive video editing technology is combined with artificial intelligence, creating fake videos have become indistinguishable from reality.

This development will challenge our society. But, it should also create an economic opportunity for our region.

Our largest regional industry, national security, sees the degradation of the fidelity of information as an existential security challenge. Chuck Howell, chief scientist for dependable artificial intelligence at the research contractor MITRE, points to an “arms race over various kinds of deception” attracting the attention of our national security establishment.

Many of our largest private businesses – media, consulting, advertising and other highly skilled knowledge worker businesses – depend upon the reliability of information and a consequent shared reality. More than many others, our region’s economy depends on informational expertise and having insights that are expensive to generate and correspondingly scarce. A world that does not share facts and informational integrity has no way to value informational experts. In that world, many of our businesses will suffer.

Therefore, our region has a very stark choice to make. It can either accept that the erosion of the quality of information is an irreversible technological trend, as many national observers have suggested. Or it can meet the challenge and fight for information quality and objectively demonstrable facts.

When I asked Kurt Roberts, chief innovation officer at RP3 Agency, about the threat posed by technology cheapening information, he told me we should “flip the notion on its head” and focus on using technology to help people know whether something is true or fake. This point was echoed by Adam Zuckerman, founder of the Fosterly community that promotes regional entrepreneurship. For him, technology is neither good nor bad. It just is a tool, and how we use it is an opportunity.

Any entrepreneur will tell you that the biggest businesses are often built by solving society’s biggest problems. We have the technologists and entrepreneurs to come up with new technology applications and the means to ensure that our society is based upon a shared reality and facts. We also have large customers that need that those solutions now more than ever.

Informational integrity may be a political issue for all, but for our region it is also a large business opportunity.

Read more

Many in the greater Washington business community woke up this morning to a very uncertain work week. A federal government shutdown, whether it lasts days or weeks, raises serious challenges to our region’s economic prospects.

Virginia Gov. Ralph Northam (D) in a public statement on Friday said the federal shutdown would have a disproportionately negative effect on our region’s economy and would put jobs and economic growth at risk, adding it was “past time for leaders in Washington to get their act together and come to an agreement on long-term funding solutions for the federal government.”

The already extant business uncertainty caused by past short-term funding agreements and sequestration will be exacerbated by this current shutdown. Bobbie Kilberg, chief executive of the Northern Virginia Technology Council, pointed to the many members of her group doing business with the federal government that would lose revenue in the near term and have a difficult time planning for future growth. Since our region’s government contractors receive approximately $1.3 billion in revenue each week from federal government procurement, a shutdown or the unpredictability of short-term spending deals

In addition to the potential harm to businesses, the federal shutdown will leave hundreds of thousands of federal employees with a lot of spare time and no paychecks. Federal rules do not allow non-essential individuals to work for the government without pay, so many federal workers will be furloughed for the duration of a shutdown. Just look at the numbers: The federal government is responsible for 367.900 civilian jobs in the Washington area with a weekly payroll of $777 million, along with another 64,500 military jobs accounting for $122 million in weekly payroll and benefits.

Jeannette Chapman, deputy director and senior research associate at George Mason University’s Stephen S. Fuller Institute, cautioned that the harm from a short shutdown was more reputational than economic. A short shutdown would reinforce the view held by many nationally that the D.C. region is defined by government dysfunction. She believed the actual economic harm from a short-term shutdown would be small, “somewhat similar to a snow storm,” and any lost economic activity would be mostly made up post-shutdown.

However, the longer the shutdown lasts into weeks or longer, she identified much greater economic harm. Chapman pointed to households of government employees that do not have savings to cover expenses during the shutdown, workers that generate income from government contracting jobs who get paid hourly wages only when they work, and family-owned businesses that serve government personnel (such as restaurants and dry cleaners) as all being particularly vulnerable.

She was also concerned that there was no assurance that government workers would receive back pay after their furloughs ended. There is no federal obligation to pay back wages, leaving the issue to be addressed in federal legislation when the government reopens. After each prior federal shutdown, legislation was passed to provide for back pay, but that might not happen in the current political environment. The economic hole created if furloughed government employees are not paid back wages could be significant. Chapman pointed out that even if only 30 percent of furloughed civilian workers didn’t receive back pay this would take $233 million out of our region’s economy for each week of lost pay. This is money that will be lost forever – dragging down our economic growth and creating financial distress for many families.

Our region is disproportionately and adversely affected by a national political dispute in which our region’s economy is collateral damage. This is the downside of our region’s strong interdependence with the federal government, a relationship that over time has created significant wealth and business opportunities.

As we look at the likely harm to our region, we should be justifiably angry at our national politicians for endangering our region’s economy as a result of their failure to govern. However, we should also turn our anger into energy that we focus on the opportunities before us.

Bob Buchanan, president of the local advocacy organization 2030 Group, reminded me that the shutdown is juxtaposed with Amazon identifying our region as having three of the 20 finalists under consideration for the home of its second headquarters project. We shouldn’t lose track of the desirability of our private sector work force and our community.

He is right. I know from my own work that a growing number of businesses are locating in our region and growing in areas such as healthcare, software, education, consumer products and hospitality without any connection to the public sector at all. The reality of our region’s economy is that we have a vibrant and growing private sector business community.

In life, we often learn much about ourselves by how we react to adversity: are we victimized by circumstances or do we meet challenges head on? This can be a moment when we take stock of the many advantages our region has, and we increase our commitment to growing our non government business community.

We can choose to endure the dislocation of a federal shutdown, and hope for a return to business as usual. Or, we can take the opportunity to show the world that Washington, DC is much more than a company town and celebrate our economic diversity.

I think our region is up to this challenge. What do you think?

 

 

Read more

It’s critical that community leaders understand our region’s workforce trends. A recent workforce report from LinkedIn is essential reading.

 With more than 143 million individual members in the United States and 3 million job postings a month, LinkedIn has a large and current data base to use in identifying employment trends.

LinkedIn’s report shows that of the 20 largest metropolitan areas in the United States, Washington, D.C. and its suburbs have the slowest percentage increase in hiring during 2017. Measured against an average hiring increase of 10.8 percent, our region had a hiring increase of only 3.5 percent. That’s worse than the San Francisco Bay area, which had a hiring growth rate of 3.9 percent. Places with diversified local economies and affordable housing performed much better than the national average, with the three fastest growing areas being Houston, Phoenix and Dallas-Fort Worth.

LinkedIn also follows migration of workers and population based upon the profile locations of its members. This effort highlighted the troubling fact that nationally two of the 10 largest losers of workers were nearby: Norfolk was fourth and Baltimore was ninth. The areas with the largest number of lost workers were Providence and Hartford.

Meanwhile, no locality in our region was among the top locations for inward job migration. Places like Austin, Denver and Seattle were top destinations. Our region did rate as one of the most active job markets from the standpoint of inbound and outbound migration taken as a whole, with Washington, D.C. and its suburbs being the sixth most-active region. Austin, San Diego and Orange County, California led the way in migration activity.

LinkedIn also tracks what it describes as emerging jobs–careers where the worker’s skills and role are directly relevant to the growth of technology-driven businesses. Our region attracted workers in many of the emerging job categories, including data mining, business development and relationship management, and sales. It was not alone in looking to attract these workers, however, as our region faced strong competition for these valuable workers from the San Francisco Bay area, New York City, Los Angeles and Dallas.

Unfortunately, according to LinkedIn, we are not winning this competition.

Our region is not attracting workers at the rates of competing regions. In fact, we are losing workers. The top three locations for outbound migration from our region were the San Francisco Bay area, Denver and Seattle. Observers who have suggested that we are losing people who want to be software product entrepreneurs will likely find vindication in this data. Meanwhile, within our region, Washington, D.C. and its suburbs gained workers through inbound migration from Baltimore, Norfolk and Charlottesville. Redistributing workers may create pockets of growth, but does not provide for regional growth overall.

What is clear from the LinkedIn data is that we have jobs going unfilled because we are not attracting, retaining, or training a sufficient number of workers, particularly in emerging job categories. This conclusion is consistent with a recent report produced by the Greater Washington Partnership, as well as past reports prepared by regional experts such as Steven Fuller.

At some point we must acknowledge what data and experts are telling us: without concerted action, our region will have a continued mismatch between our workforce and available jobs. In the long term, employers will either find the workers they need here, or they will relocate their businesses to elsewhere. In the near term, every available high-paying job that is unfilled is an economic opportunity lost.

Unless we ensure that our region is focused on being an enticing place to live, and develop effective processes to develop the skilled workforce we need, we will continue to lag behind competing economies around the nation and the world. And over time we will likely fall further and further behind.

If you aren’t concerned, you aren’t paying attention.

 

 

Read more