‘Anchors’ Need to Step up in Springfield
A little over a year ago, I submitted an op-ed piece to BusinessWest. The subject was my attendance at the annual meeting of the Initiative for a Competitive Inner City (ICIC).
ICIC founder Michael Porter, a renowned Harvard Business School professor, presented 10 years of data about small, successful inner-city businesses. Some of you may recall that Porter spoke in Springfield during the mid-1990s about the importance of small businesses relocating to the urban center. His presentation prompted the move of my business to a downtown Springfield location, where it continues to operate.
While I didn’t attend this year’s ICIC meeting, I received a copy of Porter’s presentation. His subject was the role of anchor institutions — hospitals, colleges, and universities — in the transformation of economically disadvantaged inner cities. These anchors are generally among the disadvantaged cities’ largest employers. This is certainly true in Springfield, and thus the topic is certainly relevant.
Local colleges and universities and health care institutions make significant contributions to Springfield’s health and well-being. They have a sense of obligation and act as good corporate citizens. I believe they view these contributions as distinct from their core businesses and as such are considered expenses. They report how much they contributed in both dollars and volunteer hours, and measure both as costs to the institution.
If anchors are to have the transformative effect that Porter observed in other cities, he contends that these anchors must dramatically change their mindset. He believes they must begin to look at their relationship with the inner city where they reside through the lens of “shared value.” They must answer the questions: what do we (the anchor institution) need from the city? What does the city need from the anchor? At the intersection is where they will find shared value.
Porter challenges these anchor institutions to expand their definition of their respective core businesses beyond the obvious to include fundamentals such as real-estate developer, employer, purchaser, and workforce developer, among others. To achieve shared value requires making investments, but the outcomes are measured as returns on those investments. If you’re interested, you can access Porter’s presentation on the ICIC Web site, www.icic.org.
Among the data cited are some outstanding examples of anchor institutions that have created shared value in inner cities. One such example is the University of Pennsylvania and the impact made on West Philadelphia. In one category, that of purchaser, the university has increased its purchasing from local vendors to 12% of its entire procurement budget. According to Porter, this is by far the largest commitment he’s been able to document. Dramatically expanding local purchasing requires a commitment from an anchor organization’s leadership. These institutions are so large, their leadership understandably has no idea where goods and services are being purchased and who the qualified local vendors are. Porter says these anchors must clearly articulate their needs as well as their expectations to the local vendor community.
While anchors may need to change the way they normally structure contracts or the way they view vendor relationships, there are discernible benefits. Doing business in Springfield is generally less costly. Doing business locally means greater vendor access. This, in turn, should yield a better product. Doing business with people you know and work with on not-for-profit boards and community initiatives should provide assurances about the values of these small, local businesses. Most importantly, the impact of anchors willing to purchase from local businesses sends a signal to other small companies about business opportunity in Springfield.
Last year, I made an informal request of several anchors as well as the EDC — the organization that represents the region’s 80 largest employers. In each case, I asked them to review their accounts payable to determine their degree of local purchasing. I suggested each consider increasing local procurement by 5%. Naturally, they are under no obligation to respond to my request. However, this simple act would have an enormous impact on the local economy and specifically on the health of well-established small businesses.
The return on this investment could be easily measured, and is one of many examples of shared value that these anchor institutions can and should achieve. It is also a big step toward transformation, which is vital to the interests of businesses of all sizes in Springfield. v
Nancy Urbschat is the owner of TSM Design in Springfield; (413) 731-7600.