The budget axe to swing…very possibly in your direction.

The current Business Week notes that 32 (or about 2/3 of the US states) are facing budget shortfalls all the way from California (22.2%) to Vermont (0.1%), and an analogous study suggests a similar fate for private or private/public partnership economic development organizations.

Yet deep down you know that continued or expanded economic development efforts (and budgets) will not only provide jobs, tax revenues and income to your community but are also a major if not the major answer to widely-spreading world economic recession.

What to do?

During the past 48 years DCI has worked with about 400 development clients, and a number of them have shown sizable ingenuity and fortitude in pioneering ways to avoid the budget guillotine.

Here are six that might work for you:

FIRST, MAKE IT CRYSTAL CLEAR THAT ECONOMIC DEVELOPMENT IS AN INVESTMENT NOT AN EXPENSE.  Unlike diverse social programs development has a direct payoff that is as anti-recessionary as you can get: people in full time jobs that pay taxes and buy things.  No other budgeted program can so clearly or simply make that statement.

SECOND, BACK UP YOUR INTENTION WITH HARD NUMBERS: This is pivotal in convincing your Board, your legislative cluster, your donors, your influencers and your public.  The notion is to do what your private business brothers do, translate everything into a numerical Return-On-Investment.  For example, one of our clients is able to show that every $1.00 invested in his program yields annually $6.34 in documented community benefits, a more than 6:1 return on investment.

THIRD, HAVE YOUR PRIVATE EXECUTIVES SPEAK FOR YOU WHENEVER POSSIBLE:  As a top executive in your economic development organization, face it--you have little credibility and can easily be accused of self dealing.  Far more believable are business people who literally live or die by their respective ROI.  Often they are your Board members so use them whenever feasible.

FOURTH, CONSIDER TAKING SOME HIGHLY VULNERABLE ITEMS OFF THE BUDGET TABLE:  It’s astonishing but often 3-5% of an economic development budget can cause 95% of the trouble, and I’m talking here especially about the highly visible categories of “entertainment” and “travel.”  Some smart development groups have arranged that such relatively minor items be paid for by respected business individuals or groups providing greater flexibility of operation at very little cost.  If this just isn’t doable make sure such expenses aren’t subject to misinterpretation.  I recall an incident some years ago where a $24.50 lunch endangered and almost caused to topple a $700,000 e.d. budget.

FIFTH, ENLIST THE SERVICES OF THE LOCAL PRESS:  As you know, newspapers across the nation are in a terrible financial mess, but chances are your local or regional paper is still influential among people who count, and chances are also that the Editor(s) are looking for good subjects for their daily editorials.  One such topic might well be acceptance-without-change of your budget.  The basic message: economic development is the key to opening the puzzle of economic bad times.  And by judicious reprinting and distribution of the piece you can reach not only your local/regional decision makers but also their pivotal influencers as well.

SIXTH, IF ALL ELSE FAILS HAVE A “PLAN B”:  Hopefully these and analogous words of wisdom will help you keep your development budget safe and sacrosanct, but not always.  If the meat axe is aimed at everybody, you need to have a contingency proposition in your vest pocket.  Here my advice is to list items for the chopping block in reverse priority order with the least important first.  The reverse strategy—cutting off bone rather than fat or sinew—seldom works today and simply gets you in bad for good with the budget stranglers.

These six tips are in no way all-encompassing.  I bet at least some of you have developed other tactics to keep the folks with the green eyeshade at bay.  Click on the comments section below and tell us about them.  Or if you want to talk confidentially about your budget strategy in particular, don’t hesitate to give me a call at 212-725-0707.

On the last day of the IEDC Atlanta Conference (Wednesday, 10/22) a phalanx of 20 professional site consultants had at it with close to 700 development practitioners answering a couple of dozen queries seldom unanimously.

But on one point the location advisors agreed: how to and how not to contact them walking a tight rope between apathy on the one hand and annoyance on the other. Some highlights:

1)     They’re busy and their time is literally money so no big brochures. leisurely newsletters or multi-colored sales pieces no matter how flashy and flamboyant;

2)     Plug them in on the bad news too, especially newly closed facilities where a cluster of skilled and talented people are still available;

3)     For your website forget the pyrotechnics; stress hard up-to-date facts and figures particularly when they differentiate you from your competition;

4)     Most of the consultants favored regionally packaged information which covers and combines a number of places with differing characteristics; you’ll gain attention if you join with your neighbors;

5)     In all your consultant communications brevity is the soul of success and the right graphic, as the Chinese once pointed out, is still worth a mountain of words;

In talking to place consultants the famous “KISS” principle still applies (‘Keep It Simple, Stupid!”)  

One of the highlights of IEDC’s recent Atlanta Conference was a “Branding for Economic Development Success” presentation by Ed Burghard, Executive Director of the Ohio Business Development Coalition.   

 

Ed’s not your typical economic development professional.  He comes with 30+ years of experience from Procter and Gamble, a company that knows a thing or two about product branding. 

 

During the course of the past three years working to support the State of Ohio, he’s developed a “Three Moments of Truth” model that was the centerpiece of his presentation.  He’s taken a difficult and challenging topic and boiled it down to three simple boxes: 

 Some key notes from Ed’s excellent presentation: 

1)     Most economic development organizations are “over invested” in the First Moment (Winning the Right to Compete) and “under invested” in the Third Moment (Winning the Reinvestment). 

2)     In today’s online world, a strong brand works to get your location on the short list.  This is increasingly important as 71% of companies do not contact economic development groups during their initial screening.  (Thanks Ed, for referencing DCI’s Winning Strategies Survey on this).    

3)     Not all communities should be engaged in brand building.  Smaller communities will see a better “return” by supporting regional or state economic development groups in their brand development efforts and focusing their limited budgets on Moments 2 (Winning the Competition) & 3 (Winning the Reinvestment). 

Want to speak to Ed? He encouraged all place marketers to contact him via email at Eburghard@mac.com.

The most recent edition of DCI’s continuing research study, “Winning Strategies in Economic Development Marketing,” was released last week.  Since 1996, we have surveyed corporate executives with site selection responsibilities to determine the “customer’s perspective” on best practices in place marketing.  In the 2008 survey, 281 senior corporate executives participated.  

How in tune are you with corporate decision makers’ frame of mind? Try the following, four-question quiz.  The correct answers appear at the end of this post.

1. Executives were asked to select the top three sources of information influencing their perceptions of a state or region’s business climate.  Which of the following is NOT considered a top information source?

     a. Articles in Newspapers and Magazines
     b. Business Travel
     c. National Surveys (e.g. Fortune or Money magazine)
     d. Dialogue with Industry Peers

2. What do executives consider the most useful feature of an economic development organization’s website?

     a. Current comparisons to competitor locations
     b. Directory of available buildings & sites
     c. Information on available incentives
     d. Testimonials from local companies

3. In the 2008 study, which of the following tools was rated as the most effective way to reaching corporate executives who may be considering a new location?

     a. Internet/website
     b. Advertising
     c. Hosting special events
     d. Public relations/publicity

4. At what point during the site selection process is a company most likely to contact an economic development group?

     a. During the initial screening of all possible locations, to request preliminary data.
     b. After developing a shortlist of potential communities, to request specific data or arrange site visits.
     c. After the field has been narrowed to a few finalists, to negotiate incentive offers.
     d. After a location has already been selected, for assistance in identifying a suitable building/lot.

The Answers

1. c
In every edition of the survey, we’ve asked executives with site selection responsibilities to tell us which sources of information influence their perceptions of a community’s business climate.  While the order has changed somewhat over the years, the top three selections have consistently been “dialogue with industry peers,” “articles in newspapers and magazines” and “business travel.”  In the 2008 study, “national surveys” is the sixth most important influencer of executive perceptions. 

2. c
Executives were presented with twelve features that are commonly included in the design of an economic development organization’s website.  “Information on available incentives” was selected by 82% of respondents, earning it the top spot.

3. a
In the 2008 study, “internet/website” captured the highest rating among all economic development marketing tools for the first time. 

5. b
The most frequent response to “At what stage in a site location search would you first contact economic development organizations?” was “After we have developed a shortlist of potential communities, to request specific data or arrange site visits” -- 40% of those surveyed selecting this option. 

Want to download the 2008 edition of the report? Click here.

What’s the value of a promise?  In some economic development circles it’s good for $250 million.

A trend around the country is Promise programs, scholarship funds that front the college tuition bill for every student in a community.  Kalamazoo kicked this off in 2005 when a masked group of donors pooled their funds to send students to Michigan colleges.  Since then, other communities like El Dorado, Arkansas, Pittsburgh, Pennsylvania, Denver, Colorado and Newton, Iowa are following suit. 

Last week 80 communities gathered in Kalamazoo for PromiseNet, a conference for existing and prospective Promise communities to share best practices.  Promise programs have been cited as leading to economic development turnaround, attracting developers and increasing college enrollment.  El Dorado notes that home sales are up 10% since their program began in ’07, bucking state-wide and national trends.

It’s no question that these promises are incredible gifts.  Still, it’s worth remembering that a Promise is a tool for economic development, not a silver bullet.  I recently traveled with Ron Kitchens, CEO of Kalamazoo’s Southwest Michigan First, and Ron’s quick to point out to other Promise communities, “You bought a scholarship program, not a factory.” 

But Promise communities want their investment to move the meter, and rightly so.  What’s your opinion?  How will Promise programs impact communities?  Are you living in a Promise community and seeing results?  What’s working and what’s not working.  And just what do you think the legacy of these programs will be?

“What’s in a name?”  William Shakespeare asked.  In the case of DCI, the one word answer is “plenty!”

Therein lies a double tale:

• A few years ago DCI was hired by a State with not surprisingly a Governor from one of the two major political parties.  Immediately after he described his decision to the press, he was attacked by the leader of the opposition party for selecting a big Washington lobbying firm closely allied with controversial political leaders which he alleged to be deeply enmeshed in “the culture of corruption”.  You guessed it: they got the wrong DCI! 
• Now it has happened again—this time in a supposed conflict of interest by a company representing an Asian country allegedly controlled by a repressive military dictatorship.  Again, a different DCI than Development Counsellors International.   

SO LET'S SET THE RECORD STRAIGHT.  THERE ARE TWO "DCI" AGENCIES.  The first DCI is Development Counsellors International  —   headquartered in New York City, specialized in economic development and tourism marketing.   We are non-partisan and non-political with clients of every color and tint in the political rainbow over the past 48 years. 

The other “DCI” is titled The DCI GROUP.  They are an important political lobbying organization in Washington DC with a strong tilt towards the Republican party and conservative causes.

We’re two different agencies doing different things for different sets of clients.  Now that we’ve got that straight we can move on to other things!

Special thanks to all of those who entered DCI’s first ever “cartoon caption contest.”  We received a total of 89 submissions.  The cartoon team of Jon Stamell and George Hughes judged the contest and selected five winners  (as well as one "bonus" category winner) are listed below.

Here are the winning captions:

"We were very lucky to find this shovel ready site…"  (submitted by Rob Anderson, Project Manager, Massachusetts Alliance for Economic Development)

"Permitting turnaround took only 6 months…" (also submitted by Rob Anderson, Project Manager, Massachusetts Alliance for Economic Development – what a creative fellow)

"…and as Mayor I am proud that our incentive package was key to attracting this fine company to our great city." (entered by David Lyman who unfortunately neglected to share his title and organization)

"His mother and I try to be supportive.  After all, we aren't losing a son, we're gaining a bedroom." (shared by Mark Podemski, Vice President for Development, Rockford Area Economic Development Council)

"Now I would like to announce the government's new recovery plan!" (submitted by Jim Renzas, President, Location Management Services)

We also had a sizable number of captions involving a former New York Governor who was in the news at the time of the caption contest.  The "Best of Elliot Spitzer" Award goes to Chuck Alvey, President & CEO, EDAWN who offered the simple yet compelling caption of: "Ladies and Gentlemen, Elliot Spitzer!"

All winners receive a framed copy of the cartoon with their caption included.  Congratulations to Rob Anderson, Mark Podemski, Jim Renzas, David Lyman and Chuck Alvey for their winning submissions.

When you lose something, learn something.

This is the third in a group of five economic development marketing misses, one for each decade I’ve been in this business.

When I first started in economic development in the late 1950s there was no such thing as economic development targeting.  Every competing county or community – and there weren’t that many – considered and described themselves as a combination Nirvana or Utopia; letter perfect for any kind of economic activity from anywhere.

About three decades ago targeting began to take over often with two characteristics focusing on investment opportunities:  A. where you had a demonstrated economic advantage; B. where the right target was of special value to the community’s sustainable future.

Targeting is a sizeable step forward, but it brings with it its own set of problems including:

• If everybody picks the same target you lose the advantage of any competitive leadership, and targeting itself proves counter- productive
• If you don’t have effective follow up you lose all the advantages of targeting because in the end nothing happens

Unfortunately for many development groups both conditions hold sway.

For example, experts agree that only a handful of places will have viable life science centers, but it is a relatively rare community that doesn’t list biotechnology or an analogous title among its prime targets.

Also, literally hundreds of thousands and sometimes millions of dollars are poured into target advertising or “cluster marketing” programs in which there is little or no follow-up should a potential investor actually show interest.

Ergo, here is a list of common sense guidelines for the now universal business of targeting:

First, as they say in baseball, hit the ball where the fielders aren’t; if you must select a common target, lay claim to a special piece of it.  For instance, Buffalo-Niagara Enterprise has set its site not on biotechnology generally but rather on the limited but important province of bio-econometrics, the place where bioscience intersects with computer science.

Second, look at unusual targets where you have less competition.  A medium-sized Southern city and DCI client was we believe the first place to target non-profit organizational headquarters.  As a result they arranged a luncheon meeting of non-profit executive directors in Washington, DC where they hoped to attract 30-40 participants.  Instead they did welcome 161 top people simply because nobody else had done that before.

Third, have a follow-up organization and process firmly in place before you start marketing.  What’s best here, we’ve found, are follow-up teams led by local/regional private business people in analogous industries who can honestly say to prospects: “This has worked for us; it could also work for you.”

How do you target?  Does it work?  Tell us about it.  Scroll to the comments section below and give us your thoughts!

Welcome to DCI's "Cartoon Caption Contest."  Here's how the contest works:

1) Take a close look at the cartoon specially created by cartoon team, George Hughes and Jon Stamell, a creative duo whose cartoon clients have included law firms, publishing companies, wineries and even Ross Perot (leave it up to a cartoonist);

2) Click on the "Comments" section below and post your entry for a caption.  Make sure to include your name and email address;

3) Enter the contest as many times as you like (with as many caption entries as you can come up with).  And feel free to extend the contest to your economic development colleagues across the US and around the globe.  

The contest closes on March 28th at midnight.  George Hughes and Jon Stamell will then select the top five winning captions which will be announced by DCI on Tuesday, April 1st (April Fools Day, of course).  The winners will take home a framed copy of the drawing with their caption.  The cartoon will be signed by George and Jon.

But best of all, you'll own bragging rights as one of the economic development world's most creative individuals.

P.S.  And I’ve been asked to add that if you would like to discuss using cartoons for any kind of promotion or advertising, you can contact Jon at 917-608-1390

Learn by your mistakes.

I’ve been doing that for a little over 50 years of economic development marketing practice and have picked out five of the biggest I’ve either made or viewed for this blog series.   I’ve already covered the first in a previous blog Projecting Job Numbers: Recipe for Economic Development Suicide on the folly of projecting job numbers as a fund-raising economic development device, so let’s move on:

MISTAKE NO. 2: PICKING AN ECONOMIC DEVELOPMENT DIRECTOR BY STARTING WITH A NATIONAL SEARCH

“We’re going to get the best economic development person in the country” one of our clients said to me a few years ago.

“How much are you going to pay?” I said, and he named a figure that seemed to me about double the appropriate prevailing wage.

That client went ahead and hired one of the best known US developers who started by bringing in an equivalently expensive Associate Director, thoroughly shook up the staff beyond recognition, initiated a sizable economic base study, picked out a new and much more lavish office location -- and then left in six months for an even more prestigious and highly paid development post. 

National searches for development leaders are often appealing to local leadership but they can also lead to sizeable and often unexpected consequences.  Here are just a few potential difficulties:

• Differences in community conditions and characteristic
• Demoralization of existing staff
• Tendency to seek out the single outsider hero instead of relying on logical and proved local/regional resources
• Possible dissatisfaction by the new hero’s family
• And of course hugely increased costs along the way

Just one of many possible illustrations: a Midwestern community started on a North America-wide search and did it right.  They got the right Executive Director who truly galvanized the development program. But his wife couldn’t locate the right local religious instruction for her four children and within less than a year the still new director had departed for a much larger city with broader educational alternatives.

Sure, national searches can work but only after you’ve looked hard for local nominees who tend to know the community and its business challenges and potentials and have already made a strong community commitment.

Final example: DCI was asked to help recruit a CEO for a newly minted development organization.  It came down to two candidates, one of them a smart, quiet, highly active local banker; the other, a widely known, much quoted economic developer from 2,500 miles away.  The outsider “guru” was selected who then promptly became involved in a public brouhaha with two members of the Board and resigned after a year of widely watched turmoil.  The youthful banker was now picked, and for the past ten years has done an outstanding job.

I’m not saying don’t institute a national search; DCI has had dozens of highly effective clients who were hired that way.  I’m saying first start at home.  You may be happily surprised at what you find.

Agree?  Disagree?  Click on comments below to convey your brickbats or benedictions.