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25/06/2020

Competitive advantage in the time of pandemic

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Recently I was chatting with a mate, trying to convince him that I thought there might be a decline in ‘nation states’ and ‘globalisation’ and a consequent rise in distinctive regional economies like our Cradle Coast region.  But my mate was sceptical and said, well ‘what does our region have that gives us a competitive advantage?’  And so I began to think (and COVID-19 seems to focus the mind), well what would be sustainable into the future and what gives us a competitive advantage over other regions throughout the globe?  Now a lot has been written about ‘advanced manufacturing’, and ‘advanced manufacturing’ is good.  But it is not an industry in itself.  It is a methodology to manufacture a widget in an advanced way.  And, as we have seen over recent years, you can manufacture a widget in an advanced way in Burnie, in Bangkok, in Beijing – you can transfer the process wherever you want.  So ‘advanced manufacturing’ in itself, does not give the Cradle Coast a competitive advantage.  It does not ‘future proof’ it.

There is a professor at Harvard University called Michael Porter who is a ‘guru’ in the area of competitive advantage.  He talks about ‘differentiation’, or in other words ‘distinctiveness’, as one of the ways that a regional economy can achieve competitive advantage.

So what are the factors in our region that make us distinctive and can therefore give us a competitive advantage?  To my mind, there are probably three factors.  Firstly, our people.  Amongst other terrific characteristics, we are creative and we are problem solvers.  If there is something that needs fixing, we will fix it.  And we will fix it without too much outside interference thanks very much.  Secondly, our culture.  Now here I refer to both our ancient ‘first peoples’ culture and our more recent history.  And finally, our landscape.  Our valleys, our rivers, our mountains, our forests, our pastures and all that they enable.

I think each of these three factors can enable industries and services that will give us a competitive advantage.  However, it is our landscape and the sustainable industries and services that flow from it, that I think need to be concentrated upon and supported.  Locally owned industries that are so embedded in our landscape, that they can’t be ‘off-shored’.   So, to my mind, value-chain agribusiness, renewable energy industries and high value tourism are examples that flow from our landscape, are embedded in it and have the capacity to future proof our regional economy.  It may well be however, that some of these ‘landscape embedded industries’ are not even thought of at the moment, and so we need mechanisms to think about, plan and implement them.

There are of course ways to establish these future industries.  One of them is to find an entrepreneur like David Walsh or Elon Musk and get him or her to establish a completely new industry and then businesses will be established to support this new industry in the local economy.  Another way to do it, is to enhance the value chain for an already existing industry – producing the raw material (in a sustainable way), processing it (in an ‘advanced manufacturing’ and sustainable way) and distributing the finished product to market (in an efficient and sustainable way).  An example of enhancing an agribusiness value chain might be taking the alkaloids industry to the next stage and establishing a local pharmaceuticals manufacturing industry.

What all this needs is an alignment of our institutions.  An alignment of our government (both Commonwealth, State and local), our industry leaders, our community leaders, our education and training sector and yes, our University. To my mind the instrument and methodology for this alignment in order to establish a regional economy that has a competitive advantage, is ‘future proofed’, and sustainable, is the Cradle Coast Authority’s Futures Plan.

The Futures Plan approach is already delivering for our region and will help us achieve great things if we all get behind it. An effective Regional Economic Development Steering Group is identifying regional priorities and ‘going into bat’ for us in Hobart and Canberra, and a number of industry-based Working Groups are doing valuable work, ably supported by economic development staff from all of our local Councils. It’s a unique approach underpinned by a level of cooperation and goodwill that is the envy of other regions.

Steve Allen is a voluntary member of the Cradle Coast Authority’s Audit and Risk Committee.

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