Japan is already one of the most sophisticated technology economies in the world. It may be difficult to add to your existing knowledge and practices.

My role today is to assist with your discussion on a strategy that will further develop a high technology economy for the future of Kobe. I will give my perspective on how and why Seattle became a center of technology, and also how we market ourselves to the world. I am like ice on a pond. I have a thin amount of knowledge about many subjects.

Cities in the United States have different political cultures. It can be difficult to transfer lessons and best practices between American cities. It is more difficult to adapt ideas between countries. Seattle strongly believes it is important to learn lessons from cities throughout the world. How do other countries and cultures solve their urban problems? We try to find these answers during the annual study mission program that I will later present. Kobe, Hyogo Prefecture and Osaka were the focus of the 1994 visit.

There is a legend that when Seattle was founded and establishing itself as a center of business, it looked to the world for appropriate models of success. Clearly, Seattle could not tie its future to the central government that was 3000 miles away. Luckily, the United States Government recognized it could not micromanage Seattle's affairs from Washington DC. Seattle and the United States looked to Japan for a model.

Seattle's early leaders, recognized that Edo, now Tokyo, had extended strong control of the "Han", or feudal states of the Tokugawa period. We looked to the period when each region of Japan had to be self sufficient. Seattle found considerable wealth in the Kansai area in Osaka and Kobe during this ancient period. They also found a history of local control on the critical issues of commerce. From the time of the Hideyoshi, the commercial strength of the area was led by local officials. They created their own educational institutions. One example is the Kaitokudo, an institute of higher learning, established in Osaka in 1724. Seattle learned that when local interests including business, education and government worked together to develop a shared vision and economic strategy, a city can have great success. This was done under a feudal lord we now call a Mayor. My remarks will focus on local partnerships and strategy. Our model, however, is feudal Japan, and we recognize that we are on our own. As they say in China, " The sky is very high and the emperor is far away".

If there are any historians in the audience that are trying to remember this legend, you can rest your brains, I come from a innovative city and I invented the legend. I may have also invented Japanese history. We invent everything in Seattle How did Seattle become a city of high technology and innovation and what lessons can be learned?

Thirty years ago, Seattle was dependent on a natural resource-based economy. Fishing, timber and wood products, and agriculture were the mainstays of our economy. Seattle was distant from the major North American markets, a remote location for manufacturing that required costly transportation. Fortunately, Boeing could fly its products to its customers.

Compare that with today. Recently, the "Christian Science Monitor", a leading newspaper called Seattle the capital of the new economy. It is ranked as one of the most livable cities in the United States. It is the center of multiple, leading technologies, sciences and research. What caused this revolution in Seattle's destiny?

Seattle experienced three significant changes over the past 30 years. First the growth of Asian economies and Asian trade made the port complex of Seattle/Tacoma the second-largest in the United States. Japan is a major contributor to our success and we thank you. Second, the development of wide bodied planes by Boeing changed our location. The distance from Seattle to London and Tokyo via air is equal. Seattle changed from a remote location in North America--the Last Frontier-- to accessible because of air travel. We can now fly over the polar ice cap to Europe cutting the times to get to these markets. The third change key for Kobe, was the shift in the American economy from heavy manufacturing to services and high technology. The investment in high technology is in people and not in plants and equipment. Transportation costs of materials are not a factor but quality of life for employees is. Seattle is considered a great place to live in the United States as Kobe is in Japan. This is part of the story I will tell.

One of the key ingredients of our success is learning from others. You hold conferences such as this. We take 90 to 100 of our leaders and each year visit the world. In 1982, the Mayor of Seattle and our business leadership began a program to visit leading American cities to study their success. We asked the question, what could we learn from these cities strategies and programs? We visited one American city each year until 1992 when we took a group of 71 to Amsterdam, Rotterdam and Stuttgart.

The success of this mission led to an annual visit to a world class city. Cities we visited have included, Amsterdam and Stuttgart; Kobe and Osaka; Hong Kong; London; Singapore; Sydney, Australia; and last year Berlin, Germany. This year's Study Mission travels to Stockholm, Sweden. We have 100 members in this delegation, led by the Mayor, the Chair of our Chamber of Commerce Seattle's congressman and the Chair of our Trade Alliance Board. Next year's trip will be to Barcelona, Spain

One of the important issues we examine is what these regions are doing to be successful in high technology. I plan the content of these visits under the theme of, "A Competitive Region in a World Economy." I will give my perspective based on both the Seattle experience and the lessons from planning the eight missions.

Seattle began these overseas missions when we realized that the world had changed and that we could not ignore our new circumstances. We realized that we don't have a monopoly on good ideas and best practices. We look at what others do and adopt their practices to our conditions. The creation of the Trade Alliance was based on an Amsterdam organization. We visited this organization on our first international visit. We adopted the model from Amsterdam and modified it to fit our local characteristics.

A Boeing executive stated after one of our visits, "World Class companies require world class cities". Kobe and Seattle's competitors will be the best in the world. The benchmark that you should set for yourselves is not just Seattle or Osaka or Tokyo, but the best in the world. Seattle and Kobe have no choice.

When I say Seattle, I am not referring to the city limits of our central city, but to the entire metropolitan region of 3 million people. When you look at a globe of the world, you see the names of the central cities representing each economic area. This is the brand name for an area. Business people, tourists or students who visit our city from around the world do not know that 145th street is Seattle's north boundary and 205th street is the county boundary. Our region reaches from the City of Everett in Snohomish County in the North through Seattle and King County in the center to the City of Tacoma and Pierce County to the South. We are an regional economy which must work together to be successful. Global competition does not allow for local political battles.

A basic entrepreneurial atmosphere is required to be at the cutting edge of technology. How do you treat failure and risk taking in Kobe? The City of Seattle's 2001 calendar for example, features innovative city programs. Even the city government and city employees are encouraged to suggest new ideas and methods to provide city services. We have a fund that neighborhood groups can apply for to improve their area. The groups must match these funds with local money or volunteer labor. The projects could be to build a playground or other neighborhood improvement. The program works to foster creative thinking on the part of our neighborhoods.

A natural resource economy is based on exploiting a resource that takes time to grow or extract from the earth. A manufacturing economy, like Kobe's, is based upon finding efficient and lower cost methods to produce things. An innovative economy is based upon developing new ideas and bringing them to market. This means new companies and successes and failures. Our frontier spirit has assisted Seattle in becoming a place where risk taking is accepted and admired.

We have worked to develop a strategy that supports the growth of our current technology sectors and attracts new companies. We don't have technology parks in Seattle, we are a technology city and region. The entire city is a technology park surrounding a major research university along with other great universities and community colleges. Our Economic Development Councils developed a strategy with a high technology future as the objective. Our community also created a Technology Alliance that supports the growth of this industry.

The Technology Alliance was created as an affiliate organization of the Greater Seattle Chamber of Commerce. Its focus is on creating programs that foster education, collaboration, and investment in our technology economy. It is a partnership of trade associations such as our software industry association, research institutions, chambers of commerce, government, education and community leaders. This organization coordinates our work to strengthen our technology economy. The Alliance works to enhance technology education in our schools. It works to build our reputation as a technology leader and it works to foster innovation. It also formed an "Alliance of Angels" which provides capital to promising start up companies. It is important that the government, university and technology business leadership created a partnership to keep our competitive edge. If the Mayor of Kobe and the Chairman of your Chamber of Commerce brings a study mission to Seattle, the Technology Alliance should be one of your presenters.

The development of strong clusters of firms within on industry have allowed the development of industry associations. The Washington Software Association brings the members of this industry together to share information and expertise. This association now has over 1500 members. There is a Biomedical association, Aerospace Alliance, Electronics Association and others. The development of industry clusters and the specialized support services this allows, is considered valuable to the development of a high technology industry.

Two recent studies examined the factors involved in Seattle's success. The first, commissioned by Kobe and prepared by Pacific Northwest Advisors(www.pnwa.com) is called, "Seattle Information Technology Report." It is an excellent and inclusive overview of our region and its businesses and institutions. A second study by the Daniel Evans School of Public Administration at the University of Washington, written last December for the Brookings Institution, will also be instructive to your discussions. The second study is called, "Ten Steps to a High Tech Future: The New Economy in Metropolitan Seattle". It also examines the reasons for Seattle's high technology success. I will incorporate their recommendations into my presentation.

The University of Washington study reported that between 1995 and 1998, 6000 new high technology jobs were created in the City of Seattle and 27,000 were created in the metropolitan area. The report focused on where technology firms located in our region and why they choose that location.

Now what do these conclusions and my observations find as the major ingredients of Seattle's success and the subjects that Kobe may learn from. I will discuss twelve ingredients for success.

First: RESEARCH UNIVERSITY

When you look at the clusters of technology companies by sector in the United States and Europe, it is easy to observe that they are centered around major research universities. Boston( Harvard and MIT), Research Triangle of North Carolina (Duke, North Carolina) , Austin (University of Texas), and Silicon Valley (near Stanford) are all centered around leading universities. Seattle has the University of Washington. This university, with over 30,000 students, received almost $600 million in federal government research money last year. This was second among American Universities. It also receives support from local businesses and foundations. Our university has been a research leader for decades. An example is in the medical and biomedical field. The research conducted at the University, as well as at Seattle's Fred Hutchinson Cancer Research Center, has created one of the leading biomedical centers in the United States.

The research at the University covers a wide range of subjects. Ocean and Fishery Science received 60 million in research funds in 1998. Engineering received $37 million. Medicine received $245 million. Nursing received $10 million. Pharmacy received $6 million, Public Health $34 million dollars. This is just one institution in Seattle.

The Fred Hutchinson Cancer Research Center, Swedish Hospital and other Seattle Medical institutions received millions of dollars more. The Fred Hutchinson Cancer Research Center is the largest recipient of money from the National Cancer Institute in the United States. The University of Washington report lists research as one of the keys to our regions high technology success. If Kobe aspires to be a leading technology center, your universities must have world class research in those areas in which you want to develop local industries. Industries will cluster in groups. In high technology the university relationship is critical for both research, students and the interaction between facility and companies. How does Kobe Universities manage spin-off companies from university research? The University report states, "Biotechnology...is critically dependent on close associations with university-based researchers". Berlin now has business research being conducted in university facilities acting as technology parks. Humboldt University is moving the engineering school of the University to this technology park.

Second: PEOPLE

As I mentioned earlier, the investment in high technology is in people and not in big facilities and equipment. People are mobile. The best and the brightest can live anywhere in the world today. You need a quality education system to train and prepare all levels of workers for a technology industry. The education system becomes the second key ingredient in creating a world class technology city. The inner City of Seattle has one of the highest educational rates of any large American city. We also pride ourselves on our community colleges and the continuing education. People need to have education throughout their lives. My wife went to a community college after she was a school teacher to learn medical commuter programming. She is now the computer support person for cancer biology at he Cancer research Center. She is now part of Seattle's high technology economy. "Those urban areas that do a better job of gearing up engineering and scientific academic programs and attracting bright students into those fields offer a competitive advantage to growing high tech companies." states the University report.

Third: QUALITY OF LIFE AND ENVIRONMENT

Your city must be one that can attract and retain the best and the brightest. We cannot chain people to desks in Seattle. We compete for talent. Berlin, for example, works to make its city a fun place for young professionals. When we visited Singapore on a international study mission, we heard officials express concern that the city was not exciting for young professionals and they were planning to build a major entertainment complex. If Tokyo or Seattle has more activities for young talented people and a job offer comes, you can lose talent. Seattle has worked to provide arts and culture, concerts, sports and a lifestyle that attracts people. We know that if a company can attract talent to our city, they will want to invest. The Seattle City government as well as other cities in or region have worked hard to revitalize their downtown's. The University report also calls for investment in the Quality of life, " Cities can take steps to encourage a vibrant, diverse setting for cultural activities, eating and drinking, shopping, and entertainment." I was at the beginning of "Urban Resort City Kobe' promotion and I always thought Kobe's program presenting a city as a resort was brilliant.

Seattle is also known for its clean environment and maintaining this is a continual challenge as a fast-growing city. An elected official who does not protect our water and air will lose his or her office. A clean environment is a significant attraction in recruiting technology companies. Stockholm, Sweden is proud to show you fisherman in the downtown and the cleanliness of their water. Kobe is a clean city and the people care about the environment in which they live.

Fourth: TRANSPORTATION

It is critical for Kobe to be connected to its customers. The roads, rail and waterways are important. In high technology, the air connections are the most important. On a recent mission to Berlin, the American Ambassador began his speech by saying Seattle was connecting the world. He attributed this to having Boeing, Microsoft and leading wireless technology companies. Information must flow, people must meet and products must get to market. The long relationship between the Ports of Kobe and Seattle is a testimonial to the importance of transportation to our mutual success. Fifth: DIVERSITY

For the past six months the Trade Alliance has had a loaned executive from Germany. He said he was amazed at how cosmopolitan he found Seattle. He enjoyed the Mexican and Thai restaurants they did not have in his city. He found a German church with the services in his language. He found us a comfortable city. We pride ourselves on our rich diversity. Our companies are enriched by the diversity of the workforce and the cultural and language skills that are available. I can take our visitors to a tea ceremony at our Japanese garden or visit Song Mei Pavilion in a classic Chinese garden we are building at one of our community colleges. We can visit a Thai elephant logging camp or an African village on a Savannah at our zoo. I can visit a Nordic Heritage museum, an Asian cultural museum or the Asian Art Museum or see one of the largest collections of African Art in the United States. Irish bars, Middle Eastern restaurants and Greek music are all available. The second-largest international children's festival in the United States and the international village at our Children's Museum are additional examples. Seattle is also known as one of the best cities in our country for professional women. A few years ago, eight of the nine members of our city council were women. We work to be a diverse community and a comfortable place to conduct international business. We also want to be able to attract the world's best and brightest and make them feel at home when they arrive. We now have 30,000 immigrants from India, who are an incredible pool of talent for our high technology companies. We want jobs for our own young people, but we have been open to global talent.

Sixth: PUBLIC INFRASTRUCTURE

A world class high technology city requires world class infrastructure beyond your transportation system. Your city's bandwidth, energy and power, water quality and other infrastructure must support the company's ability to compete. The telecommunications infrastructure is one of the essential ingredients which supports a high technology economy. Whether it is fiber optic cable in the streets or the use of laser transmission of data, being pioneered by companies like Terabeam in Seattle, a technology city of the future must be connected to the world. In the information age, fiber optic infrastructure and wireless sites are as much a part of a city's economic agenda as are roads and highways.

Seventh: HOUSING

This is a significant issue in our city. Where will people live and will they be happy? Can young professionals find housing in Kobe? Singapore has an excellent system of giving their people ownership that ties them into Singapore and helps create a satisfied workforce. Housing is a major challenge in our region; our economic success has raised the cost of our housing. It makes it difficult for lower skilled workers who are still essential to our economic success to find housing. It can also create a problem in attracting the bright young professionals that our technology companies need. Hong Kong treats housing like a public utility. It is part of the city's infrastructure that supports a healthy business climate.

Eighth: BUSINESS CLIMATE

What is the business climate in your city? Is it customer friendly? Your customers are the companies you want to retain or attract. How does the climate for doing business for high technology companies in Kobe compare to competitive cities in Japan and Asia? What is your tax structure? How easy is it to get a permit? We work to provide a good city climate for business. When a business comes to Kobe, do you try to push the business to a city project or do you listen to where the business wants to locate and to its needs?

Ninth: PROMOTION

Marketing and promotion are important ingredients to establishing the reputation of a city in a world economy. Are the images you present of Kobe appropriate to your economic strategy? Are the marketing materials written in the languages of your customers and are they well written? Are materials that promote trade, investment and tourism consistent? We created the Trade Alliance for regional promotion. This partnership brings the major organizations of government, business and labor together to coordinate our international business promotion. Promotion of a city depends on having a quality product--you need something real to promote. The high technology industry can be assisted in attracting students, researchers, teachers, financial support and businesses.

I would suggest it is time to stop talking about the earthquake. That can make people nervous. It is time to look to the future. I understand while the citizens of Kobe had events on Remembrance Day, January 17th, the government began the effort to bring attention to the future.

Tenth: STRATEGY

Kobe must develop a strategy and investment plan that will help create desirable technology clusters. This strategy must be realistic and build on the local strengths of your universities and people. In global competition you can not proclaim yourself to have a world class industry, you must earn it. Your strategy must address the strengths and weaknesses of various alternatives and play to the strengths. We were lucky in that Boeing and Microsoft started in Seattle. Our economic development councils had to develop a strategy to look beyond these two companies. The Technology Alliance was created as a strategy to enhance our region's technology future. The University report calls on cities to, "Understand the high tech firms in your region and your city's competitive advantages" as one of the ten recommended steps.

Eleventh: GOVERNMENT ROLE

The role of government in our society is to support our entrepreneurs and businesses in a way that allows their success while regulating certain practices and behavior. The quality of the infrastructure, the excellence of the public universities and schools, the business activities of the city are all local public responsibility in my State . The overall business climate is created by government. The development of partnerships with business leaders in order to understand their needs is also necessary for a successful economy. The University report recommends the provision of venture and seed capital. You may be able to do this with government funds in Japan. We cannot. The Technology Alliance has an Alliance of Angels that assists small entrepreneurs in finding capital. They also recommend support programs for entrepreneurs. The President of the Technology Alliance feels that support for innovation is one of the most important ingredients in becoming a high technology city. One small example is an initiative by our city government . They have established a technology matching fund. This allows small non profits and organizations to apply for funds to update their technology and computers.

Twelfth: FOREIGN INVESTMENT

Kobe is known as one of the best Japanese cities for a foreigner to live. This means the quality of a health care facility must be comfortable for international residents. You must have a school that is considered one of the best in Japan. People in business should want to relocate to your city.

Thirteenth: LUCK

Yes, I said there were twelve areas to discuss. Bill Boeing moved to Seattle to operate his family's timber business at a time that airplanes were made out of wood. His hobby was flying and he started making seaplanes. The story of Boeing. Bill Gates was born in Seattle. This is called the luck strategy and if I knew how it worked I would be in Las Vegas and not here in Kobe. There are now 60,000 millionaires living in the Seattle area. These people had luck.

These are twelve area to examine, Research, People, Quality of Life and Environment, Transportation, Diversity, Public Infrastructure, Housing, Business Climate, Promotion, Strategy Government Role, Foreign Investment. Kobe is already one of the premier Asian cities. You just need to reposition yourself for the dynamic global economy. I will now discuss how we market ourselves. How do we develop a brand name for our region and present it to the world? What is the brand for Kobe? Is it Kobe, Urban Resort City? Is it Kobe, high technology city? Do you want it to be , Kobe Earthquake City, when you are attempting to attract talent and investment. What is the image you want Kobe to have in the world? Once you have selected the image or brand, you must repeat the message over and over and not change the message too often. The simple secret to becoming an internationally known city is to borrow two of the best baseball players in the world. I thank the Orix Blue Wave and Kobe for the latest gift, Ichiro Suzuki.

Baseball players play on a team and you must have team Kobe as we have worked to have team Seattle. It is difficult in the big city leagues where the teams have many super stars that don't always get along or want to play together or have different philosophies of how the team should play. In a large metropolitan area, you have many owners and coaches. It is an interesting political management challenge.

Finally, I want to say a few words about our study missions. We will go to Stockholm this spring with 100 of our leaders. We visit a foreign every year to see what we can learn from successful cities throughout the world. We also do it to build relationships between our civic leaders. Our business, governmental, educational and labor leaders spend a week in a world class city. They are away from the distractions of their office, talk with each other and learn to work together. Our goal is to have the most sophisticated civic leadership of any city in America in international culture, business and government practices.

The Great Hanshin Earthquake was in the last century. Kobe must now look forward in order to maintain a strong economy for your children in this century.

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Last updated August 6, 2001