Success Depends on Planning, Collaboration, Accepting Change

Success Depends on Planning, Collaboration, Accepting Change

By Dr. Timothy Donahue and James Koehn, J.D., CPA, Chadron State College

Dr. Timothy Donahue James Koehn, J.D., CPA
Dr. Timothy Donahue James Koehn, J.D., CPA

Nebraska's economic future depends on planning for the future, working together instead of competing, accepting great changes, and understanding Nebraska's role as an integral part of both the U.S. and global economies.

Just as the human body uses different muscle groups and organs to accomplish various functions, Nebraska does the same. If one body part malfunctions, it affects the whole body. We work and plan independently, but the health of one part contributes to the health of the whole. If Nebraskans deal with challenges and take advantage of opportunities, the state can succeed in the global marketplace and as a result, the state and its communities will all prosper.

Nebraska's future and sustainability hinge on recognizing the changes necessary and being proactive in our responses.

"The Five New Realities of Economic Development in the 21st Century," written by Sandy K. Baruah, head of the Economic Development Administration, shows:

  1. We are in a global economy.
  2. The pace of change will continue to accelerate.
  3. The components of competitiveness can no longer be pursued separately.
  4. Partnership with the private sector is critical.
  5. Innovation is the only sustainable competitive advantage.

 

Nebraska's Systems
Nebraska is composed of at least four systems; the sub-systems work independently but function as part of the total system, which is Nebraska:

  1. Federal, state and local government
  2. Business and industry, agribusiness
  3. Non-profit foundations
  4. Human capital

 

Federal, state and local government
The state and federal levels of government serve many functions in the management of local governments and their citizens, including developing and maintaining infrastructure.

The world is using the Unites States' public infrastructure model in their countries to maximize their global trade opportunities, which further emphasizes the importance of evaluating and updating our infrastructure. A balanced approach to infrastructure planning could be accomplished through a collaboration of business and community leaders and federal and state agencies that are responsible for upkeep and development of that infrastructure.

Matthew D. Chase is Executive Director of the National Association of Development Organizations (NADO) and stated in early 2008:
"Our global competitors have learned from the economic history of the United States. A nation must invest in its public infrastructure, whether broadband, water and sewer, health care centers, workforce training facilities or transportation, if it is to efficiently and effectively participate in national and global trade. Access to markets is critical, both for our agricultural community as well as other sectors of the economy such as tourism, health care, energy production, manufacturing and service industries.

"As reported by The Economist in February 2008, China has spent more on its roads, railways and other fixed assets between 2001 and 2005 than it spent in the previous 50 years. Since the 1990s, China has built an interstate expressway that is second only to our interstate system. Their work isn't complete as they remain focused on linking communities with high-speed rail, 97 new airports and more than 300,000 kilometers of new roads.

"These investments are not just taking place in urban areas; much of the emphasis is on connecting its vast rural landscape and workforce to trade centers and markets around the world. Other emerging markets, such as India, parts of Europe and many sub-Saharan Africa nations, are also spending an increasing portion of their Gross National Product (anywhere from four to eight percent vs. slightly about two percent for the U.S.) on infrastructure upgrades and improvements. Sure, they may have far more pressing unmet needs than we have. However, these nations are making strategic investments aimed at connecting nearly 70 percent of the world's workforce to the rest of the globe. The competitive challenges facing America's industries are just beginning."

Business and industry; agribusiness
Telecommunications has allowed Nebraska businesses to participate in the global economy. According to Telecommunications Industry News (reported by Scarborough Research), broadband penetration has grown by 300 percent in the United States in the past six years, allowing people to become online entrepreneurs.

Approximately 49 percent of American adults now have a high-speed Internet connection in the household, compared to just 12 percent in 2002. The Digital Subscriber Line (DSL) represents the majority of this increase, with DSL increasing by 575 percent in the past six years.

"Broadband has made it possible for Nebraskans to live where they choose.

Broadband has made it possible for Nebraskans to live where they choose. Using online capabilities, they can attend college, conduct business, obtain research and use functions such as Global Positioning Systems (GPS) and Wi-Fi (wireless Internet) for navigation and crop production, according to Telecommunications Industry News. This capability allows people to sell merchandise or services worldwide.

The Kauffman Index of Entrepreneurial Activity is the leading indicator of new business creation in the United States. Published by the Kauffman Foundation, this index captures the first month of significant business activity by new business owners, and is the earliest documentation of new business development in the country.

In 2007, changes reported in entrepreneurial activity include:

  1. For men, the entrepreneurial activity rate increased from 0.35 percent in 2006 to 0.41 percent in 2007. In contrast, the rate for women decreased from 0.23 percent in 2006 to 0.20 percent in 2007.
  2. Latinos' entrepreneurial activity increased from 0.33 percent in 2006 to 0.40 percent in 2007. Additionally, the entrepreneurial rate of immigrants rose from 0.37 percent in 2006 to 0.46 percent in 2007, which compares to an activity rate of 0.27 percent in the native-born population.

Agribusiness has always been a basis of Nebraska's economy. Today, the state's business and industry profile has diversified, though agriculture and its related businesses are still a large percentage of the state's total economy. Food and water are fundamental resources that are almost impossible to replace if we don't manage them properly. It is up to us - the citizens of the world - to make the final decisions in agribusiness. We must address long-term planning over short-term profit decisions if we intend to pass on a healthy system to the next generations.

A.V. Krebs wrote in The Corporate Reapers: The Book of Agribusiness (Essential Books: 1992):
"Food, next to life itself, has become our greatest common denominator. Its availability, quality, price, and its reflection of the culture it feeds and its moral and religious significance make it quite literally history's - staff of life.' Today, in the never-ending worldwide struggle to determine who will control its production, quality and accessibility, food is no longer viewed first and foremost as a sustainer of life. Rather, to those who seek to command our food supply it has become instead a major source of corporate cash flow, economic leverage, a form of currency, a tool of international politics, and an instrument of power - a weapon!"

Victor Davis Hanson, a former California raisin grape grower, wrote in Fields Without Dreams (Free Press, 1996):
"The final verdict on the future of the American farm lies no longer with the farmer, much less with the abstract thinker or even the politician, but rather with the American people themselves - and they have now passed judgment. They no longer care where or how they get their food, as long as it is fresh, firm and cheap. They have no interest in preventing the urbanization of their farmland as long as parks, Little League fields and an occasional bike lane are left amid the concrete, stucco and asphalt.

"They have no need of someone who they are not, who reminds them of their past and not their future. Their romanticism for the farmer is just that, an artificial and quite transient appreciation of his rough-cut visage against the horizon, the stuff of a wine commercial, cigarette ad or impromptu rock concert. Instinctively, most farmers know this. It's the real reason they are mad."

Thomas Jefferson, in a letter to John Jay in 1809, said:
"An equilibrium of agriculture, manufactures and commerce is certainly become essential to our independence. Manufactures sufficient for our own consumption of what we raise the raw materials (and no more). Commerce sufficient to carry the surplus produce of agriculture beyond our own consumption to a market for exchanging it for articles we cannot raise (and no more). These are the true limits of manufactures and commerce. To go beyond them is to increase our dependence on foreign nations and our liability to war. These three important branches of human industry will then grow together and be really handmaids to each other."

Non-Profit Foundations
Nebraska non-profit (501(c)(3) organizations are businesses, and must demonstrate to their donors they are competent. They must prove they understand their market, can provide adequate services in a cost-effective manner, and are working to become sustainable. Public and private partnerships will become essential.

Non-profits are an essential part of the state's safety net for its residents; they fill gaps in the government's work by providing services that business and industry consider to be unprofitable from the standpoint of return on investment.

Most non-profits are funded by grants, government support and business and individual support. In 2006, there were nearly one million of these organizations; almost a 70 percent increase from 1996 (http://nccsdataweb.urban.org/PubApps/profile1.php?state=us). As the number of non-profit organizations increases, competition for donors also increases, threatening sustainability of individual organizations.

Non-profit organizations can protect themselves by creating a new way of doing business to assure sustainability. One option is to generate earned income to support its social purpose through the sale of products or services, which is the classic model of a For-Profit business.

According to David Rendall, Assistant Professor of Business/Management at Mount Olive College in Goldsboro, North Carolina:

  1. organizations should combine service with business;
  2. social enterprise should participate in the Experience Economy;
  3. organizations should not take on business models that have been rejected by the private sector;
  4. organizations should consider audiences that are willing to pay for the services provided;
  5. organizations should start a social enterprise that can make money; then fund charitable pursuits.


Human Capital
Nebraska's future depends on its human capital. Entrepreneurs of tomorrow won't be like the entrepreneurs of the past; they will be Millenials; baby boomers in a re-defined capacity; and immigrants. Each group has its own attributes and needs.

Millenials
Millenials are now 10-27 years old; this is an age group that will be crucial in the next decade. In that time, half of all certified teachers plan to retire, as do the majority of federal workers. Millenials may not have much capital, but they generally have superior technology skills, and many may have learned to be entrepreneurs, either through formal training or through starting their own businesses, according to Rick Telberg, editor-at-large for the newsletter of the American Institute of Certified Public Accountants.

Young people must be involved in decisions affecting future planning. Not only will they introduce their own interests and learn about the global economy, but they will gain a sense of responsibility and excitement about the state and its future. Studies show that leaving children out of the future planning equation has led to the development of many "people-un-friendly" places. Additionally, young people have information on what is wrong and right in their communities (www.activelivingresources.org).

Baby Boomers
Baby boomers were born in the years following the end of World War II and are retiring in great numbers. Sixty percent of workers employed with the federal government indicate they are on the edge of retirement, and many industrial and civic leaders are approaching retirement (Connecting Generations: The Sourcebook by Claire Raines).

These baby boomers will bring about widespread change in the future. Many have worked in corporate environments, and through retirement or displacement, they will continue to work with skills honed from their previous careers. They may turn their hobbies into businesses; they may apply business skills to humanitarian projects.

Baby boomers may have money, but may not have pensions; they have skills, but may be weak in new technologies; they want to continue to work; they have a vast network of contacts; and they know traditional ways of doing business (Rick Telberg, editor-at-large for the newsletter of the American Institute of Certified Public Accountants).

Immigrants
Immigrants have contacts in foreign countries; they know other languages and cultures; they experience difficulties with English and American culture; they have an exceptional urge to succeed; they have little capital, but do have a drive to earn money (Rick Telberg, editor-at-large for the newsletter of the American Institute of Certified Public Accountants).

Conclusions
Nebraska can't be all things to all people, nor can it implement all the projects or wishes of the residents all at once. We can, however, prioritize projects in a fair manner and, in time, create synergy in the state.