How a Dose of Data Reality Can Enhance Your Region’s Competitive Positioning

by Gene DePrez, Americas Leader, Global Location Strategies, IBM

Three trends are disturbing the sleep of regional developers these days. First, globalization has a full head of steam and will not be stopped. Second, the old marketing approaches to attracting businesses aren’t working as they once did. And third, regions are recognizing that to stay competitive they must undergo change, perhaps dramatically – but how?

It’s hardly news that the practice of economic development is changing as the world globalizes and job opportunities shift. It has been many years since Sun Belt developers could confidently lure industrial-based manufacturing, distribution and transportation businesses with the advantages of cheaper labor – plus government-assisted infrastructure and tax incentives – while Rust Belt regions wrung their hands. This business model is clearly not as effective as it used to be, especially since many of these traditional businesses are not even located in North America anymore – they are in Asia or Eastern Europe, and are looking at even less costly environments in Africa.

The changing model of economic development organizations reflects the findings of the 2006 IBM Global CEO Study. In the report, 765 CEOs around the world placed a high priority on innovation in response to massive shifts in the global competitive marketplace – and indicated that business model innovation in particular has the greatest impact on a firm’s overall financial performance.

Recognizing that their employment environments are undergoing significant upheaval and that their economies must be redefined, forward-looking regions are successfully exploring economic development in a new way. They are focusing on attracting industries driven by intellectual capital – research, technology and services. These industries generally are more sensitive to idea collaboration and the requirements of venture capital, and are less susceptible to globalization. Instead of looking to government simply for tax and zoning breaks, these industries seek government assistance in developing public-private value networks to promote collaboration and access to critical services.

Attracting these new industries to an area, and holding on to successful local businesses and industries, requires new thinking. The questions that early-adapting developers have been asking, and no doubt many others will ask soon, are basic, revealing and often uncomfortable.Who are we? What are our real strengths and weaknesses (in-depth, and without hometown bias)? How do our attributes stack up against others? What do prospective employers need and want from communities in this new century? Ultimately, a region needs to ask the most uncomfortable questions of all: Are there more opportunities here, or somewhere else? And even if we have the will to change, how do we do it?

Unbiased benchmarking

While the nature of today’s business world may have economic developers pondering these qualitative questions, the quantitative and analytic tools available today can help provide answers and direction. An area that is serious about growing, or turning its economy around, or stemming the loss of established businesses, can employ the same tools and methodologies that businesses use when they explore growing or relocating to a new area.

But first, regions must get real. They must become significantly more systematic about how they view and present themselves. They need a dose of data reality, approaching development the way an investing business does, driven by hard data and rigorous analysis. Regions need a reality test to compare themselves against competitors who might be down the road or half a world away.What are businesses looking at when they make decisions to move or stay? What criteria? What data? What weighting? How do they score? How do they screen?

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