My Take on the Opportunity of Reduced Federal Spending
Over the past year, politicians, businesses and the media alike have been bemoaning the effects on the region because of the automatic spending cuts known as sequestration and the drawdown of federal spending. With spending tied so intrinsically to political infighting and government deficits, the region should begin to come to terms with the new reality that reduced government spending is here to stay, and that is a good thing.
It is undeniable that there will be challenges for businesses to adjust to this new norm. However, I see this as an unprecedented opportunity for the D.C. region to redefine itself as a global hub of business, with an emphasis on new markets focused on start-ups, technology, energy, biotech and the financial sector.
What I’ve seen from my clients, and the region as a whole, is that many of the companies that built service-oriented government business models will experience significant challenges over the next several years. If they have not already done so, executive management teams should begin to explore strategies to migrate their business to the commercial sector or business-to-business market.
Pivoting to new markets will require significant investments in training, marketing and leadership. But in reality, the entire regional business community needs to invest and buy into this concept if we are to diversify market offerings and attract new businesses.
The case for attracting new businesses to the region boils down to people. I truly believe that human capital will make the difference in growing and expanding our new regional economic reality.
Our region has one of the largest concentrations of higher-educated professionals in the country. While historically the government and its contractors have been the draw for these talented minds, other industries now have the opportunity to tap into this pool of highly educated individuals because of the slowdown in government spending.
Businesses should not only look at the existing talent pool, but to the future as well. The academic community that exists in the D.C. region boasts some of the most prestigious universities in the country and there are tremendous opportunities to closely partner with these institutions.
For example, the region’s investment and venture capital firms should, in conjunction with existing start-ups, incubators and think tanks, aggressively recruit and support rising college entrepreneurs. Technology and biotech firms should emphasize more joint academic-private sector research and development centers. The expansion of these types of relationships with the academic community will make a measurable difference in ensuring that the region doesn’t lose these innovative minds to Silicon Valley, New York and Cambridge.
What we’re talking about is building a new, agile infrastructure of business opportunity. In doing so, the next generation of business leaders will be given tools that champion the cause of diversifying our region. This will encourage the creation of new businesses, bring fresh insights into existing companies and serve as an incentive that attracts new businesses to relocate to the area.
The government slowdown is not a business risk, but a unique opportunity for our region. It is imperative that we come together and embrace this new reality, nurture it and shape our region into a new, richly diverse business community.
This piece originally appeared in The Washington Post Capital Business.