Exponentiality

One of the things that I grapple with is this issue of exponentiality in economic development. How do you take a kernal of economic development and turn it into a huge tree that keeps cranking out economic benefits for decades.

The call centre industry in New Brunswick has a bit of this in it but I am looking for other models. How does Halifax turn a nascent financial industry (9-10 firms with a couple of thousand workers when they are built out) into a back office powerhouse like Edinburgh with 100+ firms and 30,000 workers? How does an aerospace cluster emerge from a few small players?

Take aquaculture. Now, some of you might know all the back story here to take my comments as an exemplar. The industry was developed – with the help of government and university R&D -and a few private sector players dove in and eventually we had a $150 million industry with likely double that in total economic activity in New Brunswick. Then the industry tanked a bit, had problems and consolidated and now is doing reasonably okay.

But my point is how come we didn’t blow that out into New Brunswick becoming a world leader in aquaculture? I realize we are restricted in the availability of farmable sites (onshore and offshore) but why didn’t New Brunswick emerge as the idea hub for the industry. The head office of aquaculture development?

For example. I just listened to a BBC documentary on the emergence of deep water, offshore aquaculture. There are some that say this industry will be huge and are already predicting it will generate 40%-50% of total fish protein need within 30 years. Why doesn’t that eminate out of New Brunswick? Weren’t we among the first in back in the 1980s?

Imagine that New Brunswick was the home base for a multi-billion offshore, deep sea aquaculture industry. All the head office jobs, all the R&D jobs, all the remote monitoring stations, all the travel to/from the farms, the harvesting jobs, the shipping jobs, the conferences, the university jobs, the manufacturing jobs, etc. You get the point.

How do we take a small, homey industry with some hard working farmers and seasonal workers and turn it into a global powerhouse? Obviously we need the private sector to lead. We need a few global players (like this guy developing football field sized farms off Hawaii to grow tuna) to take the lead but what is the role of government? Of community leaders? Of the university community? Can we catalyze this or not?

Are we left to the whims of the market? Some guy in California with money and entrepreneurial spirits steals the IP from Chile and New Brunswick and adapts it to the offshore?

Michael Porter would say that these kinds of innovations should bubble up and out of an existing cluster – maybe like the nascent on in New Brunswick. But he is wrong. Entrepreneurs sniff out opportunity and steal ideas from places like New Brunswick.

Maybe the window of opportunity on aquaculture is closed. I don’t know. But what is next? What can we jump on with some government investment and strong private sector participation that could lead to an exponential industry growth?

Why does that matter? It matters because small, incremental growth won’t redress New Brunswick’s problems which have an economic core but that emanate out into social problems, under-education, chronic out-migration, lack of self-esteem, entrepreneurial timidity, lack of risk capital, etc.

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0 Responses to Exponentiality

  1. mikel says:

    To quote another theme, why ‘world leader’? What about just ‘player’, what about just having an idustry? Why is more than that necessary? Aquaculture already is a quarter billion industry and employs 5000 people.

    However, as for ‘growth’, again, years ago I mentioned the fishing community that wanted to build an inshore fishery for scallops, one of hte most expensive seafood items. That was a ‘community project’ so apparantly was not worht funding because no one person could get stinking rich.

    That’s important because fish farming is now the most heavily polluting industry on the high seas. A recent EU paper says “intensive aquaculture..has become synonymous with pollution and destruction of the marine environment”.

    Now some may say ‘who cares?’, but thats’ interesting because for those who like to dispute ‘folk wisdom’, scallops and shellfish are actually quite ecologically benign compared with finfish.

    Thats important because in this case its the simple act of funding somebody who ASKED for it. No, its not ‘deap sea’, but so what? It’s actually community based, designed to create jobs, not wealth, has a proven track record, and is environmentally sustainable. Maybe thats WHY its ignored by government. Or maybe its just in a liberal riding when the tories ran the show-who knows.

    But it doesn’t take billionaire investors, again, its a political problem. The simple answer is you CAN”T get public policy decisions that favour people over investors til you are at least listened to by government. And I point this example out to show that it is NOT ‘the people’ who are standing in the way of progress, they WANT the progress, but probably aren’t going to jump on board if government OK’s a condo development for economic development (although some may).

  2. Anonymous says:

    Great post, and exactly how we should be thinking.

    We are actually doing well in aquaculture. We hosted a national aquaculture conference in Saint John in the last month. We have a successful NB company growing and acquiring internationl interests. We have scientists collaborating in international research. We are considered among the best in the sector along with Norway, Scotland and Chile.

    So, we need to be looking out for the next area of excellnce. And when we find it, education, research funding, policy etc should be adjusted to help grow it exponetially. It might be tidal power. Maybe is bio poducts from wood. Perhaps it is nuclear energy. Maybe environmental technology. Perhaps it is GM foods.

    These are the things our ED people should be researching.

  3. richard says:

    Does NB have a colonial mentality? Is that why we are not a leader in aquaculture? We certainly do not have the research structure in place that would supply the inovation required to be the leader. That research requires high paying jobs and provides a multiplier effect in local communities. So yes, it makes one hell of a difference if we are a leader and not just a player. Research can also improve the environmental sustainability of aquaculture.

    I see the same thing in many of our industries; even where we are big players, much of the high-paying work is done elsewhere. Seems we are happy with the crumbs.

  4. Anonymous says:

    Part of the answer is focus, or, more specifically sustained focus.

  5. Anonymous says:

    I will imitate Mikel to make my point. David, I think that you need to go back to your strategic management textbooks. Porter is not wrong for a simple reason: Innovation, by definition, CREATES BUSINESS VALUE, while the value of a great idea without implementation is ZERO.

  6. Anonymous says:

    Anon. 647 is bang on. Much of what gets recognized as innovation is simply creativity.

    There is abundent creativity at the moment due to the large funding available for academic research. If we want to see more INNOVATION we need to support market led research