Articles

MISSISSIPPI CAN SUCCEED IN THE NEW ECONOMY (MISSISSIPPI BUSINESS JOURNAL; KEITH PARSONS) - AUGUST 7, 2000

by L. Keith Parsons, Attorney, Watkins Ludlam Winter & Stennis, P.A.

Doing exactly what everyone else is doing, except later and with fewer resources, is not strategy. Strategy is finding a niche where you can excel and create world class enterprises. Michael Porter, "What is Strategy?" Harvard Business Review (Nov-Dec. 1996).

To excel in the new economy, Mississippi needs a clearly defined strategy. One area of strength in the Mississippi economy that provides a solid foundation for future growth is the communications and information technology (CIT) industry. I believe that E-commerce fulfillment and distribution and biotechnology are also niches in which Mississippi could become a world leader.

CIT Industry

Mississippi already has over 150 communications and information technology companies in operation, many of which are world class companies. Efforts are underway to leverage this base using the "cluster" concept. A recent study by Michael Porter of the Harvard Business School, which was funded by Mississippi Technology, Inc. and several Mississippi business leaders, provides a blueprint for further developing this sector. Key components of the plan include the formation of a CIT industry association, enhancement of education and workforce training programs, and the development of incentives and government policies to support growth of the CIT industry. The Department of Economic and Community Development and private sector groups are working to implement these recommendations and the Governor has announced he will call a special session of the Legislature to address economic development later this summer.

E-commerce Distribution and Fulfillment.

E-commerce businesses primarily are online marketers or online service providers. Some products, for example, software and music, can be delivered to the end user online. Other products, for example, groceries, cannot. Without effective product distribution and fulfillment, the Internet cannot realize its business potential. Yet, little attention has been paid to this aspect of E-commerce. As noted in a recent survey of the E-commerce business by the Economist, (February 26, 2000), little attention has been paid by E-commerce pioneers to the need for newly designed distribution systems that will be essential for E-commerce businesses to succeed. Likewise, a survey of their Web sites indicates that states and policymakers across the country, from Texas to Tennessee, Georgia, North Carolina, Pennsylvania, and Massachusetts are focusing on the sexier high tech side of the communications and information technology industry revolution. Few, if any, states have targeted E-commerce distribution and fulfillment as an area of focus.

But will focusing on E-commerce distribution and fulfillment simply perpetuate Mississippi's historical reliance on low skill and low paying jobs and low value businesses? I believe it will not. To be world class it will be necessary to develop state of the art systems that apply advanced current technology or to create new technology, to create innovative solutions to solve complex logistics problems, and to manage highly efficient organizations effectively. This will create a large demand for highly skilled workers and managers and for creative research and development. There are many examples, including Federal Express, that demonstrate that an innovative distribution company creates significant value. On the other hand, the fact that E-commerce distribution and fulfillment creates some lower skills jobs is actually a positive factor, since in the short term many Mississippi workers need these jobs. E-commerce distribution and fulfillment businesses should balance the goal of raising the skill level of Mississippi workers with the goal of providing employment to as many workers as possible.

Biotechnology

We are in the middle of the communications and information technology revolution. Many of the opportunities it affords could pass us by before we have time to prepare for these opportunities. Biotechnology will fuel the new economy of the next generation. See Juan Enriquez and Ray Goldberg, "Transforming Life, Transforming Business: The Life-Science Business Revolution", Harvard Business Review (March-April 2000). Now is the time to start preparing our children and shaping our public policies and institutions to participate in the next new economy.

Unlike E-commerce distribution and fulfillment, other states have realized the potential of biotechnology. In addition, biotechnology is too general to be a successful niche, so we would need to focus more narrowly. Plant science is one possibility given the academic and research capabilities we already have in this area. Some of the areas of expertise at University Medical Center may suggest other possibilities. The key is to recognize these opportunities now and to begin preparing now to become a world leader in these areas in the next generation.

What Needs to Be Done

For Mississippi to be successful in any of these sectors we need to do five things. First, we need to strengthen our educational system at all levels, especially in math, science and technology to ensure that we are producing the entrepreneurs and workers needed to compete in the new economy. Intellectual capital will be the currency for the new economies that are emerging and for the new economies we do not yet envision. Second, we need workforce training so that current workers will have the skills necessary to contribute to and participate in the new economy. We cannot afford for the current generation of workers to be left behind. Third, we need to focus. We need industry, educational institutions, government, and private sector economic development organizations focusing on achieving the same broad objectives. Only by combining resources in a common effort can we hope to compete with states with greater initial resources and a head start on development efforts. Fourth, we need to build infrastructure. We need angel funds and venture capital to support new enterprises. We need university/industry research partnerships. We need incubators for new businesses that provide a complete array of support services. And we need collaborative associations targeting each of the niches discussed above. Fifth, we need to work on image. Austin, Texas and Atlanta, Georgia, for example, have created an image of success in the new economy. This image, in turn, attracts intellectual capital and aggressive new businesses, which, in turn, enhances the image of the region creating a positive cycle. We need to highlight our successes in business, the arts, and on social issues, while we work to solve remaining problems. We need to do everything possible to develop a positive image for Mississippi. I think we can succeed.