Posted October 1998
by Michael Gurstein
Associate Chair in the Management of Technological Change
Associate Professor Organizational Management
and Director, Centre for Community
and Enterprise Networking
University College of Cape Breton
e-mail: Mgurst@ccen.uccb.ns.ca
www: ccen.uccb.ns.ca
The paper was distributed at a presentation by Dr. Gurstein to the Communication for Development Group, FAO Extension, Education and Communication Service, and other FAO staff, 6 August, 1998
Cape Breton is an island on the easternmost edge of North America, attached (in 1962) by a causeway to mainland Nova Scotia. The main population centre, the Cape Breton Regional Municipality (or "Industrial"Cape Breton), is at the easternmost tip of the island reflecting its origins as a European- facing seaport, and a supplier of coal and steel to Europe. The island has a population of one hundred sixty- six thousand out of a provincial population of approximately nine hundred thousand. Sydney, the main population centre of the region, is some two hundred and seventy-five miles (five hours by car) from the provincial capital, Halifax (population; three hundred and fifty thousand). Halifax is the regional service and professional hub with a small and struggling advanced-technology sector. The closest major metropolitan centres are Montreal or Boston, which are both approximately nine hundred miles distant.
At the end of the 19th and early part of the 20th centuries, Cape Breton was one of the most prosperous and economically active parts of Canada. Coal mines boomed and the steel industry expanded rapidly, supplementing the coal and agricultural sectors.
Since World War I however, the industrial sector in Cape Breton has declined continuously. Employment in the mining sector fell from a high of twenty thousand men to the current twelve hundred; in the steel works numbers fell from fifteen thousand men to seven hundred. This decline which has accelerated in recent times, has been partially checked by increases in the services sector and tourism; but the region has experienced a steady population drain as the labor force ages and the younger generation leave for education and first jobs and fail to return.
The coal mining and steel industries down-size constantly, and rumors abound of bankruptcy and full closure of both operations. The current official unemployment rate is in the 20-25% range with a significantly lower "participation" rate than the rest of Canada, suggesting a real unemployment figure around forty percent.
A "metropolitan environment' is one where resources intellectual, financial, physical are concentrated. It is a "hub" into which resources flow from outlying areas, where there is a significant density of population and activity. This density of activity and concentration of resources supports specialized activities involving a high level of intellectual and cultural creativity and are a focal point for financial resources and economic activity.
A "non-metropolitan" environment such as Cape Breton, is characterized by lacks and gaps, limitations and hindrances rather than by opportunities and advantages. In a non-metropolitan environment those concerned with enterprise development manage the absence of resources (of which technology is one). They have to create technology and other resources, instead of simply harnessing and directing those which already exist.
A non-metropolitan environment is not necessarily a deprived environment, but it is one in which there is relatively little capacity to participate creatively or productively in the most active and emergent areas of the economy. If other factors of the non-metropolitan (normally resource based) economy are in reasonable health, there may be no problem. However, when those aspects are in serious decline, the lack of resources reduces the capacity for innovation and industrial flexibility, as well as for economic renewal and re-orientation.
Technology enterprise development in a non-metropolitan area means trying to manage the consequences of technological change initiated elsewhere. Technology enterprise development in a non-metropolitan region requires bridging the gaps, piecing together those resources and particularly those human resources which are available to accomplish needed tasks.
The inevitable first step is to ensure that the basic infrastructure to support the technology is in place eg. the provision of adequate telecommunications carriage with sufficient speed and volume to support the project. In some areas this may be as basic as ensuring that there are individual telephone lines (rather than multi-party lines) or that there are digital switches which allow transport of digital data. The provision of basic infrastructure may not however, be cost-competitive without subsidies to a private service provider. In metropolitan areas infrastructure availability can be taken for granted and no effort or expense need be incurred in its development.
A second impediment to technology enterprise development in a non-metropolitan area is the lack of a culture in which such development can occur-a recognition that such developments are possible here; that it is worth the expenditure of local economic or infrastructure development resources. In a metropolitan community the media, schools or service organizations perform this function without cost to the technology enterprise, in a non-metropolitan environment this may not occur.
Each of the conditions mentioned above represents a cost of developing a technology-related enterprise in a non-metropolitan region which the same activity in a metropolitan region does not bear. Thus few technology-based enterprises settle in non-metropolitan regions; those that do are often on a small scale and financially weak or may have or develop few connections to the local economy-being always available for flight should conditions change or prospects appear brighter elsewhere.
In metropolitan regions there are many institutions which contain technical and professional expertise, a range of information resources, and the capacity to undertake applied research. In a non-metropolitan region there may be none, or only one: the local community college or regional university.
A final difficulty in technology enterprise development in a non-metropolitan area is funding for the technology itself. In a metropolitan area there will be multiple possible sources of funding: banks and other lending institutions, venture capital funds, private investors and government agencies. In a non-metropolitan environment funding may be available only from the government. Banks in the non-metropolitan areas deal primarily with consumers or resource-industries; they have little or no expertise in other economic spheres. In consequence they are very hesitant to lend money in these areas. There are virtually no venture capital funds or pools of private funds for lending. Because of the cyclical nature of the resource economy, funders tend to be exceptionally cautious.
UCCB is central to the use of advanced technology to support local economic development in Cape Breton. In an environment where few have access to technical information, or information which supports innovation, or expertise in using new technologies, tertiary level institutions are the only institutions where such people are normally employed. Cape Breton, which has been industrialized for a hundred years, has roughly twenty percent of its population in knowledge-intensive occupations- public service, finance, education, research-compared to approximately fifty percent in Halifax, the provincial capital.
Drawing on Canadian Federal Government resources, originally intended to support advanced research in technology management, UCCB convinced authorities that a research Chair should be established for looking at how technology might be impacting on non-metropolitan areas. The "Chair" in the Management of Technological Change (MOTC) and its two incumbents (there is a Senior and an Associate Chair), were both drawn from non-academic careers-in one case from a scientific and a legal background and in the other from a consulting and business background.
The work of the Chair has largely been a response to the immediate crises which have overtaken the local economy. While there has been a continuing decline in the existing steelmaking and coalmining activities, this decline has in recent years accelerated and in 1994 the third pillar of the local economy, the fishing industry was closed as a result of a drastic decline in the fish stocks-forcing the closure of most of the associated fish processing industry as well. The on-going efforts to stimulate alternative industries through conventional industrial development strategies-focussing on conventional industries have without exception resulted in very high profile failures.
In the non-metropolitan context of Cape Breton, UCCB replaces other institutions and resources which are readily available in larger metropolitan areas-and as through the Chair, providing enterprise "mentors" with specialized expertise, applied research skills, national and international experience and networks, and the capacity to undertake formal and paper work requirements for business development, such as completing forms, preparing proposals, preparing business plans, and so on.
In metropolitan areas these skills are available for hire on contract; in non-metropolitan areas they are in short supply or non-existent. In addition the access to the research capacity at UCCB and particularly the flexibility of research resources (however limited) of the Chair has provided an important stimulus to innovation both in product and in practice. At the technical level, those providing technical training look to maintaining their own skills at or close to the state of the art and to facilitate the acquisition of current equipment which then can provide a base for local entrepreneurs to acquire training and experience.
In developing an approach and techniques to support the local development of technology-based enterprise, the Chair has contributed by popularizing and promoting technology awareness in Cape Breton. The role for the Chair in MOTC at UCCB is one of providing some of the momentum and the vision from which a new technology oriented economy can emerge.
The position of the Chair, a part of the University but with responsibilities within the community; concerned with "managing" technology but with the requirement to create the conditions for this management to occur; tasked with the need for an output in the form of "research" but where in order for research to occur, recognizing that there must first be an activity to be researched; is unique. Such a linking of the world of enterprise with the world of reflection, the world of research with the world of management is not generally encountered in university contexts, but its widely acknowledged "success" in the Cape Breton context suggests that it might be the kind of initiative which would warrant emulation in other non-metropolitan regions.
Most often the businesses with which CED becomes involved are small and labour-intensive, with low capital and skills requirements. CED enterprises tend to be concerned with local markets and services. Technology-intensive enterprises are usually larger, requiring more capital and skills and access to outside markets. Typical CED activities (real-estate management, construction/renovation, tourism and home care) use computers, fax machines, and similar tools in their internal operations, but do not incorporate technology as a core resource for expansion or new enterprise development.
The form of the CED enterprise also may be different from that of a technology-intensive enterprise. Typically these latter firms are entrepreneurial, fast-paced and staff-driven. CED enterprises tend to be more deliberate in operation, fiscally-conservative, and board-governed. Historically, CED enterprises have relied on public sources grants subsidies, tax incentives for financial support, while technology-intensive companies have depended on venture capital and equity markets. Payment in technological firms is usually monetary, whereas in the CED groups there may be an emphasis on in-kind or non-monetary rewards.
The Centre for Community and Enterprise Networking (C\CEN)
Because of its range of involvements and activities it was decided to establish an operating "arm" of the Associate Chair MOTC through a University "centre" which became the Centre for Community and Enterprise Networking-C\CEN. Opportunities are being "developed" by C\CEN in such areas as:
- self-sustaining activity for community initiated public Internet access sites
- the delivery of public services through public access sites
- cacilitating Community Access to the Internet-telecentres, telecottages, community access and community networking
- multimedia, digitization and computer applications
- entrepreneurship and business
- Community Enterprise Networks
- the transfer of lessons to less developed countries
International / Third World Internet Development
- virtual management
- youth and education programming
- on-line Technical support and conferencing
- First Nations Internet Access
- community based health and wellness on-line
- environmental industries development and awareness
- culture and heritage and music and arts On-line
- electronic (on-line) democracy and participation
C\CEN has identified a number of areas where there may be potential for on-going and significant job/work creation in its region including and especially in the provision of remote services to large organizations and particularly public sector organizations via the Internet. The approach that C\CEN is adopting is one which involves research, development AND enterprise incubation.
There clearly is a role for the net as a "marketing" tool for small local businesses. There are enough success stories to suggest that for some it is a potentially very significant tool. For how many, and for whom in non-metropolitan communities it can serve as this kind of tool remains to be seen. Only certain types of economic activities lend themselves to this type of support.
Other potential uses of the Net as a "tool" as for example, as a source of product or marketing information or as a means for collaborative business activities (production, marketing, purchasing and so on) are in their very early infancy. A current project, being undertaken by C\CEN is exploring the use of the Internet as a business information tool by small businesses in rural Nova Scotia. To date, the results have been mixed in that there appears to be very limited interest by small rural businesses whether from a lack of knowledge, a lack of available resources to undertake such activities, a lack of access to the Net or for other reasons as yet undetermined.
The technology is having a significant benefit of another sort, however. It is "enabling" the mobilization of a much wider and more sophisticated range of resources to support local economic development initiatives than has ever before been possible. Music making and performance has for example, become one of the most significant local industries (Cape Breton has retained perhaps the purest strain of traditional Celtic music). The organization of performances, the marketing of performers and ancillary activities such as schools and publications, and the conduct of the business of at least certain parts of the industry are migrating to the Internet. The local availability of Internet access has meant that a significantly higher proportion of economic benefits from these activities is being retained locally rather than ending up in metropolitan centres.
Most of the students went back to their respective schools and in a few instances agreements have been negotiated with income support agencies (Social Services, Unemployment Insurance, TAGS-an unemployed fisherman's transition program) to allow their "clients" to replace the students as "volunteers" (ie. no loss in benefits and the payment of a small "expense" allowance). Through the system of regional co-ordinators and the electronic network set up to manage WiNS, some Internet and community access training was provided to the "volunteers".
Based on this program, C\CEN was contracted to send two Internet-workers to Angola to support the work of an NGO in Luanda. One was a youngish unemployed ex-fisherman, using his Government funded computer training for the first time, and the other a University College of Cape Breton Geographic Information System graduate helping the NGO to install a GIS program as part of a contract with the World Bank.
SENCEN (Straits East Nova Community Enterprise Network) a group informally associated with C\CEN in the same area is working to develop a "virtual city" in the Straits of Canso area of Eastern Nova Scotia. This project grew out of a very successful Community Access (CAP) site in a small fishing village where a particularly entrepreneurial manager created a CAP site which began to function as a kind of rural "Kinko"'s (common information/communications resource hub) with e-mail/Internet access, a variety of software tools and training and other small business supports. The Community Enterprise Network (CEN) was taken up by the community and became a hub of training and small business activity for the area including job searches, web-site development for marketing, contract computer training and some remote technical service provision.
C\CEN has chosen in this regard to focus on community applications of ICT for non-metropolitan areas and including the technical and application supports for these activities. Thus C\CEN has been "investing" in bringing certain of its staff up to the state of the technological art. This is not research in the traditional sense of pushing forward the state of the technical art, but rather it is making a one-time only investment in ensuring that the region can "stay in the game"-a form of "putting the coal back into the ground".
C\CEN is actively conducting "research" in the remote design and delivery of government services particularly as to how they might provide an opportunity for contracting services to communities such as Cape Breton. In addition C\CEN is providing developmental and incubation support to several enterprises which are looking to provide contractual services remotely via the Internet, capitalizing on lower overhead costs and more ready access to employment support programs as a possible competitive edge. Also C\CEN is examining the possible opportunities which may be available to provide services and support to the not-for-profit and community sectors in information technology recognizing that these areas may have a requirement for "intermediate" level ICT support and particularly support for low cost ICT solutions to their requirements.
To some degree looking to ICT as a solution to the economic problems of rural and remote areas may be wishful thinking. It is not evident how ICT will be of immediate benefit to most individuals or communities, particularly those without direct access to the hardware and the skill and education level required to make some effective use of it. On the other hand, ICT and particularly the Internet is offering benefits/opportunities to some-enhanced marketing of tourism operations and specialized products such as crafts or foodstuffs, the means to undertake full or part-time or intermittent "telework" or at least to maintain a form of involvement in a work environment from a rural or remote setting. But these examples are for the moment, anecdotal and highly particular.
These applications are selective and primarily for those few who already have access to the technology and to the capacity to use it. However, the overall effect is to raise the level of the local infrastructure to a point where community based economic development sufficient to the requirements of the modern competitive marketplace is at least conceivable.
Equally, whether the technology provides the opportunity for the advance of other types of business in rural areas or rather accelerates the decline of these businesses through making access to the greater selection and cost competitiveness of metropolitan suppliers easier remains still to be determined.
In a context however, where the reliance in rural and non-metropolitan regions on resource extraction as the economic foundation would appear to be less and less tenable, the continuation and expansion of ICT infrastructure development and experimentation with alternative enterprise and service formats is certainly warranted. The alternative which is continuing rural depopulation and metropolitan concentration. The overall capacity of metropolitan areas to absorb additional populations in a context of what appears to be a continuing cycle of jobless growth is questionable.
At a time of increasing global competition and diminishing capacity of developed economies to absorb the labour of those made redundant in the course of these changes, developing the means for economic participation in non-metropolitan areas is a movement which might be of enormous and widespread benefit.
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