Mapping: Deciding Which Is the Road Not Taken

The refrain from George Harrison’s song, “Any Road” — “If you don’t know where you’re going, any road’ll take you there” — certainly speaks to the importance of having a destination in mind. Place one finger where you want to go on a road atlas and another on the place where you’ll start and the various routes to get from one to the other become obvious. Then, it’s a straightforward process to apply criteria such as distance, time, traffic patterns, etc. to determine which particular route to take.

The concluding lines in Robert Frost’s poem, “The Road Not Taken” state:

Two roads diverged in a wood, and I, | I took the one less traveled by, | And that has made all the difference.

In a classic style, Frost explains how he resolved a dilemma that confronts all of us at some point — a choice between two paths that, once made, offers no chance to go back and choose the other. Unlike the previous instance where destination featured heavily in which road to choose, in this one, the journey becomes more important than the destination. The choice depends on a willingness to explore a foreign landscape and take advantage of the opportunities discovered there.

Here, too, the traveler applies an equally valid process based on powerful criteria such as sensitivity to initial conditions, availability of resources, and degree of advocacy and participation to guide decisions of which way to go. These criteria are often represented in “maps” that don’t look like the more familiar road atlas, but serve a similar purpose in that they show the physical associations among people, places, things as well as define their characteristics in large data sets and frame their interrelationships to powerful concepts and innovative ideas.

During the course of the grants mentioned in my initial post, we introduced several types of maps and mapping processes that blended “destination” and “journey” perspectives, but focused on localizing business ecosystems and developing business cases. Among these are the following:

I encourage you to join LocalFoodSystems.org (it’s free!) so you can explore these mapping features more thoroughly and see how they apply in the context of YOUR business ecosystems as you decide which is the road not taken!

Originally posted to Sustainable Local Economic Development by Steve Bosserman on Thursday, August 9, 2012

The Economics of Happiness and Meaningful Work

Recently, one of the community activist groups in our area hosted a screening of the prize-winning movie, The Economics of Happiness, followed by a Skype interview with Helena Norberg-Hodge, one of the co-directors and founder and director of Local Futures – Economics of Happiness, formerly known as the Institute Society for Ecology and Culture (ISEC).

It’s definitely worth seeing, if you haven’t already done so. In addition to information available on the Local Futures website, a YouTube film clip offers a quick overview of the main themes explored in the movie: The Economics of Happiness – Official Trailer.

In her commentary on the Skype call, Ms. Norberg-Hodge emphasized the importance of launching and supporting community-based initiatives that rebuild the local food economy and deliver education for action.

She encouraged attendees to mobilize democratic action and draw upon the power of the electorate to influence politicians to enact, rescind, or amend laws regarding taxes, subsidies, and regulations so that locally-sourced products have an even playing field with their globally-sourced alternatives.

Her rationale suggested that the resulting decentralization of corporate and governmental structures would increase the number of jobs. It would also provide community members with meaningful work based on values and skills resurrected from a nearly lost ancient wisdom inherent in our cultural roots. In many instances this worthy work translated into farming using simple tools and adhering to millennia-old agricultural practices.

While Ms. Norberg-Hodge did not openly discount technological developments, the significance of them as a defining force on the pace and degree with which our civilization continues to advance received short schrift.

The loss of jobs today comes primarily as a result of technology. The machine replaces human labor–period. Our challenge is to figure out what we do with our time as the machine continues to eliminate the need for us to spend it in drudgery. The increased redistribution of power as decentralization takes hold opens the door for a new definition of meaningful work WITH the machine, not against it.

No doubt, localization will give us the opportunity to learn how to invest our time in our personal development, care and support for one another, and adaptive community cultures. That would be a dream worth making a reality. But if the future of localization means becoming reacquainted with a shovel, rake, and hoe for hours on end, that seems more like a nightmare! Better to master the machine for our well-being rather than our destruction.

Originally posted to Sustainable Local Economic Development by Steve Bosserman on Wednesday, August 8, 2012

Introduction to Key Terms: Local and Localization

As one might infer from the title of this blog site and the objectives of our grant proposals, the concept of “local” featured heavily in the design and development of our projects. Local is one of those terms that carries multiple meanings. In some respects, it waxes nostalgic, recalling seemingly slower-paced times when we were more available in the present to do things that mattered for ourselves and those we cared about. Ah, if only we could return to that era.

Well, maybe.

For others, though, local translates into dull and boring and may even haunt some with the spectre of unwanted meddling, close-mindedness, and meanness that severely limits possibilities. We should get away and stay away.

Yet, there are those for whom local carries a more expedient meaning about survival over the long run. We belong to a community in which all our members commit to establish a sustainable course for this and many generations to come.

Of course, the truth for each person is a unique blend of these three. Local becomes a personal sense of place. It has a familiarity that says whoever is here belongs here; this is where I can do my best; this is where we can make our stand. It provides a measure of safety and security whereby I, along with my fellow community members, have the means among us to meet our basic needs and more. It establishes a foundation of community-centeredness and fair-mindedness for all to draw upon, yet encourages each of us to exercise personal freedom to pursue our individual goals, live our lives fully, and make a positive difference for ourselves by whatever criteria.

In this context, localization is the process by which members make their community that place where they and their families want to stay because there is nowhere else they would rather be. Localization is a community’s drive toward self-sufficiency and commitment to sustainability. It is an act of collective responsibility.

With this sense of “local” and “localization” in mind, community members direct more of their focus toward achieving self-reliance. This prompts them to take greater responsibility to meet their basic needs through the use of their own resources rather than importing from others much further away. Using terms introduced in my previous posting, such a shift in responsibility redraws the boundaries of the business ecosystem within a radius much closer to home. This opens the door for the development and application of business models that support the successful start-up and expansion of small-scale enterprises throughout the community and region. The net result is that more transactions occur locally, which keeps the wealth of the community at work for the community and goes considerable distance toward making the community the place to be and stay.

As a community localizes its business ecosystem, it produces more of its basic needs in terms of gallons of water, calories of food, kilowatts of energy, units of housing, articles of clothing, quality of sanitation, etc. This, in turn, spurs numerous opportunities for entrepreneurial activity specifically in agriculture and bioscience. Given these were focus areas for our grants, we could tap into the energy generated by the push for localization and the use of agriculture, particularly in food systems, as the economic development engine to advance our projects. In fact, our experiences with those dynamics in the course of our projects became the subject of multiple postings such as Which Food System Do You Use to Get Your Calories? over the past four years. Look for several more along similar themes to be referenced here in future posts under the Sustainable Local Economic Development heading and tagged as “localization.”

Originally posted to Sustainable Local Economic Development by Steve Bosserman on Tuesday, August 7, 2012

Introduction to Key Terms: Business Model, Business Ecosystem, and Transactions

During the course of the two grants mentioned in my introductory post, our project team convened numerous “stakeholder sessions” across Northeast Ohio in an effort to encourage participants to generate business ideas and use the tools we offered to build them into business cases. In a pattern that repeated itself several times, attendees would have exciting ideas for businesses that played into their skills and captivated their interest in the session, but died along with the conversations after the meetings were over.

A likely reason for the high drop-off is the result of having given thoughtful consideration to the question, “How can I make a profit with my idea?” Or another way to ask the question is “How can I sell the value I deliver for a price that covers the expense I incur for delivering that value and have extra left over as a reward for me taking the risk and succeeding? The answer to that question is a business model. And if I can’t come up with a business model that fits with my idea, then I can’t make a case for it. Simple.

How could so many innovative and compelling ideas raised during the stakeholder sessions not find compatible business models to see them through to start-up? No doubt, there are several contributing factors to this outcome, not the least, of which, is that many of the ideas, which sounded good when first given voice, just didn’t pass muster under closer scrutiny. But what we also found is that how wide the net a person casts to vet an idea with others defines in large degree whether the idea continues toward fruition or dies on the vine.

In effect, almost any idea has the potential to connect with a social network of the countless, nameless many who represent all walks of life and all manner of means, and garner sufficient support to forge the idea into a full-fledged business. It is an application of Barry Commoner’s First Law of Ecology— “Everything is connected to everything else”— to commerce. The result is a business ecosystem.

From this perspective, a business ecosystem encompasses and interconnects all resources and assets as well as all participants be they customers, owners, employees, investors, suppliers, advocates, etc. Given this, how one draws the boundaries for a business ecosystem, defines who participates, and then positions an idea into it, influences the development of viable business models. The more expansive and inclusive the business ecosystem, the more options there are for a serviceable business model to ensue.

This raises the question, “Why do the qualities of expansiveness and inclusiveness contribute to more clarity rather than more chaos?” We found that, as in a natural ecosystem, the business counterpart thrives on an abundance of flows. Only instead of water, air, nutrients, etc., the flows in commerce consist of inputs, outputs, information, and know-how. And when these flows converge at specific points in time and space, an exchange of value, or transaction, occurs using an agreed to medium of exchange.

A business model organizes transactions so that “I sell the value I deliver for a price that covers the expense I incur for delivering that value and have extra left over as a reward for me taking the risk and succeeding.” More participants, more flows, more mediums of exchange, more value generated in a business ecosystem drive more transactions and, with them, greater odds that a business model will surface that develops a worthy idea into a successful business.

With these three terms as tags, look for future postings related to them that appeal to our grant experiences…

Originally posted to Sustainable Local Economic Development by Steve Bosserman on Monday, August 6, 2012

Introduction to Sustainable Local Economic Development

Since 2008, I have been actively involved as a Co-Principal Investigator on a 3-year USDA-Specialty Crop Research Initiative, Regional Partnerships for Innovation grant awarded in September 2008 and back-to-back 1-year grants from the Fund For Our Economic Future (FFEF) in 2009-2010 and 2010-2011. These grants complemented one another. The USDA grant sought, in part, to develop a social networking infrastructure —LocalFoodSystems.org — for connectivity and collaboration that would inspire participation in agriculture localization. The FFEF grants focused on providing social networking participants with templates, processes, and tools necessary to catalyze significant entrepreneurial activity through increased localization within a regional agriculture-bioscience industry cluster.

During this 4-year period, I posted to blogsites, created websites, tested platforms and applications, prepared presentations, provided coaching, and contributed to papers and proposals all related to the themes of these two grants. Most of the information generated unfolded chronologically and addressed particular topics of interest in the moment. Furthermore, it was made available through the media that best supported the message being delivered to specific audiences. This led to a general mishmash of material with wide variations in timing, theme, track, and target making it difficult for those who may have an interest to consider what I tried, why I did it the way I did, what happened as a result, and what I learned along the way.

To address this shortfall, put a final wrap on the grants, and move my thinking into new areas of interest, I will begin a series of postings under the heading of Sustainable Local Economic Development that recasts my work in a more searchable framework. As with this introduction, these postings will appear on Blogger with links to the Sustainable Local Economic Development group on LocalFoodSystems.org (LFS) — you may need to join LFS (free) in order to view posts linked to it — Tumblr, Slideshare, and Scoop.it and announcements to Steve Bosserman on Twitter.

To help organize the information in the postings and maintain consistency in the framework, I will apply one or more of the following tags to each entry:

  • organization dynamics
  • business ecosystems
  • food systems
  • localization
  • local economy
  • mapping
  • business case
  • work space
  • market network
  • business model
  • governance
  • self-reliance
  • transactions
  • community investment portfolio
  • project management

I welcome your feedback about any of the postings as well as input on the tagging convention. This is a complex, yet very important subject about which there are few absolutes and far more questions than answers. The more we can learn together from our different experiences with sustainable local economic development through these media, the more valuable the outcomes. Thanks in advance for your interest and consideration.

Originally posted to Sustainable Local Economic Development by Steve Bosserman on Sunday, August 5, 2012

Rules and Choices for a Sustainable Local Economy

Economies are social systems within which we make choices based on needs, wants, and means. People regulate economies through rules that set taxes, tariffs, fees, standards, licensure, certification, patents, etc. These rules reflect the priorities of the people who enact them through their governance structures be they for small local groups or large global agencies.

The intent of rules is to limit choices in favor of those that produce the desired behavioral outcomes on a consistent basis. Such rules make the economic system more effective (do the right thing) and efficient (do it the right way).

Oftentimes, rules from multiple levels of jurisdiction apply to the same set of choices. For example, cooperatives, municipalities, county, state, and federal offices and agencies, the European Union, the United Nations, professional societies, industry-wide private sector groups all have a hand in defining various regulations to monitor and manage the supply of basic needs such as food, water, energy, fuel, manufactured goods, etc.

Unfortunately, competing or unclear interests behind the rules or insufficient diplomatic moxie to enforce them results in a complex legal and financial landscape in which to make choices. From a business perspective, this dense web of rules becomes a barrier to entry for all but those that have a global market, deep pockets, and easy access to resources to sort through the alternatives, invest in the opportunities, and pay the consequences for any misstep. It also fosters a dependency by people and their communities, neighborhoods, and rural areas on global players to supply them with basic needs. This places communities at risk for survival if supply chains are disrupted whether by natural disasters, climate change, pandemics, fossil fuel shortages, political turmoil, even a down Internet, to mention some of the more obvious.

As explored in the posting, “Business Models for a Local Economy,” the primary purpose of a local economy is to meet the needs of its participants whereas the purpose of the global economy is to satisfy their wants. Such distinctly different purposes result in different rule sets. Governance structures proliferate at all levels to administer rules of the global economy. Far fewer are in place for local economies. However, several types are available. Among these are policy councils, buying clubs, and co-ops for food, family, education, housing, etc.

Governance structures for local economies establish the rules by which members of communities, neighborhoods, and rural areas have more options available so they can choose to meet their needs through local sources. In effect, such “rules management” facilitates “Business Model Development within a Local Economy”, which drives two fundamental “localization” processes:

  • Integration across all value-added steps from the point of consumption back to the points of production
  • Utilization of community assets and resources without reliance on outside funding

The combination of these two processes, under the auspices of a local governance structure, gives interdependent local businesses and support organizations the competitive edge to prevail over their global counterparts when meeting needs of community members. Furthermore, members have opportunities to minimize economic leakage, reinvest their assets, and retain vital resources in the community through an effective portfolio management effort. This collective effort, then, is the foundation for sustainable local economic development.

The diagram below offers another way to view these critical interrelationships.

The integration of value-add steps–a function of rules management–flows from the point of consumption to the points of production, whereas the utilization of community assets and resources–a function of asset management–flows from identification and location to inclusion in an infrastructure project and business case portfolio.

The center of the diagram lists a wide range of professional services required to accomplish the tasks and complete the activities associated with rules management, business ecosystem functionality, and asset management. Social networking and innovation, which characterize asset management, and entrepreneurship and commercialization, which result from rules management, form the backdrop to conduct these transactions.

As the graphic suggests, services are transactions–the lifeblood in social system behavior. Nothing gets done between and among people without transactions. However, some methods and processes require fewer transactions than others. Furthermore, a healthy local economy incurs fewer transaction costs, either internal or external, to meet the needs of its members than a global economy. This is simply because the sustainability of the community is in the hands of those who live there. It’s in their vested interest to manage it. And given the choice to do so, which a vibrant local economy does, members will act on behalf of their collective sustainability.

Community members, represented by the orange-colored background, have the rules in hand to manage the context and the choices available by which they can:

  • Meet their needs
  • Sustain their community for generations to come
  • Assure themselves of a reasonable quality of life
  • Build on a firm foundation to participate, successfully, in the global economy

These outcomes of constitute the primary purpose for a sustainable local economy and the healthy development it catalyzes and encourages.

Originally posted to Sustainable Local Economic Development on Tumblr by Steve Bosserman on Wednesday, September 8, 2010

Metrics for Local Economic Sustainability

Business models within a local economy engage community members, focus on meeting the physiological and safety needs of members, integrate across value-added steps, utilize community assets and resources , and apply output and performance metrics so that community members can keep score.

Although listed last, the significance of applied metrics cannot be overstated since it is through them the functionality, impact, and cost of the organization or cluster of organizations built upon the business model are measured. However, carefully crafted metrics have the capability to expand the business model beyond its basic purpose to drive solvency and sustainability of an organization or cluster of organizations to deepen the resolve to establish a fully functioning local economy, spur creativity and innovation to find business solutions, increase the rate and degree of adaptiveness, and significantly improve the odds of long-term sustainability for the community-at-large. The quality of the metrics, e.g., the relevance of the scorecard, within the framework of a local economy, shape the design of a business model so that the performance of the organization or cluster of organizations achieves these broader objectives. What are these metrics, then?

The graphic below builds on the basic flows of assets and work functions introduced in the posting, “Does Your Community Meet the Needs of Its Members?” The spreadsheet table superimposes traditional and alternative measurement systems across the two flows in order to motivate, track, and compensate progress. These complement the output metrics already identified in the posting.

The interplay between these two systems of metrics is the engine that strengthens and sustains a local economy. Let’s start with output metrics. The purpose of a local economy is to meet the needs, e.g., food, water, energy, housing, etc., of people within a given community, neighborhood, or rural area. The success of a local economy in delivering these needs to local points of consumption is determined by output metrics. For instance, food can be measured in calories, water in gallons, energy in kilowatts, housing in livable units, and so on.

These same output metrics apply to the work functions associated with delivery of a specific need. For example, food preparation, food processing, and food production provide calories, water recycling yields gallons of potable water, deconstruction and repurposing result in units of usable materials, parts, and components, etc. The more efficient these work functions, the more effective they are in delivering needs and the more sustainable the local economy. How to manage and improve work function operations, then, is of considerable importance.

Work functions or work modules are not independent of one another. They are highly integrated value-add steps that span from the point of consumption to the points of production. The key to managing and improving their operation rests in increasing the degree of integration among them. This requires a highly collaborative effort among those who are responsible for carrying out the tasks associated with each step whether they do so under the auspices of separate businesses or support organizations. For this reason, there is a direct association among the roles community members play: holders of the output metric scorecard; “owners” of the work functions; and leaders of work function integration into clusters of for-profit and support entities in their local areas.

Whereas independent agents dominate the play in the global economy, collective responsibility and leadership for meeting community needs rule the day in a sustainable local economy. The challenge is to match the assets and resources in the community with the work function clusters so they have the wherewithal to deliver according to the desired output metrics. The purpose of the community investment portfolio is to match infrastructure projects and work function clusters with assets and resources such that community members are confident the results will justify their investment. Performance metrics through multiple mediums of exchange indicate how well this match is made.

The posting, “Business Model Development within a Local Economy,” illustrates how a business model can “…execute the work functions required to meet needs and keep the organization sustainable.” Or put another way, a business model shows how to utilize all assets and resources in the community without precluding future availability.

The key is to use the assets and resources without changing ownership or without modifying them to where their original purpose is lost to others who might also use them. This is accomplished through various mediums of exchange such as alternative currencies, time banking, carbon credits, renewable energy certificates, and volunteering that provide liquidity of fixed assets, like land, water, facilities, equipment, housing, clothing, materials, etc., so they can be easily committed to the completion of prioritized work functions.

While money / currency remains a principal way to access resources, to buy or have a long term lease agreement limits access by other community members. It also runs the risk that ownership and control of assets and resources transfer to people outside the community. This imposes another set of restrictions on access and use and contributes to economic leakage, which weakens the community’s chances for sustainability. A Sustainable Seattle report, Why Local Linkages Matter: Findings from the Local Food Economy Study, offers an excellent overview about the consequences of economic leakage related to food sourcing choices and ways to return to a more sustainable path.

The commitment of assets and resources is associated with the completion of commissioned work functions. The same mediums of exchange that assure the flow of assets and resources also incentivize people to apply their skills, talents, and wherewithal to the tasks at hand and fulfill what is necessary to meet the needs specified by the output metrics. And, just as purchased assets often blocks the community from further access, employment often limits the person hired from participating in other work functions and the value exchanges presented by mediums of exchange other than money / currency for salary / wage.

A healthy local economy establishes sustainability through two features. First, it enables members of a community, neighborhood, or rural area to invest and reinvest its assets and resources as represented by multiple mediums of exchange into a portfolio of prioritized project and clusters. Second, it incentivizes community members to carry out the tasks associated with the integrated work functions in each project and cluster in the portfolio as they are prioritized and launched. When the combination of utilized assets and executed work functions deliver on the needs of community members the local economy is successful. And when this is done repeatedly, the local economy is sustainable.

Originally posted to Sustainable Local Economic Develop on Tumblr by Steve Bosserman on Monday, September 6, 2010