Report On The States;

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CENTER OSSIPEE, N.H., IS NOT THE sort of town that makes you think instantly of twenty-first-century America. Deserted by the railroad and skirted by Route 16, the main gateway to the Mount Washington Valley vacationland, it is a small, quiet town lying on the economic fringes of a small, quiet state: the sort of place future generations might drop in on to remind themselves of what life was like in a different, less harried era. In a downtown comprising mostly a post office and a doughnut shop, however, sits the headquarters of a company that symbolizes more the future of the American economy than its past.

"People wander in here asking if we sell antiques," says Douglas Treat, chief executive officer and co-founder (with wife, Nancy) of Yankee Concepts Inc., a state-of-the-art bar-code label manufacturer supplying several Fortune 500 clients and the federal government. "We never see any of our real customers. But that's the reason we moved here in the first place -- to be in a small town where we can take the time to know people, to have a positive impact on an entire community. In a lot of ways, the whole state's like that."

Treat hastens to add that, because Yankee Concepts does all of its orders computer-to-computer and all its product delivery via overnight mail, being off the beaten track hardly means being out of the commercial mainstream.

"We compete directly with the biggest firms in our industry," he avers, "and we beat 'em to death." With his five-year-old company already grossing around $500,000 annually, Treat admits one of his biggest challenges is budgeting enough time for the community activities and recreational pursuits that steered him toward small-town living in the first place.

Compared with a modest hamlet like Center Ossipee, a more obvious indicator of where America is going -- and growing -- is Norcross, Ga., about 20 miles from the heart of downtown Atlanta. A sprawling tableau of shopping malls and industrial parks, Norcross is home base for numerous fast-growth Georgia companies; chief among them is Hayes Microcomputer Products Inc., one of the world's most successful modem manufacturers.

"I knew two things from the outset," says co-founder Dennis Hayes, a Spartanburg, S.C., native and Georgia Institute of Technology grad. "First, that I wanted to live in or near Atlanta, the one southern capital with all the amenities of a majorleague city. And second, that I wanted to start what would become a large company. The range of resources we have here are the real keys to that future growth."

As distinct as the towns and states they inhabit, Treat and Hayes symbolize something new about the pattern of economic growth in the United States -- a pattern captured by, and reflected in, INC.'s 1986 ranking of the nation's hottest spots for growing businesses. Unlike INC.'s previous reports on the states, this year's ranking focuses exclusively on three variables. In the four years from 1982 to 1986, now many new jobs were created in a state? How many new companies were founded? And how many young companies experienced significant growth? Taken together, these three measures provide a strong indication of how successful each state has been at nurturing new businesses and encouraging expansion. The chart on page 58 reports the results. Accompanying the chart is a note explaining definitions, cutoff points, and other methodological matters.

Some of the states at the top of the list are those you would expect to find there: Alaska (#2) and Texas (#3), both hit hard by the oil crunch of the last 12 months but still proven performers over the four-year period; Maryland (#6) and Virginia (#10), each aided by a generous influx of federal dollars; and such perennial high-tech fliers as Massachusetts (#9) and California (#11). But the presence of New Hampshire (#4), Georgia (#5), and, above all, topranked Arizona in the list's First Five suggests a diversity in the geography of economic growth that has gone unrecognized by most politicians and pundits. Without California's Silicon Valley or Massachusetts's Route 128, without vast mineral resources or indeed much of anything else to build on, these three states have somehow constructed entrepreneurial economies that handily outstrip their sovereign competitors. A look at the ingredients of their success reveals a surprising variety of paths to prosperity -- and a glimpse of economic futures both more diverse and more dispersed than anything in the past.

ARIZONA: POWER FROM THE PEOPLE

In 1969, LeRoy Ellison, a young Harvard graduate, left his job at General Electric Corp. to start Capex Corp., one of the Phoenix area's first software companies. Knowing little about business, having no local venture capital sources to turn to, Ellison still managed to cobble together the financing for a company that would grow to about $20 million before its acquisition, in 1982, by Computer Associates International Inc. Since then, Ellison has gone on to become Arizona State University's first Entrepreneur-in-Residence and to lend his support to numerous other high-tech ventures.

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