Porter's Initiative Brings Enterprise Into Inner City

BOSTON--It didn't take long for the audience to catch on that Michael E. Porter, Christensen professor of business administration, doesn't usually lecture at Roxbury Community College.

Although the world-renowned guru of corporate management was in the neighborhood to discuss the Initiative for a Competitive Inner City (ICIC), his effort to rebuild troubled urban areas, the local audience greeted with skepticism the erudite scholar who seemed to have all the answers.

"I was afraid that he was going to be lynched," recalled Luis Soto, an inner-city businessperson now working with Porter.

Despite initial setbacks, the nonprofit ICIC now appears to have begun bridging the cultural gap separating the Harvard Business School's (HBS) leafy Allston campus from the struggling Roxbury start-ups it seeks to help.

Started in 1994, the Boston-based ICIC uses research and consulting to encourage companies to construct and improve enterprises in the inner city.

As of December, it served 20 clients, ranging from a fish-processing plan to the Boston Bank of Commerce, New England's only blackowned, full-service commercial bank. The ICIC also has elicited the financial support of such corporate giants as McDonald's Corp. and Citicorp.

The initiative originally stirred excitement among scholars and local activists alike with its emphasis on empowering inner-city entrepreneurs and creating much-needed jobs in economically deprived neighborhoods.

"We must stop trying to cure the inner city's problems by perpetually increasing social investment and hoping for economic recovery to follow," Porter wrote in a 1995 article in the Harvard Business Review.

"Instead, an economic model must begin with the premise that inner-city business should be profitable and positioned to compete on a regional, national and even international scale," he wrote.

That initial enthusiasm, however, was tempered by the difficulties of combining elite consulting techniques with the bread-and-butter realities of the struggling inner-city economy.

In what staff members are calling "a decided evolution," over the past six months the ICIC has refocused its priorities and refined its methods.

The realignment in the group's strategies seems to be paying off.

"I'm much, much more encouraged than I have been in the fast five years," says James Miller, chief executive officer of AB&W Engineering, a Dorchester-based supplier for the nation's major auto makers.

A New Angle

Although some say that the ICIC has little conception of life in the inner city, most agree that Porter has introduced a revolutionary new approach to dealing with the problems in America's troubled urban environments.

Eschewing the traditional entitlement approach, Porter formed the ICIC with the hope of developing permanent private-sector job growth in the inner city.

In the 1995 Harvard Business Review article, Porter outlined the strategy that he is applying to the ICIC.

Porter says that inner-city neighborhoods are generally perceived as unprofitable regions in which to locate business because of a number of misconceptions.

Instead of focusing on problems such as poor infrastructure, a low- 1skilled work force and limited access to capital, Porter is working to emphasize the benefits of locating a business in the city.

Porter cites four basic competitive advantages urban neighborhoods have:

* Strategic location near central business districts and major transportation hubs.

* Underserved consumers with substantial purchasing power.

* Growth opportunities through integration with regional business clusters.

* Stable and underutilized workers with entrepreneurial potential.

The ICIC pursues these goals through researching and consulting for local businesses and linking them with major corporations. To execute their agenda, the group enlists the pro bono brain power of MBA candidates from business schools across the nation.

This fall one group of HBS students is in Miami conducting a benchmark study of the city's economy.

In addition to providing a profound analysis on Miami's individual problems, the study will be added to nine similar ones from around the nation providing insight on broader trends within local economies.

Anne S. Habiby, a recent addition to the ICIC team, is the national director of the organization's research projects.

Habiby feels that Porter's organization offers an important contribution to research on inner-city problems.

"It's not the case that we go into the inner city every few years, do a few studies and get some data," Habiby said. "We are in the inner city every single day."

In addition to research conducted in major U.S. cities, the ICIC also acts as a consultant for inner-city businesses in Baltimore, Boston, Oakland, Calif. and Kansas City, Mo.

The consulting program works with teams of MBA candidates assembled to assess the needs of the various urban enterprises.

In choosing clients--who rarely pay for the professional advice--the ICIC attempts to create a core group of businesses that it feels can provide a foundation for economic growth in the area.

The original benchmark studies, like the one now being done in Miami, often provide the direction for future consulting efforts.

"We do this detailed research, which gives us a clear road map as to how to leverage our program activity," Habiby says.

Aside from simply providing services, the ICIC has introduced high-profile corporate partners to many of its clients.

Miller says that his auto-parts company has benefited enormously from its new partnership with Textron Inc., a multi-national corporation based in Providence, R.I., that ICIC introduced to his firm.

Start-Up Problems

But such successes have come after a series of initial difficulties.

Last year, Luis Soto's Selmac Food Distribution was just the type of company that the ICIC was looking to help.

Specializing in ethnic foods distributed to Boston bodegas--local grocery stores--Soto was set to capitalize on untapped markets.

An ICIC team from HBS offered to help Soto in the initial stages of his company.

The group conducted research on the firm, examined demographic data and was able to help Selmac focus its marketing.

Unfortunately, the MBA candidates could not prevent the firm from closing later that year.

Soto says that the HBS team was extremely helpful but was unable to solve his more personnel problems.

"The location was excellent, the building was excellent, the problem was that we didn't have the expertise," Soto says. "We just didn't know how to do it."

And while Soto does not fault the ICIC for the demise of his business, he does feel that, as originally conceived, the initiative needs to better help entrepreneurs put ideas into practice.

"What they were telling us we already knew," Soto says. "We just couldn't do it."

Soto says that while the HBS students could get to the root of problems with lightning speed, they often had difficulty communicating with those who spend their lives in the inner city.

"Most of the students have no idea what the inner city means," Soto says.

Many residents who have spent all their lives in blighted urban areas have expressed resentment at ICIC initiatives, which they say descend from Harvard with a golden egg.

Urban residents have said Porter's initiative does not give adequate attention to government-sponsored programs such as Community Development Corporations (CDCs) that for years have been waging the war against poverty on the front lines.

Although Soto does not believe CDCs can be the sole cure for inner-city problems, he feels that they cannot be ignored.

"They are a tool, but they are not the only tool for getting into the inner city today."

Making Improvements

With a new office in downtown Boston and a staff that has jumped from two to 12 over the past year, the ICIC seems to be addressing many of those cultural tensions.

Monica Dean, director of the program's national business school network, says the organization is trying to avoid what she says may be perceived as "an issue of ego" with business school students.

"I think that our more recent study teams have been better selected for both aptitude and attitude," Dean says.

Most ICIC staff members believe cultural foibles are not surprising for a pioneering effort to address the needs of the inner city.

"This is a completely new model and it should be expected that there should be some difficult moments," Habiby says.CrimsonGrigory TovbisFANNY LEBRON works at the Maria & Ricardo Tortilla Factory in Jamaica Plain, one of the businesses helped by the Initiative for a Competitive Inner City.

Porter cites four basic competitive advantages urban neighborhoods have:

* Strategic location near central business districts and major transportation hubs.

* Underserved consumers with substantial purchasing power.

* Growth opportunities through integration with regional business clusters.

* Stable and underutilized workers with entrepreneurial potential.

The ICIC pursues these goals through researching and consulting for local businesses and linking them with major corporations. To execute their agenda, the group enlists the pro bono brain power of MBA candidates from business schools across the nation.

This fall one group of HBS students is in Miami conducting a benchmark study of the city's economy.

In addition to providing a profound analysis on Miami's individual problems, the study will be added to nine similar ones from around the nation providing insight on broader trends within local economies.

Anne S. Habiby, a recent addition to the ICIC team, is the national director of the organization's research projects.

Habiby feels that Porter's organization offers an important contribution to research on inner-city problems.

"It's not the case that we go into the inner city every few years, do a few studies and get some data," Habiby said. "We are in the inner city every single day."

In addition to research conducted in major U.S. cities, the ICIC also acts as a consultant for inner-city businesses in Baltimore, Boston, Oakland, Calif. and Kansas City, Mo.

The consulting program works with teams of MBA candidates assembled to assess the needs of the various urban enterprises.

In choosing clients--who rarely pay for the professional advice--the ICIC attempts to create a core group of businesses that it feels can provide a foundation for economic growth in the area.

The original benchmark studies, like the one now being done in Miami, often provide the direction for future consulting efforts.

"We do this detailed research, which gives us a clear road map as to how to leverage our program activity," Habiby says.

Aside from simply providing services, the ICIC has introduced high-profile corporate partners to many of its clients.

Miller says that his auto-parts company has benefited enormously from its new partnership with Textron Inc., a multi-national corporation based in Providence, R.I., that ICIC introduced to his firm.

Start-Up Problems

But such successes have come after a series of initial difficulties.

Last year, Luis Soto's Selmac Food Distribution was just the type of company that the ICIC was looking to help.

Specializing in ethnic foods distributed to Boston bodegas--local grocery stores--Soto was set to capitalize on untapped markets.

An ICIC team from HBS offered to help Soto in the initial stages of his company.

The group conducted research on the firm, examined demographic data and was able to help Selmac focus its marketing.

Unfortunately, the MBA candidates could not prevent the firm from closing later that year.

Soto says that the HBS team was extremely helpful but was unable to solve his more personnel problems.

"The location was excellent, the building was excellent, the problem was that we didn't have the expertise," Soto says. "We just didn't know how to do it."

And while Soto does not fault the ICIC for the demise of his business, he does feel that, as originally conceived, the initiative needs to better help entrepreneurs put ideas into practice.

"What they were telling us we already knew," Soto says. "We just couldn't do it."

Soto says that while the HBS students could get to the root of problems with lightning speed, they often had difficulty communicating with those who spend their lives in the inner city.

"Most of the students have no idea what the inner city means," Soto says.

Many residents who have spent all their lives in blighted urban areas have expressed resentment at ICIC initiatives, which they say descend from Harvard with a golden egg.

Urban residents have said Porter's initiative does not give adequate attention to government-sponsored programs such as Community Development Corporations (CDCs) that for years have been waging the war against poverty on the front lines.

Although Soto does not believe CDCs can be the sole cure for inner-city problems, he feels that they cannot be ignored.

"They are a tool, but they are not the only tool for getting into the inner city today."

Making Improvements

With a new office in downtown Boston and a staff that has jumped from two to 12 over the past year, the ICIC seems to be addressing many of those cultural tensions.

Monica Dean, director of the program's national business school network, says the organization is trying to avoid what she says may be perceived as "an issue of ego" with business school students.

"I think that our more recent study teams have been better selected for both aptitude and attitude," Dean says.

Most ICIC staff members believe cultural foibles are not surprising for a pioneering effort to address the needs of the inner city.

"This is a completely new model and it should be expected that there should be some difficult moments," Habiby says.CrimsonGrigory TovbisFANNY LEBRON works at the Maria & Ricardo Tortilla Factory in Jamaica Plain, one of the businesses helped by the Initiative for a Competitive Inner City.