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Harnessing Creative Destruction

by Hilary Coman

January 8,2009

Creative destruction sounds distantly familiar and also a bit threatening. For those readers who vaguely recall a long ago economics class, the following may ring a bell. Economist Joseph Schumpeter popularized the term years ago when he discussed the business cycle and the role of innovation and entrepreneurs in creating economic growth. By pushing the envelope and coming up with new and better ideas and products, entrepreneurs exploit their own opportunities as existing businesses falter.

Over the last few months we have been inundated with news that our community could scarcely have imagined even one year ago: the United Way campaign stalls $15 million short of its goal, Wells Fargo purchases hometown stalwart Wachovia, home sales crater in the fourth quarter of 2008 and unemployment continues a seemingly inexorable trend upwards. The Queen City has always been the golden city at least for as long as I can remember. Even as other cities faced challenges from declining populations and the loss of manufacturing jobs, we seemed different, dare I say it, even better. I read these headlines, I speak with my friends who have either lost their jobs or expect to lose them and suddenly the shine on our crown seems a bit tarnished. The Wachovia sale surprised us, and the ongoing instability in the financial markets unnerves us. Have we lost the magic or simply hit a bad spot? Our big banks are our identity, right?

I think the answer is yes followed quickly by but... this unique juncture may just offer the right kind of opportunity for another type of local business, the small business. Big business made us who we are without question. Minus the foresight of Ed Crutchfield, Hugh McColl and their lieutenants, our Uptown would be the same uninteresting place I remember from my childhood. Certainly, no bevy of small businesses could spearhead the urban transformation from which we have benefited (and pay for it.) Nevertheless small businesses can play a much larger role as the Charlotte economy evolves to meet the economic challenges of today and succeed tomorrow.

We have robust existing small businesses and we have all the right conditions to support and grow the next generation of entrepreneurs. We have the raw material in educated and talented people, be they bankers or musicians or both. We have organizations such as the Charlotte Chamber, the Latin American Chamber, the local chapter of the National Association of Women Business Owners (full disclosure – I am the current Chapter President), CPCC Institute for Entrepreneurship, the Economic Development Office of the City of Charlotte and many more. Each of these entities offers education and support to the business owner. Small businesses provide the majority of jobs in the United States. According to the National Federation of Independent Business, small businesses provide 55% of all jobs in the private sector.

As a small business owner myself, I admit I have a bias. I enjoy being self employed – I get to select the projects I want to work on and the clients with whom I want to work. I am the master (or mistress, to be gender specific) of my own little universe. I get all the upside and the downside, too. But I also have the flexibility to respond to opportunity, to move quickly in order to get where I or a client needs to go. I think that in the spirit of creative destruction, our small businesses could be a bright spot as the Queen City fights its way out of this economic downturn.

Opportunity is the handmaiden of change. Managing change is the real challenge. Maybe our identity is broader than just the red bank or the blue bank. Ironically, in September 2011, Charlotte will host the annual conference of the International Economic Development Council, an important gathering of economic developers from across the United States and many other countries. While the meeting takes on global themes, the host city cannot help but be center stage. For so many years, our story has been simple – blazing economic success as a banking city. Hopefully by the time the conference rolls around, we will have an equally successful, but more nuanced story to tell.

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