Six Ways To Expand Your Community’s Economic Portfolio
One of the challenges most EDOs face is managing their community’s economic portfolio in a way that delivers sustainable growth. Unfortunately, for the majority of communities the tendency is to either procrastinate on developing a 5 – 10 year strategic plan; or, to ignore the plan that has been developed and simply react to whatever falls from the trees after a good shaking. Neither approach is a path to success. Instead, communities need to copy a page from Oklahoma City’s playbook.
Oklahoma City’s economy is built on the twin pillars of military spending and energy (oil and natural gas). The city has a below national average unemployment rate and a lower than average cost of living. It also has a strong College and University system that generates a ready-to-hire pool of skilled labor. Lucky? Here is what the Mayor of Oklahoma City said in an interview:
“What we are looking at is a balanced economy. We learned from the 1980s that having a one-trick pony just wasn’t going to do it. We’re looking at creating a more firm foundation.”
A firm foundation is what 18 of Brookings “20 strongest cities” have in common.
How Do You Build a Strong Foundation?
Here are 6 strategies to consider for creating a strong foundation your community can leverage for sustained economic growth.
- Grow your core. Attract new businesses that can effectively leverage your existing industry value chain. Better serve the businesses that are already doing business in your community. The key is to be clear on what you are attempting to accomplish. Strategic clarity helps align the focus of supporting organizations and can create a multiplier effect on you community’s overall economic performance. It is important you create a relationship of mutual respect and collaboration with the businesses in your community. You need to uncover and track their expansion plans, and create or strengthen the capabilities/assets/public policies needed to ensure your community is the unquestioned location of choice. Since this business climate work tends to have long lead times, it is important to have a solid plan of action and be disciplined in working the plan.
- Widen your core. Move into adjacent white space by attracting a new industry built around an existing capability. To be successful with this strategy, you will need an anchor capability and/or business to work from. Implementation of this strategy can be costly, so you should consider partnerships (e.g. regional strategy) to present/create an even more attractive capability. One way to define white space adjacencies to pursue is by looking at the value chain of your anchor business and assessing which other industries/businesses also use parts of the same value chain. Ultimately, your community will require an aligned 5-10 year strategic plan to ensure this approach is effective.
- Deepen your core. Modify your asset base and business climate to appeal to a broader set of sub-industries within your core clusters. Develop a better understanding of the industry operating structure. For example, it is insufficient to say the primary industry in your community is Aerospace. Do you mean, aircraft manufacturing, engine parts manufacturing, navigation guidance, nautical system and instrument manufacturing, guided missile and space propulsion, space research, or something else? Chances are your community only participates on one (or a few) of the sub-industries of the Aerospace industry. To be sure, this example is not unique. You need to be objective in determining where your community currently plays, and in identifying the barriers to playing in other sub-industries. You also need to rethink how to customize your community brand promise so it is meaningful and persuasive to each sub-industry segment you want to pursue for business attraction.
- Improve your operational efficiency. One definition of insanity is doing the same thing over and over but expecting a different result. Test a new approach for lead identification and conversion. If the test works, create a repeatable model that allows you to focus on improving the skills of your staff and systematize the processes. This will allow your EDO to process more leads faster thereby increasing your community’s odds of success.
- Improve your lead conversion effectiveness. Increase your focus by narrowing your target. It sounds counter-intuitive. But, by tighter focusing you can better understand the needs of companies in the industry you are pursuing for capital investment. It also allows you to create stronger and more trusting relationships with the site selection consultants and thought leaders that work in the industry. Focus creates deeper understanding, which results in stronger and more effective strategic plans. The fact is, complexity stifles growth. It inhibits speed, and speed can be a competitive advantage for your community.
- Broaden your attraction search. Increase efforts to attract FDI. Expand your outreach to include more countries with business concentration in your key industry clusters. The barrier to implementing this strategic approach is the resources required. It is a perfect opportunity for your community to collaborate with regional and statewide outreach efforts to help amortize the costs. There is a time to compete for local benefit, and there is a time to collaborate for the common good. Understand and appreciate the difference.
Slow and steady definitely wins the race for sustainable economic prosperity. Unfortunately, it doesn’t always win reelections. Pursuing the right path doesn’t mean it is the easy path. To do so often takes strong EDO leadership. It also requires the skill of “leading leaders”. But, done right you will put your community on a course that will build a strong economic foundation capable of weathering the hard times and disproportionately capitalizing on the good times.
What additional strategies would you add to these six? What have you found works? Have you tried any of the above strategies only to have them fail? If yes, in retrospect, why did they fail? Some of the best learning is from analyzing the reasons for failure. Please share.
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