Inclusive and profitable economic ecosystems can be built, invested in, and scaled.
That was my core message at the recent Fast Company Impact Council Annual Meeting, where I joined innovative business leaders to discuss what it will take to rebuild America’s competitive edge. I sat on the mainstage alongside Jean-Claude Brizard, president and CEO of Digital Promise, and Deirdre White, CEO of Pyxera Global.
Prompted by Brendan Vaughan, editor-in-chief of Fast Company, we each addressed the limit of investing in binary thinking. Jean-Claude highlighted the pitfall of adopting sweeping prohibitions on technology use in schools without engaging educators skilled in tailoring the use of education-enriching technology. Deirdre discussed the profitability of recapturing rare earth minerals from our nation’s mountains of discarded technology tools and toys.
I challenged the false economic choice between profitability paired with inclusive growth and development. Economies can become more resilient, dynamic, and competitive. But only when more people, communities, and local institutions can participate in growth. We need to ensure that investment capital access broadens economic participation by America’s most talented and innovative people. This will help us to rediscover our competitive edge and reset generational expectations about national prosperity.
EXPAND THE PARTICIPATION BASE
In our 35 years, we at Living Cities have learned that cities thrive when civic leaders and investment capital—private and public—are aligned around the decisions and opportunities needed for residents and regions to thrive. When aligned leaders consider opportunities that grow economic participation, capital’s aggregate value predictably exceeds investment levels constrained by patterns of exclusion. Limiting who gets to build, grow, and own companies hobbles our competitiveness. Expanding the base of participation and investment incentivizes greater economic participation, creates new markets, and expands ownership.
We are facing multiple crises of affordability, public economic safety erosion, and the effects of a ballooning national debt. We can get through these crises by investing in overlooked people and places. This is how new entrepreneurs and new markets, along with new engines of growth, will rebuild the American economy. When more people have access to capital, more people can contribute to the economy. That includes hiring, owning companies, and innovating.
CAPITAL NEEDED TO IMPROVE COMPETITION
Three forms of capital are essential to sharpen our competitive edge:
1. Knowledge capital
Knowledge capital is the information, knowledge, and insight that helps us build on our potential and translate that into growth. Absent knowledge capital, financial investment capital can be costly and wasteful. It can feed narratives that close instead of open doors.
2. Social capital
Social capital connects people to networks, partnerships, and pathways. Here, we share essential information and insights, along with experiences. This is where we can establish transactional trust. Better networks make connections to better deals, which can lead to more durable growth.
3. Financial capital
Financial capital is the last piece of the puzzle. Investors should broaden their scope to include entrepreneurs, owners, and innovators from communities left out of prior investment waves. Only then does capital becomes more expansive and productive, along with being potentially profitable.
DO MORE THAN FUND THE NEXT IDEA
We see the three types of capital leveraged for a more competitive edge in places like Atlanta, Nashville, Miami, Charlotte, and Memphis, where Living Cities coordinated investment to strengthen business ecosystems. We did so by connecting public, private, and civic leaders to entrepreneurs from communities that were systematically excluded from economic development. Assisting leaders in centering their shared goals and objectives enabled them to reconsider approaches and practices. These practices reinforced unintended exclusions that undermined broader opportunities. We see this everywhere, and resolve to help leaders collaborate and achieve tangible impact. We want to help create conditions for broadened and sustained investment.
If America is serious about rebuilding its edge, all leaders will have to do more than fund the next idea. Leaders need to pave the roads to business innovation and expanded ownership. This will create more inclusive economic opportunities and expand markets. We must collaborate to build multiple local ecosystems that invite innovation and clarify access to knowledge, social, and financial capital. If we can do this successfully, we can build the strong and inclusive economy we need today and for our future.
Joe Scantlebury is president and CEO of Living Cities.