A Closer Look At 'Economic Gardening'
By Larry Eiler
The term "economic gardening" is coming into play across our state as this new public policy initiative of boosting job creation by focusing on growing existing businesses in the state is discussed by Gubernatorial and other public-office candidates.
It is a concept designed to propel the state toward economic growth and stability. Almost all of Michigan's new jobs from 1993-2007 came from companies with fewer than 100 employees while companies with 500 or more employees lost a significant number of jobs in the same time frame, notes the Edward Lowe Foundation, the 25-year-old entrepreneurial leadership group in Cassopolis.
Introduced by the Small Business Association of Michigan (SBAM) at its recent annual meeting, the economic gardening concept "needs to refocus our strategy from 'hunting' outside the state for job providers to 'cultivating' our own home grown businesses," explains Rob Fowler, SBAM president. It targets especially second-stage businesses ($1 million annual revenue) that have been the primary job creators.
Aptly titled "Propelling a New Economic Direction for Michigan," the program is being developed to provide the right support for the state's small businesses to help them overcome the hurdles to growth. The program is being developed by SBAM and its details will be made public over the second half of this year.
The economic gardening concept is not some new, pie in the sky brainstorm. Rather, it was pioneered in Littleton, Colo., in 1989, when the town's major employer, Martin Marietta, cut thousands of jobs. The city developed the gardening program for remaining smaller businesses and employment in Littleton has risen 71 percent and its tax base tripled in the years since.
Lowe has studied the concept for some years and notes that second stage businesses ($1 million annual revenue and 10 to 100 employees), produced more jobs in the 1993-2007 period than any other category of businesses in the state -- 137,249, while companies employing 500 or more people lost 257,585 jobs in the same span.
The gardening concept involves developing connections between businesses and the people and organizations that can help take them to the next level -- business associations, universities, roundtable groups and service providers.
Tom Kinnear, chair of the Venture Michigan Fund and head of the Zell-Lurie Institute at the University of Michigan's Ross School of Business, agrees and says "there are three needs for the state to begin to grow: talent, ideas and money." In other words, educated and trained people with an entrepreneurial edge and the investors to fund them.
Ten years Michigan did not have the infrastructure to foster entrepreneurism. Today we do: Ann Arbor Spark, the Small Business Technology & Development Center, the Small Business Association of Michigan, Automation Alley, Tech Town, The Right Place and similar groups in several other regions.
Ten years ago we had virtually no investment community. Today we do: 16 venture capital firms headquartered in the state, The Venture Michigan Fund, Michigan Venture Capital Association, six angel investor groups and six prominent VC firms have regional representatives.
Ten years ago we had no well-organized technology transfer groups within our colleges and universities. Today we do: the University of Michigan, Wayne State, Michigan State and numerous other groups in public and private universities across the state.
Ten years ago entrepreneurship was a word not widely heralded in the state. Today we have numerous successful entrepreneurs and a large number of potentials. The model is there and proven by such success stories as Health Media, BlueGill Technologies, Esperion Therapeutics, Sircon, Asterand, Arbortext, Afmedia, Healthcare Solutions.
Economic development plans typically include four key tactics -- business recruitment, retention, expansion and entrepreneurial development.
"Traditional approaches to economic development have focused primarily on the first three development tactics and have relied on tax incentives and other financial benefits to strengthen local economies," Lowe says. "Increasingly, urban and rural communities and even states, are starting to shift their economic development focus to the fourth element -- entrepreneurial development. Economic gardening is more likely to be effective in communities that already have an established entrepreneurial climate."
Seems like it might make sense for those of us who want to recreate Michigan to have a serious look at this idea and for someone with vision of Michigan Future to stake a leadership position in considering this alternative.
Larry Eiler is chairman and CEO of Eiler Communications, a PR and new media firm in Ann Arbor that also operates a research and branding unit called Re:NEW Michigan. Founded in 1987, the firm specializes in initiating creative marketing programs for emerging businesses. He is a director of the Small Business Association of Michigan, the proponent of economic gardening and an adjunct marketing professor at Eastern Michigan's College of Business.
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