“All economic activity is by definition ‘high risk.’ And defending yesterday – that is, not innovating – is far more risky than making tomorrow.“
– Peter Drucker – Innovations and Entrepreneurship (1985)
Last week I was writing on a bid for a quite interesting project to develop innovation capabilities and competitiveness in a northern European region, and as I was writing I got a number of thoughts that I will write a bit about in blog articles. Most of my thoughts relate to the central importance of management in economic development.
Here is a first article, about place management and the changing place climate and what it means in the overall context of innovation and our societies pursuit of economic growth.
All of us who went to business school or have studied an MBA know about management science. It is a discipline concerned with a number of different areas of study, including developing and applying models and concepts that may prove useful in helping to illuminate management issues and solve managerial problems.
Peter Drucker, was an Austrian born American management thinker and guru who´s books and academic and popular articles from the 1940s to the 1990s explored how humans are organised across the business, government, and non-profit sectors of society. He is one of the best-known and most widely influential thinkers and writers on the subject of management theory and practice, by many regarded as the the founder of modern management.
More recently Jim Collins’s work at Stanford presents the important scientific facts about how to turn a good organisation into a great one, with his most well-known books being From Good to Great, Built to Last and Great by Choice.
For the public sector and management of places, such as regions, cities, towns, malls and other geographically delimited areas, there are also management principles that build upon classic management science but with a different set of dynamics. Today as the proportion of the world’s population living in cities has grown from 13% in 1900 to more than 50% now, there is a clear need to approach place management in a structured way.
The one book I know of on the subject is the one published by Bearing in 2011 with Christer Asplund as the principal author. We researched the topic extensively while the book was written and even though there are numerous books on place branding and marketing and on investment and finance, we could not find another one about place management by itself.
Now four years later it is clear that Place Management is gaining momentum, both as a discipline practiced by regional and local city and town governments, and in academic research. The Place Management Institute in Manchester publish the Journal of Place Management and Development, compiling articles on the subject. As a structured management science, place management is gaining momentum after the great recession, as local regions, cities and towns gain importance and takes initiatives in rebuilding western economies.
The historic lack of literature on Place Management may seems as a paradox in the sense that places have been under management for centuries or even millennia. The management of places and their mix of inhabitants and industry have always had the attention of rulers, industry magnates and politicians. But there is a difference between keeping a place going and helping a place improve the lives of its citizens and stakeholders. A mayor basically makes sure that the city continues to deliver goods and services and maintains an adequate level of earnings and opportunities for its citizens.
However, the citizens of most cities or towns want their place to become “more” than it is at the present time. An economically depressed city wants to revive its fortunes through some kind of economic and social transformation process, ideally through igniting a new drive of development through catching on to new business trends and opportunities. A bustling metropolis, on the other hand, may have traffic congestion problems and waste disposal problems that turn off many citizens and visitors and need innovative solutions to these problems, and a popular tourist destination may have a lack of parking space, something anyone who has tried to drive into Portofino or find space in the parking garages outside Venice or Dubrovnik can witness about.
The Changing Place Climate
Place management is at its core the comprehensive understanding of factors influencing the growth and success of places. The underlying common factor is usually a desire to maximise the effectiveness of a place for its target markets, whether they are current or potential residents, shoppers, tourists, investors, property developers or business owners.
The implication of this is that previous approaches to organise a given place have often been marked by a single political focus on subsidising a specific decade’s local showcase industries. The flavour of focused changes over time, and any analytical place manager understands these shifts and is open minded enough to spot some opportunities, even if a situation might look negative at first sight.
In the illustration above, which is from chapter 2 in the Place Management book, we can see the major trends in place climate decade by decade and also an attempt to forecast into the future.
We can see that as time has gone by hard factors, like square meters of office space and road network have given way to softer factors, though not necessarily in any exclusive sense. Soft factors encapsulate more emotive aspects of a place, such as its appearance and its image, or intangibles such as the educational opportunities and achievement of the workforce, the quality of schooling, public spaces and the progressiveness of local politics on green issues. As we have this shift form hard towards soft factors, we have also had a strong shift towards increased complexity of the management challenges.
Hard and soft factors often co-exist. But, unlike hard factors, soft factors, or intangibles, are more difficult to quantify. Soft factors include knowledge and management, networking, managerial capacity, place branding and sensory marketing. In fact these might be described almost as the sense of the place, a clearly intangible dimension.