"If you don't like change, you'll like irrelevance even less." This is one of my favorite quotes, attributed to now-retired Army Gen. Eric Shinseki. Case in point: Blockbuster could have been Netflix, but the company failed to respond to evolving market conditions and went out of business.
Change in dynamic organizations is constant; successful entities are continually questioning existing strategies and pursuing new initiatives. Yet it's comfortable to fall into a routine of doing today what was done yesterday, regardless of its effectiveness.
On the other hand, it's uncomfortable to objectively assess what's working and what's not — to research and dream about more beneficial outcomes and to ultimately take the risk in pursuing alternate paths. For example, etailz, the company I cofounded, pivoted a few years after its formation away from selling environmentally friendly products via a direct website to offering a vast array of merchandise on third-party marketplaces. This change was difficult and not broadly embraced, yet had we not evolved, we likely would have suffered the same fate as Blockbuster.
The Spokane region is asset-rich in many areas and has world-class expertise in several industries. But are we deploying our resources and prioritizing our economic development efforts to optimize economic growth? A simple, useful framework to evaluate a portfolio of business units is the Boston Consulting Group Growth-Share Matrix, which judges industries by their growth rates and by their overall economic impact. High-growth, high-impact industries are "stars," while low-growth, low-impact ones are "dogs." Meanwhile, low-growth, high-impact industries are judged "cash cows," while a high-growth, low-impact combination equates to a "question mark." This is where speculative, fledgling industries usually land.
The goal, of course, is to allocate resources to the stars. Question marks should be analyzed carefully to determine whether they are worthy of further investment. Cows, exhibiting low growth rates yet high market share, should be "milked." As for the dogs, harsh as it may sound, they should be put to sleep.
Is Spokane properly allocating its resources to those industry sectors — the stars — that are expected to enjoy high growth rates and enable high market share? The poster child in this box is Healthcare Services and Information Systems, given the presence of such industry leaders as Sacred Heart Medical Center, the University of Washington School of Medicine, WSU Health Sciences, Inland Imaging, INHS, Jubilant HollisterStier, Paw Print Genetics, Medication Review and GenPrime, among others. Other star sectors include Telecom/Networking (Telect, Purcell Systems, 2nd Watch, F5 Networks, RiskLens and Ciena), Utility Services (Itron, Ecova and Safeguard Equipment) and Digital Marketing (Imprezzio, Kochava, Seven2 and etailz).
And what are the question marks that could become future stars? Some are speculating it could be robotics. Nick Smoot in Coeur d'Alene has done an exceptional job of branding his city as a robotics hub and has gained tremendous support from the local business community and research institutions. Robotics, like technology, is a broad label that can describe a range of innovation, including almost anything that automates an existing process. Companies in our region that fit this description include Next IT, Rohinni and xCraft.
This begs the question: Are we overallocating support and emphasis to certain sectors that, while perhaps providing steady jobs now, are likely to experience low growth? Cash cows have an important place in a portfolio, yet a disproportionate share of our resources should be devoted to rising stars. Where, for example, would Fairchild Air Force Base land on the growth matrix? Despite exhaustive local efforts, the Air Mobility Command recently announced that Fairchild was not selected as a preferred base for the next generation of tankers. Have we been devoting too much effort to legacy sectors at the expense of future opportunities that may provide a more robust economic upside?
We must have a healthy dialogue regarding which sectors are likely to exhibit high market share, but the exercise cannot be skewed by those protecting slower-growing industries. Unless, of course, businesses within other mainstay regional industries — defense, agriculture and mining, for example — are thinking outside the box and pursuing game-changing, disruptive innovations. Locally, Berg Manufacturing is an industry leader in designing and manufacturing entirely new shelters for the defense industry, HyperSciences has developed technology that increases oil and gas drilling rates by 10 times compared to conventional methodologies, and Farb Guidance is developing self-driving tractors for the agricultural industry.
To act upon whatever conclusions such an analysis shows us, we'll need to learn to think the way investors do as they seek the next big things. And we need to foster a local culture willing to embrace change. Choosing to focus on the right sectors, investing in innovation and highlighting the incredible quality of life offered by our region will ensure that Spokane is not "Netflixed" by other cities seeking economic growth. ♦
