Thursday, October 14th, 2010

The Asset Trap

I can’t tell you how many economic development documents I’ve read that talk about cities “building on assets” or cataloging all the great assets a city says. While inventorying your assets is an obvious and valuable thing to do, cities are often far too enamored of what they find there.

Assets can be building blocks for the new, but can also be simply the legacy of the past, not the foundation for the future. The only reason cities have most of their assets today is because previous generations didn’t try to build on the assets of their day – they went out and created something new. All too often “building on assets” turns into “defending the past”, as cities and states try to protect the industries and ways of doing business that worked in the days of yesteryear, but are failed strategies for the new economy.

Most assets require significant investment to maintain over time. So you’ve got to make a choice of how much to sink into that versus building new. Too often cities get the balance wrong and innovator’s dilemma style end up over optimizing for the past. When the world changes, they are no longer relevant.

Clearly, an asset-led strategy is an important part of a city’s development approach. But it’s only a part. It’s not just about building on what we inherited from previous generations, but creating brand new things to bequeath to tomorrow.

Topics: Public Policy, Strategic Planning

4 Responses to “The Asset Trap”

  1. Bob Weaver says:

    Interesting and timely. Thanks.

    Proposals for delousing W 38th seem like an oppty that defies the easy approach of build on what we have in that most people don’t even realize we have that asset (diversity, ethnicity flourishing among the inner-ring suburban decay). I could be looking at it too much from perception and brand POV.everyone knows Monument Circle, but only a handful spend any real time inthe 38th St corridor west.

  2. Fanbu says:

    Sometimes the “building on assets” is more sellable to communities than the “start over” strategy. I agree there is a balance in doing everything. But the balance point can be so different depends on the culture of the community, the leadership of the government, and the communication skills of urban planners/ designers.

  3. Rod Stevens says:

    I agree, but it depends on how you define “assets”. Most cluster analysis is simply regressive. If you’d been trying to set course this way for Pittsburgh in the late seventies, you would say that your strength was in steel and that you should continue that way.

    But what if you said that your strength was metallurgy? Perhaps that would have shifted you from commodity production to more high-value activities, such as the creation of alloys for jets and space travel.

    Or what if you said that you really understood construction, the process of using this metal? Perhaps you would have specialized in new building techniques that bring design and construction together.

    There’s an old HBS case study about why railroads declined: because they defined themselves as railroads rather than transportation companies. What matters is not the product you make but what you know and care about, as well as your understanding and affinity for your customers. Yes, you might speak “steel”, but how you continue to work will depend on whether your fascination is with chemistry, with the uses of the material, or perhaps simply the look and qualities of the material itself. None of these mean that you have to keep doing the same thing.

  4. Wanderer says:

    I suspect that “building on assets” is in part a reaction, and sometimes an over-reaction to the old wipe the slate clean urban renewal. If Los Angeles had seen the small Victorian apartments of Bunker Hill as an asset rather than a blight, there’d be a lot of nicely restored historic housing next to downtown right now.

    It’s also a caution against smokestack chasing and against every town lusting after the latest “hot” industries which are cold three years later. Also, real important urban assets take a long time to build up and shouldn’t be squandered lightly. But cities have to think about what assets are going to be used for going forward, because the importance of an asset is that it can help you do something you want to do.

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