John Niles, Global Telematics,
Seattle, Washington

Copyright, 1992

Speech to the Florida Governor's Conference on World Trade and Enterprise
Orlando, Florida, May 21, 1992

Thank you. This morning I am going to provide you with some new ways of thinking about telecommunications that will strengthen your approach to economic development in your Florida communities. The bottom line of my presentation to you who are economic development leaders is that telecommunications is a force that you should react to by putting MORE emphasis on enterprise, and relatively LESS emphasis on jobs. More on this in a moment.

My firm Global Telematics is a policy think tank for economic developers, telecommunications companies, and transportation agencies. I'm going to share with you some of our very latest conceptions about the place of telecommunications in economic development. I won't pretend that what I have to say to you is easily reducible to a cookbook formula. You will have to put a lot of your own experience, and the unique conditions in your own communities and regions into economic development stew, or brew. What I have to say is not a recipe, but rather an attempt to make sure that you are cooking in the right pot, on the right stove, in the right kitchen. Sound ideas are the basis for effective action.

But first, it is very important to understand the technology of telecommunications. Something you are probably worried about from me as a telecommunications specialist is whether you are going to understand what I am saying.

Don't worry. I'm going to help you right now. You have to know the jargon. When you don't know the jargon, you have to bluff.

One of the things I always do with my clients and audiences is give very practical advice on how to deal with representative of the telecommunications industry. How to impress them.

Here are the three areas of knowledge that will let you stand apart (and maybe all alone) when you are dealing with representatives of the telecommunications industry:

Start off by casually asking: In your opinion, which is the most promising of the multi-gigabit test beds for the National Research and Education Network (NREN): Aurora, Blanca, Casa, Nectar, or Vistanet? And which one of these is your company involved in? [Hope you are copying this down!]

If your telecom industry friends are stumped by this one, you need to lower the bit rate and ask something a bit easier.

Try this: Do you believe that multi media and virtual reality applications will spur the growth of SMDS and B-ISDN? Now, you need to know, in case they call your bluff, that S-M-D-S means: Switched Multimegabit Data Services and B-I-S-D-N means Broadband Integrated Services Digital Network? Who wouldn't want to know that?

If they are still stumped, press them really hard: Say, Okay, what in the heck happened to the free phone numbers for weather and time?

One reason that telecommunications is now so complex is its merger with computerization, a marriage called telematics in many places around the world. Computers are everywhere and increasingly a part of telecommunications. They are embedded throughout the public telephone network, including cellular. They are what all the fiber optics is attached to.

I am sorry to report, that as confusing as telecommunications may seem to you, the complexity and speed of change in telecommunications is actually much worse than you perceive. You will have to re-learn old abbreviations. PC not only means "personal computer" and "politically correct", but also Personal Communications. ATM no longer means just Automatic Teller Machine, but also Asynchronous Transfer Mode, which is something important, but not here and now.

In recent years there has been an attempt to apply analogies from the older world of public works to the world of telecommunications. Terms like "information highways" and "telecommunications infrastructure" have the virtue of providing a physical picture of telecommunications, but they actually are misleading.

To include all of the resources that fall into telecommunications infrastructure -- to include, for example, telephone sets, personal computers, satellite dishes, private corporate networks, teleports, cable TV systems, etc., etc. -- creates a quagmire of meaning which confuses policy discussions. The separate elements of the broad "telecommunications infrastructure" either do or soon will compete against one another: satellites versus fiber optic cables, telephone companies versus cable TV versus wireless, and audiotex versus videotex, to give several examples.

Acting as though there should be a government-coordinated unity across all of these many technologies and industries -- which is the implicit message in the use of "infrastructure" -- diverts one from comprehending and exploiting the strength that America has in the chaotic, energetic dynamics of competitive, market-driven, technological innovation yielding an increasing number of user choices.

Furthermore, some distinctly non-telecommunications items -- computer data storage, pocket-sized computers, ordinary paper telephone directories, overnight package delivery, and video tape rental stores for example -- also need to be brought into consideration in business or public policy decision making on telecommunications. Physical delivery of large amounts of information, and local mass information storage clearly trade off against telecommunications bandwidth. Bill Gates of Microsoft has noted that nothing yet beats the bandwidth of a jumbo jet packed full of high capacity computer discs. A glossy color catalog mailed quarterly and a toll-free 800 order number may be hard for video-screen-based home shopping to surpass in the marketplace for many years to come.

Keeping your region up to date in telecommunications is actually far easier than fixing public facilities deficiencies (lack of a connecting highway, lack of an airport, lack of a good high school, for example) What impresses me about telecommunications is how quickly it can be installed when circumstances reveal that it is the key gap that needs to be filled. One phone company serving the Great Plains proves that when they roll into a town with a truck mounted telephone central office switch to quickly restore phone service where facilities have been wiped out by a flood or tornado.


Now, what do I mean when I say that telecommunications and computers should lead you to emphasize enterprise over jobs? Let me lead you through the logic...

Jobs and enterprise are two broad ways of dealing with the need to make a living, at the individual level, and at the collective level.

What do I mean by the Jobs outlook -- looking for a slot. Someone to hire me. Provide me with a salary and a desk, a place to go, somebody to report to. Perhaps some people who report to me.

What do I mean by an Enterprise outlook -- scouting for needs that are unfilled. Interested in finding customers to buy something that I can do or make. Want to do my own thing.

A key distinction between the two outlooks comes from where the locus of control is. In a job there is a boss. In enterprise, you are your own boss.

An enterprise focus leads to more flexibility and adaptability on the part of people and communities..

The late Albert Shapero of Ohio State University made the linkage of entrepreneurship to economic development another way: "The qualities...which have characterized communities with long records of adapting to events, are resilience, creativity, initiative-taking, and above all, diversity. The ability to absorb abrupt changes in the economic, social and political environment and to bounce back; the ability to generate anew and to experiment; the desire and ability to begin and carry through useful projects; and a variety of enterprises that assure that no single event can affect the whole community -- all simultaneously describe the self-renewing community. And all are characteristic of or generated by entrepreneurship."

At the level of community leaders, this distinction aligns closely with the broad economic development approaches known as hunting and gardening, popularized by the Center for the New West economic development think tank in Denver.

Hunting is the traditional and still prevalent view that the straightforward, practical way of building up a regional economy is to attract new business facilities into the region by influencing private sector decisions about new sites. Depending on what S-I-C codes your consultants have told you would make a perfect match to your region, hunting is called smokestack chasing, or chip chasing, or workstation chasing.

Gardening, on the other hand, is action to improve a region's business climate, including, in particular, support of homegrown export business development.

Encouraging business start-ups is one of the most important economic development gardening programs that a region can have, for two reasons.

Number one, despite all the pain and sacrifice involved in starting businesses, including the odds against success, self-employment can be a very important source of family economic viability, satisfaction, hope, and a kind of security.

Number two, and this is critically important, the minority of small business that do grow up, do create jobs in very large numbers. Job creation by small and mid-size companies is is the only net job creation our country has had over the past decade...the Fortune 1000 cut as much as add.

In the ecology of market capitalism, jobs are clearly subordinate to enterprise. Enterprise comes first, jobs second. Jobs are a byproduct of successful enterprise. The idea of enterprise is to produce value with as few jobs as possible, since each job in the enterprise represents cost, of which there can only be so much if the enterprise to be self-sustaining. However, some enterprises grow large enough to generate jobs. A few enterprises grow large enough to produce lots of jobs.

Now linking to advanced telecommunications, telematics if you will. This dynamic area of technology, I submit, is much less kind to people and communities with a job-finding job-hunting outlook, than it is to folks with an enterprising, entrepreneurial outlook.

Telematics is now a leading force in the "creative destruction" of the old order that is part and parcel of market economies.

Jobs are relentlessly abolished or moved geographically in this process.

Banks consolidating branches while moving toward more ATMs (old meaning!) and bank by phone and debit cards, as well as geographic centralization of some functions.

Small local retailers closing down in the onslaught of competition from big-name retail chain stores with a satellite dish on the roof, and their Point of Sale computer cash registers connected directly via telecommunications to enormous warehouses.

Pizza delivery being dispatched not by the local store but rather through a statewide or multistate dispatching center using a database of computerized maps to give directions to drivers.

Telephone companies downsizing because of the computerization of many functions, including operator services and repair.

Many big companies are going through a process called resystemization or re-engineering, in which automation and telecommunications is a major driver.

Of course both jobs and enterprises are "creatively destroyed" in market economies. But because their locus of control is local, enterprising organizations and communities and individuals are psychologically prepared to explore many options in contrast to those more who are only oriented to finding a new slot or position.

In the community economic development context, studies have shown that new jobs brought into a region from the outside in through branch offices and relocations are the most vulnerable to being eliminated when economic conditions change. These kinds of jobs operate under a telematic remote control from outside the region, that is not necessarily considerate of local needs.

On the other hand, telematics is a great amplifier of creativity and growing strength for locally-owned enterprises.

Entrepreneurs are now building enterprises whose operations are designed to be totally wrapped around the power of computers and telecommunications right from startup. Telematics allows enterprises to reach distant markets, establish new supplier relationships, and create new services. Mrs. Fields Cookies (worldwide chain of retail bakeries), Dell Computer Corporation (computer manufacturing and direct factory sales), and Comp-U-Card International (home shopping by computer) are examples of companies whose mode of operation would be impossible without the telematic systems they have devised.

Telematics increases the speed of change and competitive challenge, which makes nimbleness and flexibility a requirement. In a community under pressure from change, a key source of stability can be enterprise-minded, entrepreneurial people who have made the community their home with intentions to stay, no matter what.

One final characteristic -- actually, a limitation -- of telecommunications should point you to the desirability of an enterprise focus in your economic development efforts. It is that telecommunications is not yet powerful enough to create professional and civic intimacy (or any other kind!) between distant parties without being supplemented with a considerable amount of face-to-face time. Compared to being there, telecommunications still comes up short. Who you are physically near the most is who counts the most, and who you care about the most. My view is supported I think by the observation that modern telecommunications, including voice mail and electronic mail, facilitates so many remote contacts, that professional intimacy is amplified all the more with the few people who you actually see in person frequently.

Economic development programs are built by people who care about a particular place on earth. Remote people who are in control of jobs in your community, even remote people who are well-connected by telecommunications, but who aren't in town as much as you are, are not often going to care as much about economic development as the people who are living there. You need enterprises which are locally-owned, locally-controlled.

In conclusion:

Contrast two pictures. First, enterprises all over the world reaching into your community. Entrepreneurs and bosses in other parts of the nation and the world -- who care about your region only so long as it benefits their needs -- setting the terms of the process by which your community produces value.

On the other hand, picture locally-owned enterprises ranging from self-employed consultants to small crafts exporters to growing manufacturers reaching out from your community to sell value to the rest of the world. They live where they do because a fine business climate and quality of life climate has been cultivated. They want to live in your community, and will struggle to find a way to do so. You help them as best you know how, with a particular eye for those that may "break out" and start creating a lot of new, locally-controlled jobs. I submit to you that the latter picture is the more desirable, and the one toward which you should aim.

If you believe, as I do, that it is the strength, the character, the skills, the know-how of people that creates an enterprise-oriented outlook, then efforts to improve education and training at all levels clearly constitute a most critical economic development program. And telecommunications has a lot to do with that, but that's a story for another day.

Moving forward on economic development in this wonderful state using the name Enterprise Florida fits well with the ideas I have presented. Especially because of telecommunications and computerization, I urge all of you to stay focused on creating and growing enterprises.

Good luck, and thank you!

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