For years, businesses have focused on the “hard edge” — logistics, speed and capital efficiency, Forbes Magazine Publisher Rich Karlgaard told a Bend crowd of nearly 400 on Wednesday.

But , Karlgaard explained, that alone is no longer enough to withstand an economic storm. Now, businesses need a “soft edge” — a deep expression of their cultural values, purpose and aspirations.

“The soft edge is often disrespected by people who live and are comfortable on the hard edge,” said Karlgaard, keynote speaker at Economic Development for Central Oregon’s annual luncheon.

“It’s fuzzier. It’s harder to measure; your return on investment isn’t as clear and certainly not as fast. So why do it? Because it creates extreme employee loyalty and extremely loyal customers.”

In September 2012, Karlgaard began to ponder the idea of why some successful companies survive over time and others do not. That month, he said, Apple became the nation’s most valuable company, worth more than $660 billion. And Eastman Kodak declared bankruptcy.

“Eastman Kodak, arguably, was the Apple of mid-20th century America, this leading consumer gadget company,” he said.

Karlgaard highlighted other companies across the nation that represent various soft-edge components, such as having an engaging company story, developing products with emotional engagement and being a company consumers can trust. Publication of his book, “The Soft Edge: Where Great Companies Find Lasting Success,” is scheduled for later this month.

During his speech Wednesday, Karlgaard also discussed what he called the social-media bubble where he lives, Silicon Valley. He believes it will burst sometime this year, and he encouraged Bend leaders to have patience and hone Bend’s attributes, instead of trying to mimic Silicon Valley or chase a trend.

“What Silicon Valley has become is this big home-run gamble on who can scale the fastest and win a popularity contest in the social media field,” he said.

When it bursts, it’s going to have to reinvent itself, he said, and it’s going to find that places like Central Oregon have figured out something that is worth paying attention to: the value in making things.

Applying technology, whether it’s biotechnology or information technology, to solve real world problems is the future, he said.

“Ninety-nine percent of the people in the world don’t live in the algorithmic world. They live in the physical world, where we’re making things, moving things around,” he said.

“In Bend, you’re at a great intersection between Silicon Valley design (and) abstract thinking — (along) with (having) all the creative people here, the people from smaller … communities, rural backgrounds and so forth, that are really adapted to working in the world of things.”

—Reporter: 541-617-7818, rrees@bendbulletin.com