- There’s no such thing as a “non-tech” company anymore.
- The pandemic has pummeled businesses but also forced them to use tech to survive.
- Policymakers and economic developers need to recognize and adjust to this reality.
- Ned Staebler has spent the last 15 years as an economic developer practitioner in Michigan.
- This is an opinion column. The thoughts expressed are those of the author.
- Visit the Business section of Insider for more stories.
The COVID-19 pandemic has taught us several lessons about the economy.
First, the stock market reflects little about the overall health of the broader economy. Secondly, there are two distinct tiers of workers in this country. Workers without a college degree have lost jobs at more than double the rate of their more highly educated peers, and their rebound has been far slower. Neither of these facts come as much surprise to policymakers, and perhaps the wider acknowledgement of these realities will lead to more effective and intentional interventions.
There’s another important lesson that business owners as well as policymakers and economic developers should take from the past year – one that, like those mentioned above, has always been true but largely ignored: Every business is a tech business. This might sound counterintuitive. You may ask, “how can a barber shop or cleaning service be considered a technology business?” But the pandemic has made it clear that for a business to survive and thrive in 2021, it must understand and utilize technology to compete in a global marketplace or with local consumers that even before COVID-19 valued convenience more than ever.
Every business is a tech business
The line between tech and non-tech, long blurring, has finally disappeared. The pandemic has made clear that every business needs to have an intentional strategy to utilize technology to better reach its customers, whether those are diners in their neighborhood or potential new customers hundreds of miles away. Similarly, businesses can use tech to solidify their supply chain, handle logistics, develop new products, and manage their finances. Technology enables every company, even those that have traditionally been focused on their local market, to become a national or international business that exports and contributes base economic jobs to the local economy.
Restaurants that have long resisted online ordering or delivery have been forced to adapt. Retailers who’ve been focused on their in-person sales have joined the world of multichannel marketing and e-commerce, engaging customers who might never step foot in their shop – or even in their city – by building their own websites or using a service like Shopify or by using marketplaces like Etsy or Amazon.
Businesses that run experiences like wine tastings or corporate team-building offsites have discovered the power of video conferencing and created innovative new ways to deliver these experiences virtually. Even industries we think of as “low-tech,” like cleaning services, have learned that their business can grow and thrive if they embrace technology that provides convenience and comfort to their customers.
This isn’t anything new. The most successful businesses have known it for years. After all, when Amazon started, it wasn’t a cloud-selling, data-capturing, Alexa-building behemoth. It was a bookstore with a website. Likewise, no matter what Uber tells you, it’s a taxi service with an app. Post-COVID, small businesses can still tap into these new revenue streams, increasing their profits, but only if they have the skills and the resources to utilize this technology effectively.
The utilization of technology has tremendous implications for public policy across the country. For decades, economic developers have been laser-focused on creating jobs in the “knowledge economy” or in STEM fields. Entire economic development strategies have been created around developing high-growth tech companies. Every city has a handful (or more) of publicly funded tech incubators and accelerators, and states have invested billions of dollars in luring big tech/pharma or growing their own in research parks and incubators.
This is a nationwide phenomenon, with almost every state pursuing similar tech-based strategies in the hopes of creating “the next Silicon Valley.” Michigan developed the 21st Century Jobs Fund, successfully investing hundreds of millions of taxpayer dollars into four technology sectors. Pennsylvania has the successful Ben Franklin Technology Partners program. Ohio calls their version the Ohio Third Frontier. Virtually every state has some statewide program with the words “innovate” or “technology” in the name that is an attempt to help tech businesses.
Depending how you measure returns, many of these initiatives have been successful and represent a good use of taxpayers resources. But, in an effort to be more targeted with limited resources, almost all of these programs have focused on technology only in very specific sectors. As a result, almost no state has a comprehensive statewide program to provide support to businesses that don’t fall within narrow and outdated definitions of “high growth.” And after three-plus decades, most of the “fly-over states” are still, well, getting flown over.
Economic developers invest in tech startups in the hopes of growing their own Facebook or Google. This makes intuitive sense. Those types of companies create abundant, high-paying jobs that in turn spin off lots of multiplier jobs in the local economy. They make an area “cool” and attractive to globally mobile talent, helping stop “brain drain” and attracting younger workers.
But here’s the rub: the local pizza place, hardware store, book shop, or taxi service is just as likely to become the next Domino’s, Home Depot, Amazon, or Uber as that little tech startup is to become the next Microsoft or Twitter. And, as they grow, these neighborhood-based businesses are far less likely to take their high-paying headquarters jobs to the coasts in search of venture capital and tech talent.
The founders of Google, Groupon, and Intralase all incubated their ideas and companies in Michigan, but none of them grew their companies there. Meanwhile Domino’s & Little Caesars (pizza), La-Z-Boy (furniture), Kellogg’s (cereal) and Whirlpool (appliances) all started and stayed, creating hundreds of thousands of jobs.
The necessary lockdowns for COVID won’t last forever. In the coming months, vaccines will make people feel (and be) safe enough to resume a more “normal” set of consumer behavior. Smart entrepreneurs will take the lessons they learned this past year about how to use technology to grow their “traditional” businesses well beyond their pre-COVID levels. Policymakers should understand this opportunity, and provide capital and incentives for these “tech-enabled” businesses to scale up their use of technology. Whether they do or not will be the difference between a slower recovery that further exacerbates economic inequality or one that is quicker and does more to alleviate it.
Ned Staebler is a native Detroiter. A graduate of Detroit Public Schools and the University of Detroit Jesuit High School, Staebler has worked in the private and public sectors for 25 years.Ned Staebler is a native Detroiter. A graduate of Detroit Public Schools and the University of Detroit Jesuit High School, Staebler has worked in the private and public sectors for 25 years.