Government - Written by on Monday, July 19, 2010 10:43 - 0 Comments

Haydn Shaughnessy
The Virtualization of Place

The unloved son of recessions is the place. The town or city. When the going stops being tough for national economies places pick up the pieces. So how can places respond to the situation they now find themselves in? Added to their woes is another issue that is part consequence of the road into  Government 2.0. Place as the primary source of job creation might be a thing of the past as the network takes over.

First, where do we stand on recession? There’s still room to debate whether we are in or out of it. Officially the USA is out but with concern about a double dip, with Krugman giving odds of 2:1 against back in January and the mood worsening a little since in some quarters. Friday of this week will be something of a watershed as the EU releases the outcome of its bank stress testing against a backdrop of rising industrial production.

It seems though there is still plenty to fear in the system, hence the stress tests, and this might still be the big issue  ahead of worrying over regeneration – do we still know the full extent of the problem?

The UK Office for National Statistics last week announced that UK public debt is five times its published level at 5, not 1, trillion GBP. Spanish debt levels far exceed those of Greece. Last week it emerged that 400 Spanish local authorities were unable to pay their utility bills with an empty payroll looming in August.

Whether the stress tests look good or bad the markets are already sounding cautionary notes about the tests themselves. All this is a way of saying if you manage a small town or a big city, your work is going to get tougher. You have opportunity in the age of Web 2.0 and Government 2.0 but the chances are your revenues are in decline.

Places currently lack a comprehensive management theory perhaps because they are rooted in traditional urban or rural spatial planning paradigms.

Over recent years places have been buoyed by the development of direct inward investment  as a supplementary way of managing employment creation and by cluster theory (another way of saying specialize your local labor force) or by the idea that the creative class can provide an engine for renewal. Grafted on to these fruitful but dislocated principles is place-branding, and the big gamble – sporting events and creative festivals. Get a big sporting event and like London you can justify spending $10 billion on regeneration programs.

The problem for many cities and towns is that even as they try to adopt these strategies, they are deprived of funding – national policies invariably hit the local in a variety of ways – lost rates on empty properties, people moving out, retailers shuttering.

Web 2.0 and Government 2.0 both create the infrastructure for people to get involved in their places once more, which is an unquestionable good. But I want to raise the question – is place management adequately developed as a managerial discipline?

I saw three initiatives recently that made me think another theme in place identity is springing up – the virtualization of place.

Boston has set up a global Boston alumnus network, Boston World Partnership, casting the net of stakeholders across the world. Places are beginning the search for a new type of identity, embracing the world outside their walls as part of the concept of place. Ireland recently announced a “certificate of Irishness” for the 70 million people of Irish descent who do not qualify for citizenship. Detroit too is exploring the language and benefits of becoming a global city focused on the origins of its residents, using the Web to connect to distant economies where there are established relationships through immigration.

This unhinging of place from its physical roots is not just Web 2.0 or Government 2.0. I think it will lead to a more profound acknowledgment of how interconnected we are and it will lead to an interesting debate around how towns and cities compete with each other, a debate the enterprise has to be interested in because that competition is often the lever for relocation subsidies; and an exploration of how virtual clusters, such as those we see in software ecosystems like the Apps Store, connect to local economic development.

As they explore these areas I sense cities and towns will need more theory, more cases and more guidance for the decisions they make and need to justify. It’s the time for place right now.



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