(Many ideas from this come from “The Prosperity Paradox” by Clayton Christensen, Efosa Ojomo, and Karen Dillon)

Recently I read the book “The Prosperity Paradox by Christensen, Ojomo, and Dillon (named above). I highly recommend anyone interested in the economy or business in general to pick up a copy or listen to it digitally! Here’s what I got out of this book and how I’m relating it to where I currently am employed:

What built America and why is it so great…standing above many other countries? Although I’m not going to try and answer that question directly (I would say the book does), what I am going to say does imply the answer to the question above. True economic development starts with new-market-creating innovation. What new-market-creating innovation does is takes a product or service that is currently in non-consumption and democratizes the product or service by scaling it and making it affordable for the bulk of the people in the region. This usually means the company makes the product or service less expensive by scaling the product or service in a way that it brings the price down so those who couldn’t before afford it can now afford to purchase the product. There are many benefits to the region who hosts this newly created market. Some of these benefits include new jobs for the residents, improved or new infrastructure (both hard and soft), funding for institutions by way of taxes, and many additional horizontal businesses and infrastructure to support the new market(s).

In the mid-1950s, Thiokol Corporation invested in a plant in Brigham City, Utah (as well in Box Elder County) to build the Minuteman Missile. Even though the headquarters was not in Brigham City, the impact on Box Elder County was tremendous. A new “city” was built west of Brigham City where they had around 7,500 jobs, their own water, sewer system, fire stations, etc. Many new creations were formed or perfected out of this area including the airbag. Among other transactions, Morton-Norwich Products (Morton Salt) merged with Thiokol to make Morton Thiokol Incorporated (MTI). Morton Thiokol then split based on one being more chemical and the other being more propulsion oriented. Thiokol (now owned by Northrop Grumman) has perfected the solid rocket and Morton (now Autoliv) has perfected the airbag. Out of these two entities, we find the formation of what makes the bulk of the economy of Box Elder County. Allow me to take a step backwards, as most communities in Utah have started out, Box Elder County was first and foremost an agri-business focused community. At the start of the agriculture industry, leadership created a number of Co-Ops in order to best serve the industries around agriculture. These co-ops helped pull the industries together by building necessary buildings for storage and manufacturing of ag-related products. This industry created a very strong work ethic that continues today. Box Elder County needs to continue to focus on the agriculture industry to keep high-quality food and good work ethic.

Many institutions and governments believe we need to create the infrastructure before the investment comes into the region but history doesn’t reflect this idea. Think of how Henry Ford changed the car industry and the United States of America (if not the world). Before the new market was created, industry (Ford) paid for many of the infrastructure needed in order for him to fulfill his vision of getting a car for the average US citizen. He invested in new roads, railroads, steel mills, glass works, rubber plantations, etc in order to get reliable products for his operation. Henry Ford built the infrastructure before the government even understood the needs. This type of infrastructure investment is called a pull strategy which is the opposite of a push strategy. Many institutions believe if they push an infrastructure into a market the investment will follow (i. e. water development in Africa) but until there is a funding source to help create and maintain the infrastructure, the infrastructure will simply break down. The best thing an institution or government can do in these circumstances is to allow industry members to invest in what they need (pull) to do business and standardize the infrastructure as quickly as possible so others can utilize the same infrastructure. Other than those things, government institutions should step aside and simply allow these new market-creating innovations to progress which will pull in the needed infrastructure and pay, through taxes, for the needed services in the future. This puts into perspective the need for government to be a support to the businesses and people it is intended to serve. Government is there to help support and keep the playing field level. It is tempting in many instances for the government to put one business over another or to lobby for one over another (even though the government doesn’t lobby for one over the other). This may help in the short-term but what it does over the long-term we may never realize until it is too late. A government should continue to keep the playing field open for new markets to thrive and grow. In many poor countries, government institutions can help by bridging the financial gaps through funding from other countries that help them take that first step up the ladder. As these new market creating inventions start coming to the surface these governments can help in the form of low-interest loans or grants. This will help those new-market innovations to form, create jobs, and then pull the needed infrastructure into the region to support the new innovation.

The process of true economic development goes as follows: 1. New-Market Innovation is created, 2. Jobs are born by both the new market and other horizontal support businesses (cost centers within the new-market innovations as well as sustainable and efficiency innovations), 3. Infrastructure is pulled into the region and institutions are born bringing in additional jobs to support the new infrastructure (hard and soft infrastructure like roads and water to education and government), 4. This shifts the dynamic culture of the region where the poor or previous non-consumption market is now served and are employed who then become a consumption market, then, 5. Institutions grow through new taxes and it starts over with new innovation. Notice, institutions are the last groups to really see the benefit from economic development. This is because the institutions are there to support the people…if the people benefit, the institutions will benefit…not the other way around.

As an Economic Development professional, I have the opportunity to help build these new and upcoming innovations through the support I render. Since the days of Thiokol and Morton (Minuteman Missiles and airbag creation), Box Elder County has seen a great diversity among its employers including (to name just a few) Nucor (who has three plants in the county), West Liberty Foods, POST Cereals, Wal-Mart Distribution Center, Niagara Bottling, and Procter and Gamble (who is a prime example of a company who can stand the test of time through new-market innovation). Not only do we have these larger corporations in the county but we also have some fantastic entities who are creating new markets that are growing new industries including Lewis Cabinets who are now exporting cabinets all over the country, Honeyville Grain (you would be surprised how many products they sell in the stores), Skywalker Trampolines (good chance if you purchased a trampoline in the last few years you are jumping on one of their trampolines), and Valley View Granite (you should see the efficient way they are classifying and cutting granite). All of these great companies will continue to help grow the economy and help spur on new market innovation which will continue the cycle of 1. new-market innovation, 2. job growth, 3. new infrastructure, and 4. shifts in the culture that creates a catalyst for new growth. One of the opportunities we are currently working on that has a lot of future growth attached to it is the Unmanned Aerial Systems (UAS or Drones). We have partnered with Northrop Grumman (formally Thiokol among other entities) to utilize an old landing strip where we have formed a testing location for UAS. We are marketing the testing location in partnership with Deseret UAS and we are seeing a number of companies who want to grow this new industry. One of the biggest challenges we are hearing from these companies is they don’t have enough funding do pay for expensive testing areas which is why we have been lucky enough to work with a great company (Northrop Grumman) who is willing to help these small companies test there and the State of Utah has supported the cause by funding the build-out of the testing area with Box Elder County funds as well. We now have 1,400 feet of resurfaced runway, a testing office building, and are building a new hanger. As this new innovation industry grows and expands we will see products get shipped faster and cheaper, people traveling to their locations quicker and less expensive, and for those who have disabilities they will be able to do and go to places they never dreamed before without having to hire expensive alternatives which take them out of the consumer market all together. Unmanned travel is coming and will help change the world for the better for many non-consumers. Utah is a great state because the leadership in Utah looks at new growth as the way to keep moving forward. Utah sets the bar for the way incentives should work (post-performance). As far as incentives go, I would love to see the bulk of them tied to the infrastructure needs that benefit both the communities they serve and the company that installs them. Utah has done a pretty good job…are Utah communities perfect…no…but as close as I’ve seen in the US.

We have the ability through new-market innovation to change the world and get rid of hunger and poverty, especially in the US where we are one of the richest countries in the world. We have the ability to make this happen…if we allow it to happen, it will be done through new-market innovation (not through the government). As a government employee, I have found myself caught up in the programs and services we offer our businesses. Sometimes these programs aren’t really what a business needs…sometimes we just need to help them connect to other businesses or to help them vertically integrate and sometimes we need to help by getting out of their way so they can invest into the infrastructure and their needs in order to grow. We won’t end hunger or poverty without growing the economy where there is hunger and poverty (non-consumption). If your area has hunger or poverty or any other non-consumption potential, ask yourself some good questions including, why do we do this this way? Why do we believe what we believe? Why don’t we do this differently? What is our mission and why? Why are we in this business? Why do we do development this way? I clearly don’t have the answers but this book has opened up a new chapter for me in my growth and development and I am starting to see some new answers that I didn’t see before.

Take a few minutes and read this book. You will gain valuable insights and read through a number of different examples the authors site. I used one in this article (Henry Ford). The authors even give some additional examples of potential new markets around the world.