The New York Times had an interesting article over the weekend about how universities around the country are now working closely with investors to ensure that promising ideas are nurtured and turned into successful start-ups.

Bob Tedeschi reports that the difference between these academic “proof-of-concept centers” and traditional business incubators is that they get involved in a much earlier stage.  He writes: “Rather than offering seed money to businesses that already have a product and staff, as incubators usually do, the universities are harvesting great ideas and then trying to find investors and business people interested in developing them further and exploring their commercial viability.”

Andy Levine

President/Chief Creative Officer

On Friday morning I will be participating in a “Branding the City” Panel at the World Investment Conference in La Baule, France.  Here’s a link to the conference webpage (www.labaulewic.org).  A very interesting line-up of speakers will be presenting.  

I’m interested to see how this largely European audience reacts to “five rules” detailed in my presentation:

1.      Be Different – Really Different

2.      A Logo is Not a Strategy

3.      The Calf Rarely Brands Itself

4.      Find the Right Balance Between External and Internal Customers

5.      The Case Against a Single Brand

Hopefully, this will generate some controversy among the group. 

You can check out the full presentation at (http://aboutdci.com/dci/media/docs/Five%20Rules%20of%20Successful%20Place%20Branding%20%20%20Branding%20the%20City%20on%20June%205.pdf).  As always, I welcome your candid comments and thoughts. 

How did we get into this economic mess?

Referencing his latest book, "Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation," (www.simonandschuster.com/) Dan observed that with the subprime crisis and banks collapsing the “smartest people in the financial world were now seen as dumb as you and me.” He said that the continual subprime misdiagnosis became a mere symptom of a “global virus of bad lending decisions” that began in the US and quickly spread to Europe and around the globe.

Instead of nations growing together, we started to shrink together. In fact, a report published in January by the International Monetary Fund (IMF) predicts the first contraction of advanced economies’ GDP since World War II (http://www.imf.org/external/pubs/ft/weo/2009/update/01/pdf/0109.pdf). Dan said we continue to witness a decreased velocity worldwide in capital, goods and services, and people due in part to a switch in gears from a free trade policy to protectionism and the great sense of mistrust in governing bodies such as the Federal Reserve.

How should countries market their advantages for continued foreign direct investment (FDI) in the downturn?

Dan believes that the previous approach of highlighting low costs and available workforce to attract FDI will take a back seat to countries that can point to promising advancing industries within their borders. Such countries can then market this to companies looking to get similar projects scaled up. For example, Denmark has a head start in the solar and wind energy industries, which may provide a competitive edge in helping to attract corporations looking for a market with this concentration in place.

What’s the best approach to growth in the tourism industry at this time?

The tourism industry has been hit twice as hard as other sectors with the lasting impact of the energy crisis on top of the economic downturn. Dan’s advice to boosting visits to a region or country amidst the downturn is to focus on lower profit margin visits such as those by backpackers or students in an effort to get people familiar with and in the habit of traveling to destinations, even if it’s on a shoestring budget.

Is there light at the end of the tunnel?

Despite the doom and gloom in our economic outlook, Dan is still optimistic about the US in the short term and the world in a longer term sense. As the downturn hit the US early on in December 2007 and with our new global financial architecture, he said that it’s probable and highly possible that we’ll start to emerge from the recession in the second half of 2009. He believes that important factors in our recovery will include the aggressive stimulus funding, low interest rates on borrowing, and our continued capacity for innovation.

What’s your take on where we’re headed? How long will it take to get on a path to economic recovery? We’d love to hear your thoughts.

With our nation's loss of nearly 600,000 jobs last month and pink slips now being doled out at the rate of 20,000 per day according to a recent front-page headline in The New York Times, communities across America have good reason to think "the sky is falling."  Few occupations or corners of the country are being spared.

So what are economic developers to do?  Do they throw in the towel until the economic stimulus plan starts to work and the economy shows signs of recovery?  Economic developers in communities – big and small, rural and urban – might do well to take a page from Kalamazoo, Michigan. 

After suffering a long period of economic setbacks in the 1990s when factory closings, corporate mergers and downsizings hacked thousands of high-paying jobs, the community embraced a long-term economic development strategy now known as "Community Capitalism."  It's a "by your own bootstraps" approach to revitalization that harnesses the resources of corporations, non-profit organizations, educational institutions and entrepreneurs rather than looking for a "bailout" from state or federal governments.

Kalamazoo's successes are recounted in a new book, "Community Capitalism: Lessons from Kalamazoo and Beyond."  The book, which has been featured on FOX Business News, and its practical advice on what communities can do in the face of devastating job losses, is gathering a head of steam in this economy.  One community, Newark, Ohio, even bought 1,200 copies of the book, passed them out to residents for inspiration and held a series of town hall meetings to discuss what they could do to help themselves.

Now, the book's author and Southwest Michigan First CEO Ron Kitchens is partnering with Eric P. Canada of Blane, Canada Ltd. to present a Webinar on Community Capitalism on March 10 at 1:00 p.m., CST.  The 90-minute session costs just $89.

Don't be "Chicken Little" running around proclaiming that the sky is falling.  Take a hard look at how your community can seize control of its economic future.  Consider registering for the Webinar at:  http://www.eventbrite.com/event/272309485. 

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!