Beware the hand that gifts you

U.S. Secretary of State Hillary Clinton sheds light on China's "gifting" policy—something I saw in full force in a small city in northern Ghana last October—and how it relates to mineral rights.

China is practicing Economic Development 101, and all the USAID in Africa may not be able to undo China's largesse—and the expected returns China will gain when it comes calling with a much-more-than-quid-pro-quo request.

http://www.ft.com/intl/cms/s/0/78f5e794-dd7c-11e1-8be2-00144feab49a.html#axzz22ckhQzsb

A prime example

Whew, that was close. The local state representative primary race came down to a prime number—11 votes, to be exact—separating the two vote seekers, Ben Mallicote and Tony Shipley.

http://www.timesnews.net/article/9049956/shipley-edges-mallicote-by-11-votes-in-primary

One had endorsement issues, while the other had anger management issues. One was difficult to be around, while the other got money from special interests, with major influencers lurking in the shadows. One was portrayed as "arrogant" and "out of touch", while the other promised to run a "positive" campaign.

Or maybe it was the other way around.

Either way, supporters on both sides felt strongly about the other, engendering a level of negative campaigning (and dollar flow) that's normally reserved for congressional or gubernatorial races.

The antipathy ended up leaving the average guy with the pick-up truck and a dog wondering why his persona had been co-opted as the key image for one candidate, a lawyer by day, in a Lamar-Alexander-Kafka-NRA-dog-god-no gun mash up.

The image dominated the front page of the local newspaper and almost every other piece of political junk mail to cross the stoop in the last week.

Combined with the negative campaigning, the image sent a double message. Instead of "I'm folksy" the message came across as "I'm folksy and mean".

Might have been less incongruous if it had been an image of the candidate in sports car with a pit bull.

The Death of Place?

MOBILOCRACY: Spreading the Wealth of Mobile Connectivity

Evan Kaplan, President and CEO, iPass, predicts we're about to see a"destruction of place."

Subtitled THE INALIENABLE RIGHTS OF THE MOBILE WORKFORCE, Kaplan's presentation at GigaOm's Net:Work 2010, maps out a world where mobility or mobile work is the rule, rather than the exception that it was just a decade ago.

"Today's average mobile employee is 46 years old and lives outside of Silicon Valley," said Kaplan, whose research is based on the Mobile Workforce Report, a quarterly survey of about 2,000 of the 2.5 million iPass users.  "Main Streeters are catching up with the technological elite, many have multiple devices, and their embrace of smartphones and tablets are creating the largest workplace disruption since the PC."

Trends from the iPass Mobile Workforce Report include:

1. Security and cost / productivity imbalance
2. Hyper-connected workers are becoming a norm: only 6% of workers totally disconnect on vacation
3. Post PC - the device stack that lets me work across multiple devices [simultaneously]
4. Multi-generational and global dissemination of the mobile workforce continues.
5. Multiple devices: 50% have three devices

"A highly mobile lifestyle come certain habits," says Kaplan, "which is both highly beneficial and also potentially risky to the enterprise."

"For instance, devices are cheap, but the networks are expensive," said Kaplan. "Just look at the recent LTE high-speed mobile data announcement by Verizon, where a 5GB subscription at $50 per month, can be drained in less than two hours of video viewing."

According to Kaplan, whose company works with mobile enterprise customers, enterprises need to strike the fine balance between data security protection and mobile employee productivity.

"The dirty secret is that the most of these mobile devices are more secure than the PCs or laptops we provision," said Kaplan.

Finally, Kaplan discussed what he calls the Mobility Bill of Rights:

I have the right to stay connected, to access the best networks and services, choose what device I want to use," said Kaplan, "and I want to personalize it (make it my own)."

"I want to be free of security threats and not be deprived of IT support," he continued. "I am one person, so I want one account for all my devices, not one per device."

Through it all, Kaplan talks about the "death of location" as a norm, but says that location is even more important than it was before.

"We see the cropping up of co-working, including the local CitizenSpace [here in San Francisco]," said Kaplan. "We see Starbucks and other coffee shops positioning themselves as 'third space' locations, since the need to meet with a group—and even to be around others while you work on your own thing—is still a key factor."

Is Nimble Cool Again?

"Entrepreneurs used to brag about the size of their funding round; now they boast about how little money they need."

http://www.sanfranmag.com/story/on-the-wings-of-angels


iPhoned

Innovation meets KOSBE's Small Business and Entrepreneurship Program

The recent inclusion of a small business banquet for KOSBE, the Kingsport Office of Small Business and Entrepreneurship, has been a great success under KOSBE's first full-time executive director, Aundrea Wilcox.

Like the small business awards of the past, several winners in established categories were announced.

This year, though, the judges also awarded a new award, the  Innovation Award, to a company I helped in the past define its strategy enhance product marketing.

From the official press release:

The new Innovation Award was presented to RLH JR Inc a/k/a Patient Scrubs (Nancy Hart, et al.).  In April 2003, Nancy Hart’s husband was admitted to the hospital for heart surgery.  It was there that she observed the medical staff and other patients, and discovered a need for a new level of function in patient attire that also offered more dignity.  She stitched her first Patient Scrubs prototype for her husband to wear as an alternative to the traditional hospital gown.  After many iterations, she has developed a product that is delighting her customers at their time of greatest need.

It's great to see two startups I've been heavily involved with—KOSBE and PatientScrubs—come in to their own. Both are run by determined visionaries who have a passion for what they do.

A win for transparency

Having lived in the world of journalism—albeit only tech journalism—for more than a decade, I've encountered a number of companies that claim one thing publicly and another thing privately. Often these private companies are, at best, perturbed if one questions the claims, let alone publishes an article on the disconnect.

In the world of economic development, similar issues arise, where claims are made and then verified or questioned. Most are covered by the private side of the public-private partnership, even though the public desire is to have an accounting of where the funds are spent on a frequent, transparent basis.

From time to time, though, the hand of law must be applied to crack open the window so that the light of transparency can shine in.

Such was the case in mid-November in Kingsport, TN, when the parent company of the local newspaper filed suit against the county under the "open records law" that is often

“We take no pleasure in filing suit against Sullivan County for what the county’s own attorney agrees are clearly public records,” said Ted Como, managing editor of the Times-News, at the time of the lawsuit's filing. “But we have been given no choice due to the continuing refusal of Mayor Godsey to release information that is the property of county residents."

Turns out the saber-rattling worked: today, the newspaper announced a two-fold win for journalistic integrity: first, the records had been released shortly after the lawsuit's filing and public announcement; secondly, that the county mayor himself had covered the legal fees of the newspaper's parent company, so that the suit cost would not fall upon the county taxpayers.

Hats off to the newspaper for taking the unflinching high road in a matter of public record. In the days of WikiLeaks, it's nice to see the system work swiftly and correctly. And kudos to Sullivan County Mayor Steve Godsey for taking personal responsibility for the issue at hand.

Small Business Loans: The Conundrum

Today it appears that a new $30 billion loan program will be signed in to law. Yet, as one article points out, it may not do much to unclog the engine of economic growth that is small business.

Why? Because most small businesses aren't expanding in uncertain economic—and regulatory—times.

"Our business customers are mired in uncertainty and are reluctant to invest in their businesses," said William Chase, who is CEO of a Memphis community bank, Triumph Bank, adding that he's got enough money to cover the very limited number of loans that are being requested these days.

What about the loan program? Apparently Triumph isn't buying into it.

"We have taken a strategic decision not to have our primary regulator, the government, also be a partner in our bank," Chase said.

Food for thought.

How about a few investment tax credits instead? While I've been wary of SBA loans (express or otherwise) and don't recommend them to struggling companies due to the strings attached, I often recommend taking advantage of tax credits tied to investment. 

Investment tax credits seem a less underhanded way of wealth re-distribution (or an easy way to free the flow of capital, depending on your perspective).

Fenley's Glass

Don Fenley, who heads up the Kingsport Times-News electronic edition, does a good job of comparing the numbers for the national recession versus Kingsport's version. 

Fenley uses numbers to show that Kingsport's faring better than most places, but he also points out that the perception locally is one of fretfulness.

Fenley worked at a variety of newspapers, primarily in the Southwest (including Huntington Beach, CA) and the Pacific Northwest, before joining as editorial page editor at the Times-News in 1993. As such, he has a good perspective on how things work in areas beyond the Northeast Tennessee region.

While he doesn't come right out and say "we're doing better than most" in his blog post, it's implied, and I tend to agree. For all those who think the local economy is bad, it's nothing compared to many other parts of the country. From Las Vegas to Huntington Beach, from Richmond to Asheville, the economic downturn is considerably worse than it is here.

In addition, since we tend to trail the national averages in many aspects, it's been a blessing to see a resilient economy in the local region mostly buffered against the large waves of layoffs, severe housing drops and genuine despair.

We may fret in Kingsport, but we've not yet come close to despair. Yes, housing prices have declined, but the housing market's still active; so is the commercial new construction market in the region. And so are entrepreneurial opportunities for those who consider timing right to start something new.

An entrepreneurial lord? Or just a sane business succession strategist?

"One of the greatest compliments you can be paid is that the organisation is big enough, good enough, and strong enough to withstand you going and embrace somebody else that will add value to your baby and not hurt it," stated Lord Digby Jones, former director general of the Confederation of British Industry, in a recent Financial Times interview. “What’s the point if it dies with you? It might do your ego a power of good if the world can’t go round without you but, I have to say, what was the point? What sort of legacy is that?”

 

Well played. Read the rest of the article, discussing the merits of succession planning on levels both great and small, at Yahoo! Finance or the Financial Times.

TechStar celebration - free to guests of NETTC members

In years past, the NETTC TechStar Awards event has been a luncheon that was, well, a bit pricey for those who didn't have corporate sponsorship - or skin in the game in terms of an entry in one of the TechStar categories.

This year, the price of admission can't be an excuse, not at least for the Northeast Tennessee Technology (NETTC) members or a limited number of guests of NETTC members. As of today, the EventBrite sign-up still shows 95 guest tickets available.

For free.

I've already recommended the event to an NETTC member, who in turn invited me to go as a guest. So I guess that means there are 94 free tickets left . . . 

In addition, back by popular demand, the TechStar awards will be also be accompanied by a tech symposium. It's the kind of event where short classes are held on a variety of topics. If I were a member, it's the kind of place I'd do one of my presentations on business streaming to the iPad / iPhone or how to convert old videos to BluRay, but the other presentations look equally as interesting ;)  

The tech symposium runs for a few hours prior to the TechStar dinner. 

NETTC TechStar Award applications available

In my local region, spanning the borders of three states, there's an award that really piqued my interest years ago. Started by Shelburne Ferguson, the TechStar Award is a celebration of technology, innovation and - to a lesser degree - entrepreneurship and economic development.

Hosted by the Northeast Tennessee Technology Council (NETTC) the TechStar Awards have continued Shelburne's vision for almost a decade now, and continue to be a big draw for the NETTC to recruit members and showcase the opportunities in the region.

According to NETTC president Lewis Cox, award applications are available now.

"Do not forget to apply for your own TechStar Award by September 10th," said Cox, in an email announcing the awards banquet. "We know many of you have been making good use of technology, and this should be recognized and shared. To apply for an award, to be an exhibitor or sponsor, visit www.nettc.org."

Small Business Role In Economic Development

The small business role in economic development is a paper by Kelly Dane Edmiston, who was with the Kansas City Federal Reserve branch when the document was written in 2004. Still highly applicable today.

Final thoughts on Kingsport Small Business CNN win

Hmm, well, the Kingsport small business debacle is soon to be over, hopefully: even though CNN never took down the errant rankings (leading me to believe there was never any contact with them from the City of Kingsport) the new rankings will be out in a few months. Let's just hope CNN hires a firm that know how to do math, beyond just counting!

The whole experience leaves a bitter taste in my mouth; still comfortable I did the right thing, and have to realize that others might feel compelled to win at all costs. Based on that, I'm going to take a break from posting content about Kingsport for a while, until there's evidence of a level of professionalism that seems lacking.

Postlude: CNN Money Kingsport Small Business Award

[Update 4:45pm: The City of Kingsport representative has confirmed, in an email, the accuracy of the original analysis, adding: "I will be talking to Census and CNNMoney.com on Monday about correcting the data sets." See this subsequent Bjournal.com article for more details. Issue resolved?] 


Postlude (20 November 2009 10:45am): Two days ago, on a call between a reporter and a representative of the City of Kingsport, two claims surfaced regarding CNN Money’s ranking Kingsport as the best place to launch a small business: first, that our analysis of the error was itself errant; second, that another error existed in the Census data used to rank Kingsport number one.

Unfortunately, the representative had not read the original blog post, prior to making these same claims to city and community leadership,  nor had the representative been able to pinpoint the second error. The reason is quite simple: there is no other error.

A website the representative pointed to as proof that a second error existed is the same website we used to analyze the error in the first place.  Often referred to as CenStats, the site allows one to choose an MSA and a year and then generates detailed info about an MSA - the exact detail CNN Money uses to populate the snapshot section of its rankings. 

• Choosing the Bristol VA MSA for 2004 yields the 1779 businesses that were pointed out in the original blog post as the businesses missing from the baseline. 
• Choosing the Kingsport Bristol TN VA MSA for 2004 yields the original errant baseline number of 4235 businesses.

Notice a pattern? In two clicks on the CenStats website, the error emerges, consistent with the original analysis. One more click (choosing the Kingsport Bristol TN VA MSA for 2007) yields the correct 6087 businesses at the end of 2007.  

Of even more interest, an extra two clicks of CenStats obliterates an objection mentioned in the first post, namely that the Bristol VA and Kingsport MSAs were combined together all the way back to 2000. CenStats clearly shows the Bristol VA and Kingsport MSAs as separate all the way up to 2006, combining them together in 2007. If one tries to choose the Bristol VA MSA for 2007, the end result is a screen that says “No record found.” 

Year	Kingsport MSA (24700)	Bristol MSA (14980)
2004	4235	1779
2005	4222	1813
2006	4210	1801
2007	6087	0

The full chart shows the Kingsport MSA’s small business numbers declined in 2004 - 2006, while the Bristol VA MSA’s small businesses actually grew.  The original post intentionally avoided pointing this out, but the requirement to “show our work” (like in long division in elementary school) now openly reveals the small business decline in the Kingsport MSA. 

How will Kingsport address this Census Bureau administrative/CNN quality control issue? 



Finally, what about jobs?  Did we gain anything?

Yes, we did. The combined MSAs saw a total of 8,085 jobs added for the four year period.

The CenStats data doesn’t tell us how many of those were small business jobs, though, as it only provides business size and aggregate employees, per industry, without breaking them down to aggregate employees per industry per business size.

I suspect most of these jobs were gained from large businesses, for four reasons:
First, small business declined through most of the timeframe, as we only added 73 small businesses over the four years.

Second, even if we assumed all these 73 small businesses were made up of the maximum number of employees (49 employees) that would only bring us to 3,577 jobs created, less than half of the total 8,085 jobs created in that same timeframe.

Third, a maximum possible 3,577 small business jobs number can't possibly be true, because the number of 20-49 person businesses only grew by 15 total for the timeframe, yielding a maximum possible of 735 jobs.

Fourth, even if we run a formula based on a consistent weighted average, where the average is the percentage of maximum employees per business size (100% would mean that 1-4 person companies would have four people in them, while 50% would mean of 1-4 person companies have 2 people in them) we end up with a decline in the number of small business jobs.

At a 50% consistent weighted average, we actually lose 2,147 small business jobs.
So, while there is no doubt we can say the combined MSA gained small businesses and gained jobs, we can't say for certain we gained jobs in small businesses.

Jobs	Kingsport MSA	Bristol MSA	Aggregate
2004	76,694	29297	105,991
2005	77,040	29289	106,329
2006	81,214	30420	111,634
2007	114,076	0	114,076
			Total Jobs Added 2004-07	8,085

Food for thought for someone like me who is always touting small business as the growth engine -- maybe Kingsport is unique after all, appearing to have had significant mid- to large-sized business growth.

Theaters, theaters, everywhere, and not a one being bought by a city

v

Embarrassment in Entrepreneurship?

A great quote from the founder of LinkedIn:

"If you are not embarrassed by the first version of your product, you’ve launched too late."

http://www.openforum.com/idea-hub/topics/technology/article/the-iterate-fast-and-release-often-philosophy-of-entrepreneurship-ben-parr




iPhoned

Kingsport's Number One? CNN Money award revisited

[Updates: Bjournal editorial, "neighbor to the south" numbers, other CNN Money miscalculations. Phone call with City representative. Additional details appear at end of post.] 


Unlike the accolades I've enjoyed writing about Kingsport, both here and at LaunchPin.com, this is a painful article to write. Kingsport has won numerous awards, but the community must decide how to address the recent receipt of an erroneous award, finding our voice before others speak for (or, more likely, against) us.

Significant interest has been generated in Kingsport's status as a small business hotbed, based on CNN Money's designation of Kingsport as the USA's fastest growth area for small businesses between 2004 and 2007.

Once CNNMoney.com posted the list, the news quickly spread, including a mention in the widely read Kingsport! blog and several articles in the Kingsport Times-News (October 13 and October 15). I blogged the news, via DevelopedEconomy.com, which I heard in London, where I and another Tri-Citian were speaking at a new media/marketing convention. (Brits at the conference coined the term "Digital Hollow" in our honor, which we Tri-Citians morphed into "Digital Holler".)

The number-one ranking was welcome confirmation of northeast Tennessee's potential as a whole, and of Kingsport's role specifically, especially for those of us who love Kingsport and trumpet it as a great place to live and work.

Yet something didn't seem right with the numbers.

A hunch may be the basis for questioning a statement, but it means nothing without confirming data. Since returning home to Kingsport, I've spent several hours combing CNN and local data to understand whether the "gut feel" was unfounded or accurate.

Unfortunately, the answer is that CNN Money's calculation, boosting Kingsport to the number one spot, is highly flawed. The proper calculation yields a growth rate of 1.21%, not 43.7%, meaning that CNN Money overstated the Kingsport area's true business growth by over 3600%.

To understand how this error occurred, here's a look behind the numbers.

Improbable growth rate. According to CNN Money, 5.0% was the national average in small business growth for all US mid-sized metro areas from 2004-2007. Yet Kingsport's metropolitan statistical area (MSA) grew by 43.7%, to a total of 6,087 small businesses in early 2008?

Considering that the growth rate of St. George, Utah, number 2 on the CNN Money list, was 29.8%, the 43.7% growth rate that CNN Money cites for the Kingsport metro area implies a superheated business climate.

CNN Money's other business statistics for Kingsport yield an economic snapshot that isn't so flattering as the purported small business growth. During the years in question, the Kingsport MSA lagged behind the national average for all mid-sized metro areas in vital economic indicators:

• Population growth (2% versus 5.73% nationally)
• Percentage of 25-34-year-olds with bachelor's degrees (18.9% versus 26.9% nationally)
• Per capita income ($29,730 versus $35,547 nationally)
• GDP growth (17% versus 32% nationally)

In fact, the only two categories in which Kingsport outperformed the national average during this time were property crime (3,706.1 versus 3,562.2, per 100K inhabitants) and small business growth (43.7% for Kingsport versus 5.0% nationally).

To put some perspective on those increases, note that the increase in Kingsport's property crime—not something the area would be proud to claim—is approximately 4% over the national average.

Kingsport's small business growth, on the other hand, is reported to outstrip the national average by 880% (43.7% growth versus 5% growth) for 2004-2007.

Improbable number of startups. CNN Money correctly reports that the Kingsport MSA had 6,087 businesses by the end of 2007.

A growth rate of 43.7% in four years means that the Kingsport would begin 2004 with only 4,235 small businesses (6087 ÷ 1.437) and would add 1852 businesses in four years' time.

Does it seem plausible for an MSA with only 4,235 small businesses to add almost half as many companies again to its rosters in a four-year period?

If so, where did those entrepreneurs come from? Rough estimates from the Kingsport Office of Small Business and Entrepreneurship (KOSBE) show that KOSBE helped approximately 350 businesses during the 2004-2007 timeframe, about half of which were start-ups.  This means KOSBE can account for about 175 new small businesses, or less than 10% of Kingsport's growth as reported by CNN Money.

The local incubator, Holston Business Development Center (HBDC), can account for around another 20 startups in that timeframe, leaving 1,647 business startups unaccounted for.

The HBDC and KOSBE numbers assume that no existing small businesses shuttered during that same four-year period, so a more accurate reflection might be to say that 100 small businesses were added during that time, leaving an approximate 1,750 small business gap.

Flawed methodology. What about the other 1,750 new businesses?

While 1,750 new businesses don't exist, based on the CNN Money error in deriving growth numbers for the Kingsport MSA, they are real: prior to 2004, at least 1,750 additional small businesses existed in the same geographic region, but were not counted in CNN's 2004 baseline.

In its methodology section, CNN Money explained how it compared MSAs. "We began our search with the U.S. Census Bureau's 363 Metropolitan Statistical Areas. Each MSA includes at least one urbanized area of 50,000 or more inhabitants." It then gathered information from standard government and industry sources. For data about small business populations, it cited U.S. Census Bureau 2007 County Business Patterns. "This tally is for the number of businesses in the MSA with 1-49 employees. We measured three-year [sic] small business growth from 2004-2007."

CNN Money missed the fact the Kingsport MSA's composition changed between 2004-2007. It's easy to see why they missed this: no other MSA in the top 25 list changed in this time period.

In the census data used to by CNN Money create the Kingsport MSA baseline, the MSA contained only three counties. For those three counties, a total of 4,235 small businesses existed. Data from the Census Bureau website (published on June 10, 2003) shows what CNN Money used as its baseline for the MSA 28700, the Kingsport MSA:

Kingsport-Bristol, TN-VA Metropolitan Statistical Area

47073         Hawkins County, TN

47163         Sullivan County, TN

51169         Scott County, VA

Beyond the mid-2003 baseline numbers, though, the Kingsport MSA composition changed. At least according to the Census Bureau website. Data for Kingsport's MSA (28700), in early 2008:

Kingsport-Bristol-Bristol, TN-VA Metropolitan Statistical Area

47073         Hawkins County, TN

47163         Sullivan County, TN

51169         Scott County, VA

51191         Washington County, VA

51520         Bristol City, VA

The "new and improved" MSA "added" the city of Bristol, VA, and Washington County, VA. (Bristol, TN is included in the Sullivan County portion of the MSA, but Virginia recognizes cities as separate from counties for both state and federal census models.)

For those four counties and Bristol, VA, a total of 6,087 small businesses existed.

The math that CNN used took the correct final number (6,087) for all four counties and Bristol, VA, and subtracted the faulty baseline number (4,235) from the first three counties in the Kingsport MSA.

This change in composition means that CNN Money derived inaccurate small business growth (6,087 - 4,235 = 1,852 new businesses) with an errant growth rate (43.7%) that made Kingsport the number-one growth area in the nation.

Actual Results. In reality, in the mid-2003 Census Bureau data, Bristol, VA, already had 647 small businesses and Washington County, VA, already had 1132 small businesses.

This means a total of 1,779 businesses need to added to the 2004 baseline to derive an accurate growth rate. The true growth calculation, then, would be to compare 6,014 businesses in 2004 (4,235 + 1,779) to 6,087 businesses in 2007.

The corrected MSA numbers would show that the Kingsport MSA gained 73 total small businesses for the 2004-2007 timeframe, a 1.21% growth rate.

CNN Money's calculation would be correct if Bristol, VA, and Washington County, VA, had zero small businesses in mid 2003, but added 1,779 small businesses in four years. 

If that were true, the supergrowth in Bristol and Washington County, VA, would be huge news. Yet is as inaccurate as the errant 43.7% growth rate for the Kingsport MSA.

Interestingly, the corrected model shows Bristol, VA, moved into the negative column, losing small businesses between 2004 and 2007. Small business gains were mainly in Hawkins County, TN, perhaps thanks to the HBDC's joint effort with the Tennessee Small Business Development Center, which started offering courses at HBDC in 2007 on how to start a small business.

Sullivan County gained a total of 15 businesses for a .45% growth rate. That's 0.45%, not 45.0%.

What if CNN Money had chosen a different set of Census Bureau data for its baseline? Data from Census website for late 2003 (published to the web on Feb 25, 2004) yield proper MSA composition for MSA 28700:

Kingsport-Bristol-Bristol, TN-VA Metropolitan Statistical Area

47073         Hawkins County, TN

47163         Sullivan County, TN

51169         Scott County, VA

51191         Washington County, VA

51520         Bristol City, VA

Why CNN Money chose the mid-2003 data rather than the more recent late-2003 data is unknown, but it led directly to the calculation error of 43.7% growth.

Unfortunately, for those of us who want to champion Kingsport's small business potential, correcting the CNN Money calculation mistake will destroy Kingsport's standing in the growth rankings, pushing us far out of the top 10, 25, and even 100.

Does this incorrect calculation mean that Kingsport itself is not growing? Of course not. Look at downtown's "overnight success" which was planned long before new business and property owners came on to the scene. Going as far back as the 1999 economic development summit, the city has held a proactive approach to small business growth and diversity of business types. And our MSA growth rate appears to be higher than our direct neighbor to the south.

Action. Now we come to the hard part: what action to take. We didn't ask for or seek the award; nothing we could do as a community would have affected the outcome; and the error is certainly not "our fault" in the sense that Kingsport had nothing to do with the skewed results.


While "do nothing" may seem an appropriate action, my professional experience in crisis management PR suggests that it is a short-term, self-deluding action, as in "waiting for the other shoe to drop." The shoe is poised; I am comfortable others have also discovered this error, and will probably publish it as well.

Acknowledging the error to CNN, then, appears the best way to avoid a potential crisis.  Why?

First, if Kingsport business leaders let the accolade stand, knowing that we didn't earn it, we can't broadcast our ranking with integrity and self-belief. It's like knowing your grade-school teacher transposed a test score from a 79 on your paper to a 97 in the grade book. Is the A deserved?

Second, anyone really considering Kingsport on the basis of the ranking will see the disconnect when reading the less-favorable snapshot numbers.

Third, if someone else points out the error to CNN—perhaps #2, Provo, UT, or would-be #10, Las Vegas—the ensuing publicity will lead to shame and humiliation for Kingsport.

Fourth, shaping a message to market ourselves as the number one "most improved" spot in the nation is extremely difficult; marketing ourselves as an emerging spot to watch is more effective.

Finally, if CNN opts to change the rankings, there's the possibility they will publicize the change. The publicity we will gain from being seen as an "honest" small city is much better than the publicity that any "most improved" award could ever generate. Probably not, as it becomes CNN's crisis to manage, but we've got a better chance at it if we're the ones who bring it to their attention.

[Update, 3 Nov 2009 4:30pm: Apparently CNN Money miscalculations have happened before, with communities in a neighboring state proactively addressing the issue.]

[Update, 3 Nov 2009 5:15pm: One of confirming data sources sent new data correcting my  "neighbor to the south" statement. MSA 27740 grew at 4.0%, versus national average of 4.1%.]


[Update, 4 Nov 2009 8:15am: Asked why I didn't include this Times-News article; only comment is that the commenting seemed to be more sniping than constructive, and jokes about adding meth lab businesses seem to be a bit out of place when a real issue is at hand.]


[Update, 4 Nov 2009 11:10am: As mentioned in the main article, and as can be seen on blog post comments in multiple locations other than DevelopedEconomy.com, several others also had that "huh?" moment when hearing about the win. It's taken a bit longer for me to figure out the true error (the process of which I'll address in a subsequent post) and even longer to choose to publish it. 


I did so once I confirmed that an editorial in next week's Business Journal will note that at least one economic development entity had this information shortly after the initial ranking announcement. 


The editorial will state the entity chose to ignore the error, going forward with plans to broadcast the errant win. Whether they felt they were doing their community a service by withholding information, or whether it was a move of self-preservation, the facts are clear. 


We have less than a week to address this before the loudest voices heard come from outside the region.


Update, 20 Nov 2009 10:24am: Had a rather unbelievable call with a City of Kingsport representative a few days ago. Ugh.] 

Perspective: A Job Saved Is A Job Created?

As referenced under the 12 Myths of Economic Development, the jobs-saved-versus-jobs-created debate makes for some rather creative accounting.

Now, though, the concept is making its way into the public psyche, given the prevalence of the stimulus bill:

http://newsbusters.org/blogs/noel-sheppard/2009/10/30/cbs-white-house-stimulus-jobs-numbers-hard-believe
http://blogs.abcnews.com/politicalpunch/2009/10/160000-per-stimulus-job-white-house-calls-that-calculator-abuse.html
http://apnews.myway.com/article/20091029/D9BKMVMG0.html
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/28/AR2009102804540_pf.html
http://www.bloomberg.com/apps/news?pid=20601039&sid=aUuHhaDx8Hr8

Perspective: Theodore Roosevelt Malloch

Attending a luncheon today, hosted by the winners of the most-interesting name contest, American Values Investing.

"To be sure, there have been a number of robber barons - perhaps 2% - to allow a continual perpetuating of the claim against capitalism," said Theodore Roosevelt Malloch, PhD. "But I ask you if this the norm, and does it negate the qualities that we and others around the world enjoy from capitalism?"

"Which is it? This is, as my friends in logic are keen to say, this is a key decision mechanism," said Malloch. "Is it possible that a key number of businesses can be constructed in a way that counters the narrative of anti-capitalism?"

Malloch said he was motivated to write Spiritual Enterprise by Sir John Templeton, his mentor, who comes from a town I lived in for a few years, Winchester, Tennessee. Templeton in his later years founded a research institute close by, on Sewanee Mountain, adjacent to the University of the South.

"I feel defenders of capitalism have missed the key concept of virtues," said Malloch,  a"nd the concept of calling - a theological concept whose basis has been forgotten - of which we need to remind ourselves. Those who question the benefits of capitalism must also be shown examples where an ethical implementing of capitalism is wholly consistent with moral, ethical and spiritual reasoning."

Social capital is enhanced by interactions and relationships within society, according to Malloch, while spiritual capital is enhanced by a completely different relationship with a higher power.

"A business flush in spiritual capital will generate the virtues of faith, hope and love," said Malloch, listing several of the more than 60 examples of servant leadership from Chick-Fil-A and Herman-Miller to Interstate Battery and several public firms.

He also spoke of the differentiation of the hard virtues of perseverance and leadership, as well as the softer virtues of humility and compassion.

"These softer virtues exist," said Malloch, "in American business. My mentor, Sir John, taught me the virtue of gratitude, saying that it does not represent weakness, but rather lightness, openess and strength."

Additionally, the concept of primary and secondary virtues, as well ad Plato's heirarchy of virtues, are gaining merit within organizations - and even the lecture hall.

"The book, which sold 25,000 copies in its first version, is being translated into French and Chinese, as we speak," said Malloch. "Additional research has been done in the meantime, including cross-discipline work being done between Yale's school of business and its school of divinity, to look at 24 real case studies of the benefits of spiritual capital."

A second edition of the book will be forthcoming, after the release of Thrift in early Novmeber, which Malloch calls one of the forgotten virtues.

"The companies with spiritual capital have been around for a long period of time," said Malloch, noting that about 40% of the companies in the examples were privately held. "There may be more strength or ease to keep the founder's virtues within the company's long-term DNA in a private company, but I hope to use the additional research to explore leadership as a virtue as well."

Malloch posits that leadership is a a quality potentially contained in everyone in an organization, but stressed that a leader must equally be a "good listener and follower"to actively maintain leadership.

iPhoned