How Danfoss created jobs by downsizing
Industrial manufacturer Danfoss is the largest employer in southern Denmark, but in 2003 it faced the painful task of scaling down its workforce in the region. With a hit to headquarters’ morale inevitable, Danfoss’s leadership decided to engage with affected professionals in a completely new way. The idea was to recognize the region’s potential as an industry cluster, and to facilitate a process by which many of those skilled former Danfoss executives could establish themselves as high-impact entrepreneurs within it. Danfoss provided seed capital for new ventures using innovative funding mechanisms that distributed the risk between itself and the entrepreneur. It especially encouraged startups in areas complementary to its own business so that it could lend support both as an investor and as a customer—and was soon benefiting along both lines. Danfoss has earned a healthy return on the investments, and its access to sophisticated new services and products helps fuel its competitive advantage. The company’s sales subsequently jumped by €22 million.
But the benefits go far beyond Danfoss’s success. Hiring by the new ecosystem of startups brought unemployment in its region of Denmark down by 1.4 percent. The surprising outcome of Danfoss’s shedding workers was a beneficial churn into new deployments that has helped to counter industrial decline in the region.
The important lesson of this story is that this innovative approach was not led by the Danish government or a non-governmental organization; it was Danfoss itself that recognized the executive talent potentially going to waste and piloted new structures to employ it. Also note that Danfoss’s approach is a job creation model that can travel easily; it does not depend on any unique features of Danfoss’s business or the Danish economy. It is, more than anything, a change in mindset that teaches how important it can be to look at a downsizing situation through a different strategic lens. In any year, Danfoss would have made many purchases and investments. By putting the emphasis on job creation, it found it could do so in ways that also boosted regional employment
Now in the last several months friends have introduced me to how very large and rapidly growing the maker movement is. I find myself surprised at how sophisticated and well developed a subculture it is, with its own MAKE magazine, online design-sharing sites, hundreds of physical "hackerspaces" with publicly usable 3D printers (I even discovered one in my medium-sized hometown), and "Maker Faires" attracting tens of thousands of people to learn how to make everything from trousers to a circuit board that enables your houseplants to send you a text message that it needs watering.
"Pineland Center in New Gloucester, Maine was established in 1908 to serve as a home for the mentally handicapped of Maine. At the time of its official closing in 1996, Pineland consisted of a 28-building campus and 1600-plus acres. A large part of the acreage consisted of farmland which had at one time been cultivated to sustain the needs of the Center's staff and residents.
Through its real estate branch, October Corporation, the Libra Foundation of Portland, Maine purchased the Pineland campus and approximately 900 acres of farmland in June 2000. Since that time, extensive renovation, new construction and additional land purchases have brought both the campus and the farms back to life. The Pineland property now encompasses a 19-building campus and 5,000 acres of farmland.
The Foundation's vision for the campus is to create a unique community by attracting a variety of non-profit and for-profit businesses, organizations and services to lease space in the buildings. Tenants enjoy amenities on the campus such as a conference center, cafeteria and YMCA, as well as access to the farm programs and facilities.
The farms have been developed as a self-sustaining nonprofit organization known as Pineland Farms, Inc. In addition to the fully operational farm, Pineland Farms offers public educational programming, outdoor recreational activities and a world-class equestrian center. Produce from Pineland Farms, such as eggs and vegetables, supply The Market."
"Here's our theory of change. To be competitive in today's economy, any region needs to start with 21st-century brainpower. Next, the region needs to convert this brainpower in the wealth through support networks for entrepreneurs and innovative companies. Because both talented people and innovative companies are mobile, regions must focus on physical development and building quality, connected places.
To provide a sense of coherence and direction to their strategy, regional leaders need strong new narratives that point to the future. Finally, designing and executing a regional strategy is tricky. It starts with a deeply engaged core team and spreads to a far wider network of civic leaders. Fundamentally, effective regional strategy requires broadly distributed leadership skills in complex collaboration and new civic disciplines of collaboration.
This framework provides a “base map” on which any region can map its strategy. The base map helps regional leaders identify assets and explore both connections and gaps. It provides an inclusive, common sense starting point for strategy development. "
"Despite the fact that many of the services (roads, schools, etc.) provided by local governments are often worth the expense (if they aren’t providing good value for the expense, you should move), the fact that our communities don’t also generate us an income seems like a design failure.
Strangely, income is something almost everyone seems to leave out of their plans for community resilience, despite how important it is in all of our lives. I hope people rethink this assumption before D2 (the second, and much greater, economic depression) resumes its march.
NOTE: When will D2 kick in? 2013 might be the year that the global economy starts to slide backwards again. The warning signs in China (a fall off in industrial energy use, massive stockpiles of unsold goods, etc.) point to a BIG fall off next year.
How to generate an income as a community
Here are three smart methods to get you thinking in the right direction (I’ll elaborate on these methods more in a future report):
Take the Johnny Appleseed approach. Get a productive business started and set up a community co-op to manage the costs and the benefits. If you don’t know, Johnny Appleseed was a classical Yankee entrepreneur (which is very different than the financialized poseurs we have today). He started hundreds orchard community co-ops.
Build a community around a working farm. My friend Simon Black is building a resilient community in Chile from scratch, that I’m advising him on. Every plot in this Chilean community is part owner of the farm it is built around. This resilient community is being built to bounce back from a hard (economic and infrastructure) collapse in the northern hemisphere. If you want to get more information on this community, you can sign up here.
Make it a community service. Use vacant public land and underutilized facilities to build services that reduce expenses for community residents. For example, the town of Totnes (in the UK) planted 186 nut trees around the town to provide an extra source of food for residents. For more, see this video on the project."
"Apart from its policemen and firemen—which, under Georgia’s constitution, must be public workers—Sandy Springs has only seven full-time employees: a city clerk, a court clerk, a finance director and four people who work in the city manager’s office. The city manager himself works for Sandy Springs, but his spokesman—like all the communications staff—works for The Collaborative, a Boston-based public-affairs consultancy. Morgan Falls is a lovely park overlooking the Chattahoochee river; this and the other city parks are maintained by employees of Jacobs, a multinational engineering firm based in southern California. Jacobs also administers the city’s court, in which the independent judges are paid a flat hourly rate. Severn Trent Services, based in Coventry, keeps the city’s books. Four other private firms carry out most of the other city functions"
"But in a shift that has been both celebrated and parodied, Brooklyn is increasingly retaining some of its remaining industrial spaces for small-scale, small-batch manufacturing.
A surge of young entrepreneurs eager to produce $7 chocolate bars made from hand-roasted and hand-ground cocoa, or build theater and movie sets or fashion high-end furniture for a connoisseur’s market find the smaller spaces carved out of these old factories precisely what they have been looking for.
Often the rents are affordable and the entrepreneurs can commute to work by bicycle. Such businesses also operate in New York because it has a wealth of the skilled employees they need for idiosyncratic operations that often find their customer bases within the city’s borders.
“We think this is the future of urban manufacturing,” said Brian T. Coleman, chief executive of Greenpoint Manufacturing and Design Center, a nonprofit group that has bought four weathered industrial buildings and converted them into lofts for small factories housing 110 businesses with 500 employees."