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Local Governments and the Challenge of Rapid Economic Change

To get ahead of the game, public leaders need to be proactive, and they need to collaborate.

While it is common practice for private-sector organizations to be on the lookout for technological innovations that might enhance or upend their businesses, this tradecraft is less common in local governments. Yet governments face an expanding need to stay on top of and react to trends and innovations that increasingly are disrupting their economies, from manufacturing and retail automation to the growth of the sharing economy to self-driving vehicles.

Developing this capacity will be a challenge for governments because of their cultural resistance to disruption of their own systems. Despite current efforts to instill a culture of rapid innovation in the delivery of public services, local governments typically focus on incremental improvements to administrative processes, modes of citizen engagement and strategic management. These, while good and necessary, are not sufficient for dealing with the impact of rapid change on local economies and community life.

A recent Brookings Institution report I co-authored outlines a number of emerging technological trends and societal shifts that are having an impact on local economies. Technology is bringing about new opportunities, for example, for businesses to economize on jobs such as those of taxi drivers, retail clerks, food-service workers, medical staff and mail carriers. In a study by researchers at Oxford University, it was estimated that approximately 47 percent of U.S. jobs will be at risk for elimination within 20 years.

It's not hard to see why this is happening. Self-checkout kiosks at stores such as Wal-Mart create customer convenience but limit the need for human cashiers. According to the Food Marketing Institution, as long ago as 2007 fully 95 percent of supermarkets had self-checkout lanes. We don't know for sure how this loss of jobs will play out--whether the workforce will adapt or how growing income inequalities will impact our communities. The civil unrest we've seen around the United States stemming from class and race issues in recent months could be a harbinger of things to come. Might we one day see something similar to the 2011-12 Arab Spring, in which young people across the Arab world revolted against their local and national governments over issues of extreme poverty, unemployment, human-rights violations and corruption?

However economic disruption driven by emerging technologies plays out in the United States, local governments need to take a more proactive stance, working to identify the trends that will impact their communities and their own operations and to get on top of them. Here are some suggestions for government leaders who want to stay ahead of these trends:

Leverage regionalism and local partnerships. Partnerships are a good way not only to ensure that you have the resources to find solutions for seemingly intractable challenges but also to increase situational awareness. Regional partnerships help leaders to see a bigger picture of the implications of trends, identify interdependencies among communities and work toward more integrated solutions.

Increase your global connections. Look beyond your region and even abroad to build idea-exchange networks. Find cities that mirror yours in size, demographics and economic makeup and build connections with them so that ideas can flow.

Think about how to work the disrupters to your community's advantage. Peer-to-peer networks such as Uber are already having an impact on communities, and more disruption is on the horizon with the advance of technologies such as self-driving cars and drones. Forward-thinking communities will approach these new technologies in a way that is good for them and good for citizens. Consider how, for instance, how your city might go about embracing self-driving cars before, during and after they enter the market.

Create your own team of disrupters. Finding solutions for disruptive challenges is going to be difficult and require collaboration across the governmental enterprise. There's a role for internal disrupters, along with outsiders from academia, community organizations and the private sector, to identify ideas that are beyond the scope of one department or agency.

While no one can know for sure how disruptive forces will impact local governments and the communities they serve, public leaders can position themselves and the organizations they lead to be proactive and effective--to keep disruptions from becoming disasters.

A professor at Queensland University of Technology's QUT Business School
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