Pittsburgh: The Surprising Rebirth of America’s Industrial Centers

Pittsburgh Technology Council President and CEO Audrey Russo was quoted in Forbes.com’s “The Surprising Rebirth of America’s Industrial Centers.” Looks like the world is paying attention to the Rustbelt as an emerging center of innovation with Pittsburgh at the heart. Here’s the intro to the article below. Read the whole thing here.

Move over, Silicon Valley. The American Rust Belt is going fiber optic. Though local economies built on manufacturing may not sound like the perfect candidates to transition into the new economy, cities like Cleveland, Detroit and Pittsburgh are proving otherwise.

Pittsburgh is an especially robust case in point. With 23% of Pittsburgh jobs and 40% of they city’s payroll now coming from tech, the emerging industry is an official force in the nation’s famous Steel City.

“There isn’t a week that goes by that I’m not approached by outside investors,” said Audrey Russo, president and CEO of the Pittsburgh Technology Council. “The activity has been quite profound, particularly over the last few years.”

Innovation: The New World Order

By Audrey Russo, President and CEO, Pittsburgh Technology Council

With the explosion of co-working spaces, incubators, accelerators, technology parks or whatever the new manifestations of business building are referred to now, we are certainly at a time when what we refer to as “work” has new descriptors. The analysis of these causes are endless, and from my point of view, newer behaviors of what we refer to as “work” are evident, impacting talent attraction as well as the proliferation of changing beliefs about “work.” Technology has brought us to this next era of “work.” The continued optimization of traditional work processes means that people are no longer performing dangerous or repetitive jobs. Technologically driven processes, particularly in North America, allow us to perform the same work with less people all while improving safety and higher production. Innovation has compounded at every business touch-point. We have moved away from physical repetition to what is referred to as cerebral or knowledge work. This explosion of alternative work and learning models are not a fad. This is how the new world learns and exudes impact.

However, our educational institutions have not kept pace with these changes in the business world. While we wrestle with the enormous task of revamping curriculums to match the demands of the professional realm, the skills currently being taught from the preschool to postsecondary levels are largely not applicable in our innovation-driven economy. The lag is considerable and worrisome to say the least. Shifts toward new models of education, such as home schooling, private schools, and new standards of learning are encouraging, but are not nearly to the scale the modern U.S. economy requires.

What has occurred as a result of this lag in education? A sustained level of unemployment higher than we have ever witnessed in the recorded history of labor statistics. There are other troubling realities that could be attributed to this shortcoming. It could be both simple and complex as this: the preparedness of our workforce is woefully misaligned with the evolving demands of the business world. Combine this with the fact that an entire sector of experienced middle managers suffered a permanent setback during the most recent economic downturn, and the sustained unemployment rates and economic stagnation we are currently experiencing is not at all surprising.

There is a silver lining to our current dilemma however. As with all seismic shifts, new formations and new ways of working are inevitable. More so than ever before, we are witnessing a growing sect of workers who, out of either desire or, more likely, out of necessity, are experimenting with their ideas, and ultimately their lives, to start new ventures. Technology has made the process behind developing ideas and rapid market deployment much easier. We first witnessed this new reality during the Internet boom of the late 1990s, when entrepreneurship entered the mainstream, and now see its manifestation again as entrepreneurship has become a widely accepted career path for recent graduates, as well as experienced middle aged professionals who were forced to reinvent themselves (Paul Graham**).

The collision of efficiency, technology, angel investing, and speed to market (particularly in areas other than life sciences and biotech) have made innovation-driven entrepreneurship a staple of our economy and a reliable engine in creating new wealth. We must embrace the new ways of working that incubators, accelerators and co-working spaces are popularizing. Critics will say that these entrepreneurial-based models are merely a temporary stop-gap while our economy recovers and the large, traditional corporations regain their footing in the international economy. To dismiss these collaborative ways of working and creating as a fad or trend is a mistake. We must embrace and foster the skills that are essential to innovation because it is the new world order.

For proof of this reality, one needs to look no further than our largest corporations, who desperately search for innovation engines on a daily basis and actively foster a culture of “intrapreneurship” to drive new product development and increase sources of revenue generation. While we are immersed in these shifts, I find it crucial to take an aerial view of what is actually occurring with the intention of positioning the work we do at the Pittsburgh Technology Council as contributory to the business community; concerning ourselves with how we provide strategic and innovative support, to overcome impediments to ensure our region’s acceleration into this next era. Our team is both lucky and privileged to work alongside the captains of all these industries, who have either leveraged technology to remain competitive or built solutions to drive efficiency. I know that our work in public policy must be forward-thinking, not incremental. It also means our perspective about learning and talent development must be disruptive; understanding that creating and making are inherent of curricula at all education levels. Both physical and computational skills must be developed simultaneously; these skill sets cannot be bifurcated to be useful in our innovation-driven global economy.

As I look at the explosion of incubators and co-working spaces, I see how the next generation of big ideas are occurring. The collision of the human spirit paired with fortitude, desire and autonomy illustrates that learning outside of traditional environments is the path to prosperity. These are skills that ensure self reliance; after all, working in one job, for one company, throughout a lifetime, is not expected. Why would we do anything other than embrace the proliferation of these new micro economies?

** http://paulgraham.com/invtrend.html

Navigating The Government Marketplace: An Insider’s Insight

By Joe Kuklis

Taking advantage of the government marketplace can be nuanced and long winded, but government checks don’t bounce and federal, state and local governments buy everything from paperclips to tanks. It is without a doubt the largest market segment that most businesses could ever dream of but why do so few seize the opportunity to serve it?

For one, the perception is dealing with the red tape is encumbering and that getting paid takes far too long. In some cases this was true, but the government in all of its iterations has gotten more efficient in its RFP and administrative processes over the last two decades. Are they 30 day payers? They are rarely but who is in these economic times? The truth is, government is willing to pay fair market value and in some cases higher for a service or product from a company that has a strong record of delivery and performance. These days, it is no longer “low bid” but “best value”.

So how do you as a small business owner take advantage of this incredible market place? Here are a few tips from my new “how to” guide, The Robin Hood of DC:

  • Explore whether or not spending the time to get on the government vendor lists are worth it for your company. It may take some time and effort with forms and waiting, but in the end, receiving valuable RPFs and sole sourced contracts can be a great way to supplement your sales numbers and expand your client base.
  • Work with your elected officials. They can be great legislative champions and help expedite this vendor process. Remember, they are there as public servants and it is in their best interest that they help your company grow in their districts/states.
  • Be patient. The government is a juggernaut and it takes time and effort to win business. But once you break the government inertia, it is also just as hard to stop. If you do quality work and perform, the word will travel from one department to the next. There’s only one or two degrees of separation between managers in this community and referrals travel fast.

Joe Kuklis, expert political lobbyist and head of  Duane Morris Government Strategies, has built a successful career lobbying for organizations and businesses of all sizes – he and his staff have helped raise a half a billion dollars for clients ranging from Fortune 500 corporations to one-person start-ups. Joe’s book, The Robin Hood of D.C., is an insider’s guide to the government marketplace for small, mid-sized and large businesses. Visit www.robinhoodofdc.com for more information on this topic.

 

 

 

Potential is Interesting. Performance is EVERYTHING.

 

By Gerry Peterson, Founder of Tartan Group, LLC- Executive Search, Gerry@TartanGroupLLC.com

The hockey community in Pittsburgh continues to analyze how the talent laden Penguins could get swept in four games by Boston and exit the Stanley Cup playoffs. Pens General Manager, Ray Shero, brought together a star studded line up yet the team came up short of meeting expectations. Unfortunately the story of top talent with high potential failing to meet expectations in an organization is not uncommon.

The Pens added star players late in the season and did not perform well as a team. In a world where performance is EVERYTHING, understanding how the parts form the whole team is important. The Pens had skilled players with tremendous potential. The fans are critical of the Pens with cries that the stars did not perform. Hockey is a team sport dotted with star talent. Winning a championship requires both talent and a coordinated team effort.

Bruce Tuckman, in 1965 identified the stages all groups pass through to reach top level performance. Tuckman’s Stages model of Forming, Storming, Norming and Performing is well known to students of group transformation. Tuckman did not define a time line for each stage however the process is linear with each stage clearly defined. To reach the Performing stage the group must pass through each of the earlier stages.

The lesson for business leaders is to recognize when adding top talent in a team environment they need to include an integration plan. Integrating a new team member into the group requires a planned approach. On boarding programs can accelerate the process resulting in the team reaching top performance more quickly. A question for fans to consider: Did the Pens integrate the new talent into a performing team?

We have all observed executives with notable pedigrees fail to achieve results. We are familiar with stories of people with tremendous potential on paper and with success in other organizations failing to meet performance expectations in a new environment. Adding talent alone will not ensure performance in a team environment. There are many elements that must come together for success.

The commitment to follow through with a team integration plan is important! On boarding programs will also reduce the chance of executive derailment. Analysis by fans trying to understand the Pens defeat will continue well into next season. Adding talent with potential alone is not enough to reach top performance. When looking to maximize the return on your investment in people (ROI), do you have a program to ensure your new talent acquisitions are fully integrated into your team? Potential is interesting. Performance is EVERYTHING!

 

Diverse strengths are essential to Pittsburgh’s long-term vitality

By Audrey Russo, President/CEO, Pittsburgh Technology Council

Every year we release our State of the Industry Report, which provides a three-year overview of technology-related businesses in the Pittsburgh region. While this data tells us about salary and growth in the number of companies, it also provides information about venture capital. An area of needed growth is to ensure that we have access to risk capital, which provides the fuel many companies need to start, as well as manage their accelerated growth.

While the region’s unemployment rate has remained lower than the national average over this same three-year period (2009 – 2011)* , we see that IT, Advanced Manufacturing, Advanced Materials and Environmental Tech company formation and job growth has remained essentially flat with wages increasing. The most noteworthy growth is in Energy Technology, with company formation up more than eight percent, and wages and number of employees both up 11 percent. This is the largest growth of any sector we track.

When I look at the Life Sciences, which is the smallest cluster in terms of companies and jobs, there was a slight, almost negligible increase in companies; however the wage growth of six percent with an earning average slightly below that of the energy technology sector tells me that we have a life sciences cluster that remains strong. This is the area where the region could benefit the most from additional venture capital investment. Based upon the longer lifecycle inherent to life science companies getting their products to market, companies in this sector seem to pursue product development at a rate proportionate to the amount of money raised, the number of companies receiving investment and the number of venture capital funds investing. Hence, the smallest cluster attracted the most investment. This is also the most difficult cluster in which to launch a company, given the FDA requirements and the human clinical protocols. The long-term investment strategy in this sector is well recognized. We have strong deal flow evident by the research strength of our universities. This cluster may well be our region’s solid underpinning for long-term, post-secondary degree talent attraction and retention. A higher base salary average for specialty skills paired with research should serve as a hub for diverse talent.

Intuitively, the growth in energy should come as no surprise, but the flat performance of the remaining tech sector is certainly worth exploring. Salaries are increasing in these sectors, but at the Council, we hear about the difficulty in finding developers and engineers to fill positions at startups, as well as at established companies. The alignment of existing skills with vacancies appears to be mismatched. The overall unemployment rate remains relatively low, the demand for jobs is high and the actual growth of jobs remains flat. Are we at risk for new companies to be built here if the talent in these clusters is not available?

Life sciences companies, while small in number, have contributed to the exposure of the region through the follow-on investments they have attracted. More than 30 venture firms from outside of the region have invested in this cluster, comprising 34 percent of funds raised. Many of these same investors are discovering great companies as a result of their life sciences investments and subsequently are exploring Pittsburgh’s information technology startup companies. We find that once they connect with our tech ecosystem, these outside investors are very interested in establishing deeper relationships across all the business growth areas.

The 2013 State of the Industry Report provides an insightful review of where we have been, but it also guides us in planning where we need to focus our efforts. Access to risk capital across the information technology cluster remains critical for the region. Supporting the commercialization of technology from the universities also serves as a pipeline for company creation. Talent attraction strategies for seasoned entrepreneurs in addition to technical skills will augment the efforts of new business development. But we have to be more focused and aggressive with these efforts. Building this ecosystem for the next 30 years should take on more urgency for us. We cannot remain flat in information technology, advanced manufacturing and finance, while we build the life sciences and energy tech sectors. A diverse portfolio has long been this region’s strength.

 

* 2009 – 2011 were the last years for which data was available