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The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
The Compass of Local Competitiveness v0.9
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The Compass of Local Competitiveness v0.9

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  • 1. The Compass of Local Competitiveness Manual Version 0.9 mesopartner local economic delivery
  • 2. Version of Thursday, 20 November 2008 Creative Commons License You are free: • to copy, distribute, display, and present this document • to make derivative works • to make commercial use of the work under the following conditions: • Attribution. You must attribute the work to GTZ and mesopartner. • Share Alike. If you alter, transform, or build upon this work, you may distribute the re- sulting work only under a license identical to this one. • For any reuse or distribution, you must make clear to others the license terms of this work. • Any of these conditions can be waived if you get permission from GTZ and mesopartner. Your fair use and other rights are in no way affected by the above. The complete legal code is available at http://creativecommons.org/licenses/by- sa/2.5/legalcode
  • 3. Table of Contents 1 Introduction 1 2 Why use a Balanced Scorecard-based approach to LED? 2 2.1 The background of the Compass 3 2.2 Features of the Compass 3 3 What are the key elements of a Compass? 4 4 What are the considerations and activities involved in the preparation of a Compass of Local Competitiveness? 6 5 Different types of Compass Workshops 7 6 Structure of a Compass Workshop 9 7 What happens after the Compass Workshop? 13 7.1 Action planning 13 7.2 Creation of a monitoring system 13 7.3 Implementation of LED activities 14 7.4 Follow-up Compass Workshop 15 8 Step-By-Step Explanation of Compass Workshop: Tables 17 9 Annex 1: An Example of the Application of the Compass of Local Competitiveness in a Subsector: An Upgrading Project with Fresh Vegetable Producers in Gampola, Sri Lanka 33 10 Annex 2: Documentation of a Compass workshop – Investment promotion in Baybay, Philippines 38 11 Annex 3: The Paper Computer 42
  • 4. Summary The Compass of Local Competitiveness is a tool that delivers five results in the context of lo- cal and regional development initiatives: 1. Capture the results of completed and ongoing activities 2. Create alignment among stakeholders about vision and strategy 3. Identify critical success factors for the development of a location or a specific sector or cluster therein 4. Formulate indicators to track progress 5. Define new activities and responsibilities for their implementation Whereas an external development agency would be interested in all five results, local stakeholders tend to be particularly interested in the third and fifth result. As local stakeholders notice the usefulness of the Compass to deliver these results, they tend to be willing to make the necessary time available to participate in a one-day Compass workshop. The Compass is an adaptation of the Balanced Scorecard. While the BSC tends to result in complex, costly software systems, the Compass subscribes to the intention initially underlying the BSC, i.e. to provide a comprehensive yet simple and straightforward performance man- agement approach. The Compass can be applied in four different ways: Action-oriented exercise Comprehensive exercise Overall LED effort One-day workshop that involves stakeholders from various subsec- tors. Recommended only in loca- tions with a strong, cohesive LED / RED effort [4] One-week exercise, consisting of workshops with local stakeholders and a separate effort to define indi- cators and set up a system to track them. [1] Sector or value chain initiative One-day workshop that involves stakeholders from one subsector or value chain. Has a strong business focus and helps business people to better understand their business environment [3] One-week exercise, consisting of workshops with local stakeholders and a separate effort to define indi- cators and set up a system to track them. [2] The most straightforward and easy to facilitate format is No. 3. In a mature LED / RED proc- ess, the most adequate approach would be to combine Nos. 1 and 3.
  • 5. The Compass of Local Competitiveness 1 1 Introduction The Compass of Local Competitiveness is a tool for performance management in territorial development / Local Economic Development (LED) initiatives. It is based on the Balanced Scorecard (BSC) method. Whereas BSC has been designed for the use in companies and other organisations, the Compass is specifically designed to cater for the needs of territorial devel- opment initiatives. The Compass of Local Competitiveness is a tool that gives you • a clarified perception of the vision and objectives of territorial development, • a process of strategic alignment among the stakeholders involved in an initiative, • the identification of the critical success factors of a territorial development programme and of specific initiatives within this programme, • the definition of key performance indicators and specific targets you want to match, • the definition of specific activities to achieve these targets. At what stages of an LED process would you consider to use the Compass? In principle, the Compass can be used at any stage, including the very outset. It is ideally suited for use in a constellation where LED activities have been going on for some time, say six months or a year. It can also be used at a later stage, and it is amenable to being used in a steady rhythm, such as once per year. In our experience, a Compass can be elaborated in a participatory workshop with local stakeholders under the guidance of experienced facilitators. Elaborating a Compass of Local Competitiveness can be the outcome of a single workshop. In case a comprehensive perform- ance management system is needed there is the option to have a sequence of three workshops. The total duration of a single workshop is less than a day. The sequence of workshops can still be concluded within a week. Elaborating a Compass of Local Competitiveness involves a reasonably representative group of stakeholders around the LED programme or initiative and a skilled facilitator with experi- ence in applying the Compass. It presupposes the buy-in of these stakeholders so that they make the necessary time available. Getting relevant stakeholders to participate in a workshop is sometimes a challenge, and this is one of the reasons why the Compass works particularly well in a robust LED process that enjoys the genuine support of stakeholders.
  • 6. The Compass of Local Competitiveness 2 2 Why use a Balanced Scorecard-based approach to LED? It is a widespread phenomenon both in industrialised and in developing countries that LED is conducted with little concern for monitoring and evaluation (M+E). There are a number of reasons for this: • It is often no easy to get LED activities going, and in particular it is a constant challenge to involve the private sector in LED. Accordingly, there often is little to monitor in the first place. If LED activities are going on, stakeholders are so busy managing them, or keeping them going on at all, that little time and energy is left for proper M+E. • LED is often conducted in a pragmatic and ad-hoc way that makes M+E difficult. It is not a constant production or service delivery process, like in a company, but rather a sequence of targeted individual activities. Once a given problem has been fixed, the actors involved often don’t see the point in monitoring and evaluating this. • M+E takes time and effort. It can become costly, it can become bureaucratic, and ulti- mately it can distract from actually doing LED. Given the fact that they always suffer from time and budget constraints, LED players often prefer to devote their scarce re- sources to doing things, expecting that successes will speak for themselves and assuming that managing LED implicitly includes monitoring anyway. Looking at these strong reasons against M+E in LED, we need very convincing arguments to persuade LED actors to do M+E nevertheless. Some such arguments are the following: • We need convincing success stories of substantial outcomes of LED to get sustained sup- port, including funding, for LED. We only get documented success stories if we do M+E. • LED involves a learning-by-doing process. M+E provides us with the means to make im- plicit learning explicit and thus transferable, so that over time the effectiveness and effi- ciency of LED improves and experiences becomes transferable between individuals. • Ongoing, revolving M+E provides us with evidence that helps us to cope with the 80/20 problem, i.e. the fact that we often spend 80% of our effort for activities that only deliver 20% of the outcome. M+E can help us to identify and terminate those activities that have an unfavourable effort/outcome ratio and focus our energy at those activities with a fa- vourable effort/outcome ratio. Why do we suggest a BSC-based approach for M+E in LED? The main reason is that the BSC appears superior to conventional performance management frameworks. Elaborating and monitoring a Compass is more efficient, and it is, well, balanced. Moreover, and more im- portantly, the Compass is more than just an M+E tool.
  • 7. The Compass of Local Competitiveness 3 2.1 The background of the Compass The BSC approach was originally developed for the corporate sector. It was based on a simple observation: Actors in an organisation behave according to the incentives they face, and the incentives are shaped by performance indicators. If their performance is measured against fi- nancial indicators, they will optimise such indicators – even if the short-term optimisation of financial indicators may come to the detriment of the long-term growth potential of the busi- ness. The key idea of the BSC approach was to introduce a wider, more balanced set of per- formance indicators that is not one-sidedly looking at financial indicators but also at other, more qualitative indicators that address the long-term growth perspective of the business. The rationale for using BSC in public and public-private LED efforts follows the same line of reasoning. Conventional performance monitoring frameworks for territorial development tend to look one-sidedly at economic indicators, such as GDP growth, business growth, start-up performance and employment growth. The problem is that newly launched LED initiatives take some time to deliver substantial results against these indicators. The indicators may even deteriorate despite a dynamic LED process, for instance in a region that suffers from the de- cline of old industries, or in a setting where macro-economic framework conditions are ad- verse. A BSC takes a wider perspective, including more qualitative indicators of successful LED. From a pragmatic perspective, it is important to note that a BSC can include a number of indicators that can be improved on a short-term time-line. The purpose of a BSC for LED is to define the critical success factors (CSFs) of the LED ef- fort at large and of specific LED initiatives / projects and to work out the key performance in- dicators (KPIs) that permit you to assess the impact of your LED effort and specific activities. The purpose is not to come up with a complex set of statistical indicators that takes a lot of ef- fort in gathering and updating, but rather a straightforward set of indicators that permit the as- sessment of the impact of LED. In past approaches (like in the case of development assistance donor organisations) unrealistic or not clearly defined objectives (like “The SME sector is becoming more competitive”) were matched with indicators which primarily focused at activities rather than on impact. The BSC opens new pathways to the definition of impact-oriented indicators even for intangible factors. 2.2 Features of the Compass The Compass has often been used by development organisations in the course of their activi- ties. From the perspective a development organisation, assuring monitoring and evaluation is an important goal. Local stakeholders tend to be much less concerned about this. Fortunately, the Compass is more than an M+E tool. It is also effective in catalysing a process of align- ment among stakeholders about the overarching goal and the strategy. In fact, one can use the Compass to achieve five different goals:
  • 8. The Compass of Local Competitiveness 4 1. Assess the results of completed and ongoing activities 2. Create alignment about vision and strategy 3. Identify critical success factors 4. Formulate indicators to track progress 5. Define new activities From the angle of a development organisation, all five goals are relevant. From the angle of stakeholders, at least two of the goals (identify critical success factors, define new activities) are relevant. As long as the Compass delivers on these two goals, local stakeholders will be reasonably satisfied. 3 What are the key elements of a Compass? The conventional BSC, developed for use in companies, looks at four types of factors:1 1. financial indicators To succeed financially, how should we appear to our shareholders? 2. the customer perspective To achieve our vision, how should we appear to our customers? 4. the learning and growth perspective To achieve our vision, how will we sustain our ability to change and improve? 3. the internal process perspective To satisfy our customers and shareholders, what business processes must we excel at? The BSC concept suggests to address these four factors counter-clockwise: create proper in- centives for learning and growth that will lead to constant upgrading of internal processes that will satisfy the customer, so that you have a convincing financial performance as the ultimate outcome. When translating the BSC concept from a corporate setting into the LED scenery, we intro- duce it as the Compass of Local Competitiveness with four core factors that are similar to the corporate BSC but better adapted to the reality of LED: 1 Kaplan, Robert S., & Norton, David P. (1996): The Balanced Scorecard. Boston: Harvard Business School Press.
  • 9. The Compass of Local Competitiveness 5 Economic and financial achievements (growth, business growth, start-ups, employ- ment, ...) What is the impact we need to deliver to keep our voters / our citizens happy? Relationships with external players How do we need to interact with other stakeholders (other local stakeholders, investors, customers/tourists, funding agencies, ...) to make LED a success? The learning perspective (alignment of under- standing of LED, alignment of expectations, role definitions, ...) How can we make sure that we constantly up- grade our understanding of our economic reality and of LED? The local process perspective (interaction between core players, governance pattern, ...) How do we have to organise our LED process and effort internally to assure its effectiveness? A compass can, and indeed should, not only be elaborated for the overall LED effort but also for the specific sectors, value chains or initiatives: • You may want to have a top-level compass that addresses the overall LED effort in a given location. In this case, you elaborate CSFs and KPIs that address the overall LED process, rather than the performance of specific sectors. For this exercise, you would need the involvement of political decision makers, since they are ultimately responsible for set- ting the goals that the LED effort is supposed to achieve. Note that elaborating a top-level compass only makes sense if you have a genuine LED process, i.e. a shared understanding among stakeholders that there is one LED process in the location rather than parallel sectoral development activities. As long as stakeholders are only interested in their re- spective subsector, it is not advisable to elaborate a top-level compass. In cases where you have, for instance, a municipal LED unit, it is an option to elaborate a compass for this unit, and to invite a few stakeholders who represent different subsectors to participate in the elaboration of this compass. • At the next level you elaborate compasses for specific initiatives, preparing a set of spe- cific compasses. Each of them would look at a the LED activities in a given sector, clus- ter, value chain or around a key catalytic project (landmark project). Elaborating the com- pass at the sector / cluster / value chain level creates an opportunity to align the various activities in a given sector towards a shared goal and set of performance indicators. At this level you would involve business people, representatives of supporting institutions, LED practitioners and other relevant stakeholders, but not the top political level. It also makes sense to elaborate a Compass for, say, an LED Agency or a municipal LED unit. • It is even possible to go one level further down and prepare a compass for each activity within a given sector, cluster or value chain. However, you want to check whether the time and effort involved may is in an adequate proportion to the relevance of the project. At the level of a sector, cluster, or value chain, the Compass gets a stronger business focus. A sector focus might look as follows:
  • 10. The Compass of Local Competitiveness 6 Financial results (access to credit, cash flow, ...) and economic results (market share, growth, profitability, ...) What is the result that we need to deliver to keep our shareholders, investors and creditors happy? Relationships with external players How do we need to interact with customers and stakeholders to succeed in the market? Which support services do we need to pull in to improve our performance? The learning perspective (upgrading of com- panies and supporting institutions, market in- telligence, ...) What can we do to better understand our busi- ness? The local process perspective (interaction between core players, governance pattern, ...) How do we have to organise our upgrading proc- ess and effort within and between firms and or- ganisations? In the elaboration of the compass, we suggest not to elaborate the “strategy maps” in the way suggested by Norton and Kaplan.2 We have experienced that the simple unilinear causality that they suggest does not reflect the reality of interrelationships and feedback loops between CSFs in the different quadrants, especially for organisations or networks of actors who are primarily involved in production. We rather suggest the use of the paper computer to analyse the interrelationships between CSFs and identify the CSFs with the strongest leverage. 4 What are the considerations and activities involved in the preparation of a Compass of Local Competitiveness? The Compass workshop may be a useful tool in an early phase of an LED effort, since it seems to open the perspective of stakeholders to the wide scope of activities that territorial development can involve. In particular, it works at an early stage when and if some activities have already been going on that can be interpreted as LED. The main application, however, will usually be in a sequence of activities after an initial diag- nosis has been conducted, practical territorial development activities are going on and stakeholders are interested in clarifying their strategy and defining performance indicators. For instance, the Compass works well as a focused exercise after an initial PACA Exercise, typically between six and 12 months after the exercise. At this stage, the Compass is useful • to capture the learning process of local actors regarding the objectives of their territorial development process, and to align the vision, • to gauge the progress that has been made already, and to define indicators to measure fu- ture achievements, 2 Kaplan, Robert S., & Norton, David P. (2000): Having Trouble with Your Strategy? Then Map It. Harvard Business Review, No. 5, pp. 167-176.
  • 11. The Compass of Local Competitiveness 7 • to identify and prioritise a new round of practical activities. Given the prominence of the Pareto method (see below) in the workshop, it is important that the composition of participants is fairly representative: • Both the public sector, the private sector and other relevant actors should be represented. • The different sectors that are involved in the territorial development effort should be rep- resented. • Participation should be balanced, since otherwise the results would be biased. In order to successfully invite stakeholders to the workshop, proper management of expecta- tions is crucial. • Local stakeholders need to be informed that the purpose of the workshop is to align the vi- sion on LED, to identify critical success factors and prioritise them, to define indicators to measure the impact of LED activities, and to identify additional LED activities. • Local stakeholders need to be made aware that the outcome of the workshop will have a strong impact in terms of guiding future LED, so that the workshop is a good opportunity to advocate their views and interests. • Local stakeholders must be informed that the workshop involves a logical sequence of ac- tivities. Cherry picking and hopping in and out is not an option. It is also an option to play to the curiosity of the stakeholders and use the novelty of the for- mat as a special attraction. 5 Different types of Compass Workshops The elaboration of a Compass is primarily based on structured workshops with local decision makers and stakeholders. Before planning an exercise to elaborate a local Compass, the LED champion has to take key decisions: • Will the exercise only address the public sector or involve both public and private / non- governmental players? This question may appear silly – obviously, LED must involve private / non-governmental players, and they ought to be involved in any effort that aims at goal alignment and the elaboration of performance indicators. At the same time, there is the practical matter that non-governmental players are suffering from serious time con- straints anyway and often are unwilling to devote time to an exercise that ultimately aims at M+E. It may also be the fact that non-governmental players have not really bought into an LED effort, so that effective activities involve the public sector and beneficiaries; in this case, representatives of the beneficiaries would have to involved.
  • 12. The Compass of Local Competitiveness 8 • How far do we want to drill down? Do we want to elaborate the Compass at the top level and the sector / cluster / value chain levels, or do we want to go deeper, also looking at in- dividual activities / projects? And to what extent do we want to formulate indicators? Lo- cal stakeholders tend to be not very excited about formulating and tracking indicators, unless they operate in an organisational culture that has already adopted the consistent use of performance indicators. In most cases, we have found that local stakeholders are neither interested nor experienced in indicators, so that one would consider to involve only those stakeholders who are interested in indicators in their formulation. The organisation of the Compass Exercise can only proceed once these questions have been answered, since only then it is clear who needs to be invited to the different workshops. Com- bining the different options gives us four different types of approaches which are summarised in the following matrix. Action-oriented exercise Comprehensive exercise Overall LED effort One-day workshop that involves stakeholders from various subsec- tors. Recommended only in loca- tions with a strong, cohesive LED / RED effort [4] One-week exercise, consisting of workshops with local stakeholders and a separate effort to define indi- cators and set up a system to track them. [1] Sector or value chain initiative One-day workshop that involves stakeholders from one subsector or value chain. Has a strong business focus and helps business people to better understand their business environment [3] One-week exercise, consisting of workshops with local stakeholders and a separate effort to define indi- cators and set up a system to track them. [2] [1] At the top-level Compass workshop, you set the stage for a process of aligning the over- all goals and expectations around LED. You would probably not assume that the different stakeholders who are involved or interested in LED already have a common understanding of what LED is all about. You need to allocate an adequate amount of time to address this issue. We advise against introducing a search for a vision, since the outcome is too often a generic “wealth & happiness for everybody” statement. We would rather ask: What do we want to achieve with our LED effort until the local government elections? And what is the medium- term goal of the LED effort, i.e. what do we want to have achieved by the subsequent elec- tions? This would take us to the formulation of one or a limited number of goals. This would then be the basis for the elaboration of CSFs, and after that of KPIs. The next step would be the definition of activities and responsibilities to meet those indicators (to the extent that they are not yet in place or planned – which may take us back to a re-definition of KPIs and CSFs if we realise that we don’t have the resources to launch the activities needed to meet the indi- cators), as well as the definition of activities and responsibilities to actually gather the data needed to monitor those indicators. This workshop would go beyond the activities addressed
  • 13. The Compass of Local Competitiveness 9 as part of PACA activities. A realistic time frame for this type of workshop is between less than 1 and up to 2.5 days, depending on the chosen format, the number of participants, and their degree of alignment. [2] and [3] At the sector or project Compass workshops, you would also address the issue of goals and expectations. However, at this level the discussion would be less political / philo- sophical, more practical and more business-focused. Apart from that, the sequence of activi- ties would be the same as above. These workshops may focus at the ongoing PACA activities and involve the actors identified and involved during the PACA Exercises. This kind of work- shop can be conducted in one day. Initially, format No. 3 is the most adequate, since busi- nesses are keen on action, not on indicators. As they mature, you would consider to move to format No. 2. [4] This format is a theoretical possibility, but practically it is unlikely to happen. At an early stage of a territorial development process, local stakeholders find it difficult to identify critical success factors except for the Southeastern quadrant of the Compass, i.e. process manage- ment. And even there, you confront the problem that actors from one subsector don’t neces- sarily see that their effort is linked in any way to what is going on in another, in their view un- related subsector. Once the LED / RED process matures and stakeholders’ perceptions change, you would move to format No. 1 which highlights the importance of formulating and tracking indicators. Ideally, the outcome of a Compass workshop is the definition of new and additional LED ac- tivities and the elaboration of a set of KPIs that can be used by the LED champion to monitor the ongoing LED effort. After the initial round of workshops, we advise to have follow-up workshops at a six- to twelve-months-rhythm to involve the stakeholders in the assessment of progress and in the assessment of the Compass itself, as we would expect that stakeholders want to adjust CSFs as the LED initiative progresses. 6 Structure of a Compass Workshop This section discusses the steps involved in a Compass workshop. It looks at Type 3 as intro- duced above, i.e. a one-day workshop at the level of a local sector or cluster. This is a highly robust format that can easily be applied by facilitators with some understanding of LED. The elaboration of a Compass of Local Competitiveness essentially involves the following steps: • Participants present themselves • Explain the objective of the workshop • Explain the structure of the workshop
  • 14. The Compass of Local Competitiveness 10 • Explain the Compass • Framing: What exactly are we talking about? • Look back: What have we achieved so far? • Objective: What are the overall objectives of the object of the Compass? • Revisit framing • Brainstorming on critical success factors • Brainstorming on key performance indicators • Definition of targets and accountability • Matching • Identifying gaps • Brainstorming on activities • Action planning These steps can be conducted in a single workshop, though that is not necessarily a good idea. Practical experience has shown that the definition of KPIs is an activity that often does not work well in a workshop, especially when participants have little or no experience with the concept and practice of indicators. The following table looks in more detail at the sequence of steps in a Compass workshop. Step 1 to 11 are a standard sequence in any Compass workshop. After Step 11, there are two different options on how to proceed further. One includes the formulation of indicators, the other does not. Step Objective Activity 1. Presentation of participants Participants know each other Simple Mesocard exercise: Name, or- ganisation, involvement in LED 2. Explain the objec- tive of the exercise Make sure that each participant understands three main objectives: 1. track progress 2. identify CSFs 3. define activities Local champion or facilitator explains objectives: Who and what exactly is it about? Objectives are written on a flipchart which remains visible for the rest of the workshop 3. Explain the struc- ture of the work- shop Participants know the sequence of activities in the workshop Quickly go through the steps, don’t get lost in details 4. Explain the Com- pass Participants understand the method used in the workshop Brief oral explanation, complemented with visual representation of Compass
  • 15. The Compass of Local Competitiveness 11 5. Framing: Clarify the object of the exercise. What precisely are we talking about in this workshop? Define two points: 1. What exactly is X? Clarify the borders of X (system / envi- ronment) 2. Who is involved in X? Clarify the actor structure (we / them) Put information on the object onto flip- chart. Keep flipchart visible through the entire workshop. Note actors on mesocards, organise them as insiders / outsiders 6. Look at activities and achievements since PACA Exer- cise or start of ac- tivity 1. What have we done so far? 2. What have we achieved so far (= outcome and impact of activities)? (If possible, try to capture data) Option 1: Participants call out, facilita- tors note on flipchart (may be quicker) Option 2: Participants write on cards 7. Clarify the “vision” Clarify the overall ob- jectives of the object of the Compass Mesocard brainstorming: What is the impact / outcome / benefit we aspire with X? 8. Revisit the framing Verify framing Check that the object of the exercise was defined properly. If necessary, ad- just. 9. Critical success factors Identify the factors that make or brake X Mesocard brainstorming: What are the critical success factors that determine whether X achieves its mission? What are the factors that shape the success of X? 10. Organise the cards into four quadrants Assure that there is balance between the identified CSFs • Economic and financial factors • Relationships with customers and external players • Internal process, internal relation- ships • Knowledge and learning 11. Prioritise the CSFs Pareto The following steps can be conducted and sequenced in different ways:
  • 16. The Compass of Local Competitiveness 12 Brainstorming on key performance indicators (KPIs) Measure the progress in terms of addressing each CSF Mesocard brainstorming, CSF by CSF (option: split into working groups) (note: doing this in a workshop is only advisable if the participants are familiar and comfortable with the definition of in- dicators – otherwise, you may want to delegate this step to a core group, i.e. a small working group of experienced practitioners who meet separately to de- fine KPIs, while in the workshop you move directly to the brainstorming on activities) Definition of targets and accountability Put numbers to the in- dicators, define respon- siblity for monitoring Option 1: Working groups in the work- shop Option 2: Delegated to core group, done in separate workshop 12. Matching Match CSFs or KPIs and ongoing or planned LED activities Identify “orphan KPIs”, i.e. indicators without a corresponding LED activity 13. Identifying gaps Identify which CSFs are not adequately ad- dressed Discussion 14. Brainstorming on activities Define activities related to each CSF Option 1: Mesocard brainstorming Option 2: Match ongoing activities with CSFs, identify gaps / mismatch Option 3: Paper computer 15. Action planning Pfeiffer’s six questions on each activity Continuation of Option 1 of step before As mentioned before, our experience has shown that it will often not be practical to include the definition of KPIs into the participatory workshop, and this for several reasons. First, many stakeholders tend not to be familiar with the concept of indicators. Second, many stakeholders tend not to be particularly interested in indicators. Third, at that stage, the Com- pass workshop has already gone on for some hours, and participants tend to be tired. In order to keep the flow going, it is often preferable to move directly to matching, in this case by cre- ating a matrix that has CSFs on one axis and ongoing activities on the other axis..
  • 17. The Compass of Local Competitiveness 13 7 What happens after the Compass Workshop? A Compass Workshop must be more that a once-off event. The workshop itself can be a very insightful and to some extent even exciting event, and participants will take important learn- ing out of it. This applies in particular to sector workshops, which often give the participants a much better understanding of their business environment. Yet it would be unsatisfactory if the Compass workshop was not followed by concrete action planning, the creation of a monitor- ing system and the implementation of LED activities. 7.1 Action planning We have often observed that towards the end of a Compass workshop the energy level among participants is too low to engage in detailed action planning. It is possible to have a brain- storming to generate ideas on how to address those CSFs that are not yet sufficiently ad- dressed. Yet refining those ideas, looking at the connections between them, and planning their implementation in a detailed way is better left to a separate meeting. In this subsequent meeting, there are two options regarding the format. One option is to refine ideas for action, prioritise them, and then plan their implementation, asking the six questions: How exactly are we going to do this? Who will take responsibility? Who will collaborate? Which resources do we need? When do we start? How will we know that we have started? The other option is to use the Paper Computer in order to identify those activities which have the strongest leverage effect. The Paper Computer is a tool that looks at the interrelationship between activities in a systemic way and allows to identify those activities that promise the biggest impact, in particular in a somewhat complex setting where cause-effect relationships are not obvious. The Paper Computer is explained in detail in Annex 3. 7.2 Creation of a monitoring system During the Compass workshop, or during a meeting of a smaller group of LED stakeholders who are familiar and comfortable with the concept of indicators, a set of KPIs is formulated. These criteria need to fit with the SMART criteria (see below). As there must be no more than four CSFs per quadrant and no more than three KPIs per CSF, the maximum possible number of KPIs is 64. However, it would be preferable to end up with a lower number of KPIs since tracking 64 of them might involve a very significant effort.
  • 18. The Compass of Local Competitiveness 14 Table 1: The SMART Criteria S Specific & Sensitive specific to the issues which are intended to be changed, and sensitive to the changes induced M Measurable measurable, objective and unambiguous - not easily blown off course by unrelated developments, and not easily manipulated A Attainable & Applicable attainable by the policy measures, and applicable to measure prog- ress towards achieving objectives R Relevant measuring factors which are related to the policy and reflect the objec- tives T Time-bound & Trackable Varying over time, reflecting at what point in time changes can be ex- pected and do happen. Indicators can be easily tracked, preferably the required data are already and frequently available, or are not too costly to track Source: Metz / Groetschel, Training Manual on Monitoring Policy Impacts, prepared for FAO and GTZ, 2002 A practical way of testing the robustness of a proposed indicator against each of the SMART criteria is by scoring it: 1 means “no”, 2 means “to some extent”, 3 means “definitely”, and then the five scores are multiplied. Only scores higher than 50 indicate a robust indicator. Apart from the formulation of the indicators, it must be defined who tracks each one of them, and with what frequency. Some indicators can easily be tracked on a monthly basis (for in- stance, number of registered and liquidated businesses). Other indicators may be captured every quarter. When designing your system to capture and process indicators, stick to the KISS principle – “Keep it simple, stupid!” Do not try to come up with a highly sophisticated, scientific ap- proach since this would maximise the risk that the whole effort collapses after a brief period. 7.3 Implementation of LED activities The planning of activities at the end of the Compass Workshop (and possibly in a follow-up workshop, since you may run out of time at the Compass Workshop) should be guided by six questions: 1. How exactly are we going to implement this? 2. Who will be responsible? 3. Who needs to collaborate? 4. What are the resources that we need? 5. When do we start?
  • 19. The Compass of Local Competitiveness 15 6. How do we know that we started? It is useful to agree on a certain reporting rhythm, for instance by posting monthly or quarterly reports on each activity at a website. 7.4 Follow-up Compass Workshop If the Compass is properly implemented, there need to be repeat Compass Workshops. At the level of LED at large, an annual rhythm would be adequate. At a sector level, stakeholders may decide to have more frequent Compass Workshops.
  • 20. 8 Step-By-Step Explanation of Compass Workshop: Tables Time Activity Description Tool Basic rules / mesocard questions to be asked Observations Step 1 15‘ Presentation All participants present them- selves Mesocard 3 cards per person: name, organisation, involvement in LED Good opportunity to introduce the basic Mesocard rules: 1 statement per card, write legi- bly, 3 lines per card Step 2 10’ Objective Explain that the objective of the workshop is to look back and to look ahead Oral, supported with cards or flipchart (pref- erably not mul- timedia projec- tor) Explain the objective of the workshop: 1. Track progress on developmental activities in a location, or a subsector in a location, or a value chain 2. Define additional activities Explain that a Compass is a device that tells you where to go. Can be done by local champion or by facilitator Don’t use technical language Refer back to event that initi- ated local activities (e.g. PACA Exercise, launch of LED Forum, etc.) Step 3 5’ Schedule Explain the structure of the workshop Flipchart or mesocards Point out the different steps in the work- shop. Quickly go through the steps, don’t get lost in details Step 4 5’ Compass Explanation of the Compass Oral and flip- chart Briefly explain the background of the Compass in the balanced scorecard method. Keep a flipchart with an expla- nation of the 4 Quadrants visi- ble throughout the workshop Step 5 15‘ Framing Clarify the object of the exercise: What precisely are we talking about in this workshop? Statement by champion of the activity, al- ternatively by facilitators Define two points: 1. What exactly is X? Clarify the bor- ders of X (system / environment) 2. Who is involved in X? Clarify the actor structure (insiders / outsiders) Put information on the object onto flipchart. Keep flipchart visible through the entire work- shop. Note actors on mesocards, or- ganise them as insiders / out- siders X = the object of the Compass, i.e. the LED initiative, or the cluster initiative, or sector initiative, or project
  • 21. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Step 6 30’ Look back Look at activities and achieve- ments since start of LED or activity Flipchart or mesocards 1. What have we done so far? 2. What have we achieved so far (= outcome and impact of activities)? (If possible, try to capture data) Option 1: Participants call out, facilitators note on flipchart Option 2: Participants write on cards (does not give you sto- ries!) Consider to capture partici- pants’ statements as audio / video recording Step 7 30‘ Overall objec- tive Clarify the overall objectives and deliverables of X 1. Mesocard 2. Organise cards hier- archically 1 – 2 cards per person Question: Why do we spend time and effort on this initiative? What do we want to achieve? Alternative: If in two years‘ time some- body enquires about X, what will we point at to indicate its success? Don’t use the term Vision. This leads to cloudy, fuzzy discus- sions. Organise the outcome. Try to define a hierarchy, i.e. highlight the ultimate outcome and below it the factors that will contribute Many cards will come that actu- ally are CSFs or KPIs, and they should be put up again at the appropriate step Assure that the Vision is visible during the subsequent activities Step 8 5’ Revisit fram- ing Verify the fram- ing for the work- shop Open discus- sion During the look back and the vision steps, it may have ap- peared that the frame was not defined or worded properly
  • 22. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Step 9 30' Critical suc- cess factors Brainstorm on the factors that make or break X Mesocard No limit to number of cards per person Questions (put them all up!): • What are the factors that determine the success of X? • What are the factors that decide the success of our effort to build a com- petitive location / sector / value chain? • Which elements need to be in place so that we can build a competitive location / sector / value chain? Check whether all four quad- rants are adequately ad- dressed. Often one of the top quadrants gets only few cards. In that case, explain the rele- vance of the quadrant and ask participants for additional cards. Step 10 30' CSF into quadrants Organise the CSFs into four quadrants Facilitators, as- sisted by par- ticipants, or- ganise cards into 4 quad- rants 1. Economic / financial factors 2. External relationships (with non- LED-stakeholders / external actors / customers / ...) 3. Internal process and organisation of LED inside and among the organisa- tions involved 4. Knowledge and learning (including research, training, ...) Make sure that each CSF is clearly understood by all par- ticipants, possibly insert a step in the process to verify and re- phrase each CSF. A CSF like “diversification” is useless be- cause it is too unspecific. One way of looking at the CSFs is by introducing Quadrants 1 and 2 as external factors and Quadrants 3 and 4 as internal factors. Step 11 10' Prioritise Identify two to four decisive CSFs per quad- rant Pareto Quadrant by quadrant
  • 23. Time Step Description Tool Basic rules / mesocard questions to be asked Observations The next step in the standard Compass process relates to the elaboration of Key Performance Indicators and the definition of activities. It may, though, not be useful to do this in a workshop setting, especially with participants with little experience in the formulation of objectively verifiable indicators. Below, you will find three different options (Plan A and Plan B, where Plan B again involves two dif- ferent options). Plan A Plan B What to do Inverse sequence: • Match CSFs with ongoing activities • Define activities related to CSFs that remain un- matched Standard sequence: • Define Key Performance Indicators • Define responsibility to track KPIs • Match KPIs with ongoing activities • Define additional activities When to apply Participants have little or no experience in formulating in- dicators. Participants have some experience with indicator formu- lation. Variations Have an additional meeting of a core group where you define KPIs and determine who is responsible for tracking them. 1. Use the Paper Computer to prioritise possible action. 2. Have only a first brainstorming on KPIs, then form a team to elaborate them, then have another workshop to • present and discuss the elaborated KPIs • define responsibility for tracking them • match KPIs with ongoing activities • define additional activities
  • 24. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Plan A This sequence applies in workshops with participants with little experience in the elaboration of indicators. Step 12 30’ Matching Do we have activities going on that contrib- ute to all CSFs? Matrix Create a matrix with the ongoing activities on the vertical axis and the CSFs on the horizontal axis. Verify, together with the participants, whether any given activity contributes to the CSFs. The assumption is that many activities will contribute to more than one CSF. Proceed as follows: Every par- ticipant receives a card with the numbers 0 to 3 – 0 = no influ- ence, 1 = weak influence, 2 = some influence, 3 = strong in- fluence. You ask “Does Activity 1 address CSF A?” Each par- ticipant then indicates his/her score by holding up a number. The facilitator forms an average of the scores. Encourage dis- cussion when participants come up with three or four different scores. This system assures that all participants actively participate, rather than a few dominating the scoringnd the others giving in to the temptation to have a little nap. Step 13 10’ Identify gaps Which CSFs are not matched with activities? Oral discussion Verify: Which CSFs are not matched with activities? Add up the scores in each col- umn. Probably all CSFs are at least some- what addressed. Focus the discussion at those CSFs that come out with a low score sum, and in particular those that did not re- ceive a single score of 3 (which means that no activity is really focussing at this CSF).
  • 25. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Step 14 30’ Brainstorm- ing on activi- ties What are the activities that we need to im- plement to make progress with respect to the CSFs? Depends on option Option 1: Mesocards. Various rounds of brainstorming / cluster / Pareto / brain- storming on highest priority Option 2: Paper computer (see annex) If you choose Option 1, you need to make sure that partici- pants prioritise activities that are actually doable. For in- stance, you can distribute red dots so that participants can mark those proposals they deem unrealistic before doing the Pareto. Step 15 60’ Determine responsibility for imple- mentation of activities Pfeiffer’s six questions on each activity Mesocards Six questions: 1. How exactly will we do this? (unpack activies) 2. Who takes responsiblity? 3. Who has to collaborate? 4. Which resources do we need? 5. When do we start? 6. How do we know that the activity started? It may be useful to create working groups for this step. Step 16 End of work- shop Thank the participants for their time and in- puts. Explain what will happen next. Make sure that you have a clear communication structure, so that every participant can easily track the progress of imple- mentation.
  • 26. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Plan B This format applies in workshops where participants are familiar and comfortable with the elaboration of indicators 60 – 180‘ Key perform- ance indica- tors Brainstorm on the indicators that measure the degree of prog- ress towards each CSF Mesocard Pareto Pick the highest scoring CSFs (two to four per quadrant) Go through the CSFs one by one Pareto the KPIs, CSF by CSF; a satis- factory outcome is one where no more than four KPIs are prioritised (in working group scenario, the Pareto is done by all participants after they have visited the result of each working group) Consider to divide the partici- pants into working groups: - Go through the first quad- rant CSFs in the plenary - then go into working groups Introduce participants to SMART principle: Indicators should be Specific, Measurable, Achievable, Relevant, Timed At this stage, the initial participatory workshop may or may not terminate. There are different options in terms of how to proceed. The following steps are based on the assumption that the Compass Exercise is concluded in the same workshop, and in a very comprehen- sive manner: 60 – 180‘ Targets Definition of a number and deadline for each indicator Mesocard Discussion Indicator by indicator, each participant writes his/her estimate of a realistic indi- cator onto a small circular card Results are discussed, result is deter- mined by consensus Consider to divide the partici- pants into working groups, each working on one or two quad- rants
  • 27. Time Step Description Tool Basic rules / mesocard questions to be asked Observations 45 – 90‘ Accountability Definition of a person or or- ganisation who is accountable for tracking the Indi- cator Open discus- sion Indicator by indicator, call for individuals to resume responsibility for tracking the indicator Define one actor who is in charge of consolidating the data on indicators on a bi-annual basis Definition of accountability is done in plenary 30’ Matching Do we have ac- tivities going on that contribute to all KPIs? Matrix Create a matrix with the ongoing activi- ties on one axis and the KPIs on the other axis. Verify, together with the par- ticipants, which activity contributes to which KPI. The assumption is that many activities will contribute to more than one KPI. 90 – 240’ Activities Brainstorming on activities to match each CSF and achieve the KPIs Mesocard Proceed CSF by CSF Keep CSFs and KPIs visible at all times Refer participants back to the vision statement, to make sure everybody is still on track Consider to divide the partici- pants into working groups, each working on one or two quad- rants
  • 28. Time Step Description Tool Basic rules / mesocard questions to be asked Observations 120 – 240’ Determine re- sponsibility Discussion in plenary Pfeiffer’s six questions on each activity Make sure that each question is an- swered properly Six questions: 1. How exactly will we do this? (Possibly unpack activity into complementary ac- tivies) 2. Who takes responsiblity? 3. Who has to collaborate? 4. Which resources do we need? 5. When do we start? 6. How do we know that the activity started? The complete duration of this workshop is between 9 and 18 hours or 1.5 to 2.5 days. In other words, applying this format with real stakeholders will only work under exceptional circumstances.
  • 29. Time Step Description Tool Basic rules / mesocard questions to be asked Observations There is also another option, which would be more focused and less time-consuming. It would employ the papercomputer to identify the CSFs with the highest leverage factor and focus the brainstorming on activities on those CSFs. This would proceed as follows: 90’ Papercom- puter Look at the in- terrelationship between CSFs Papercomputer see annex Strong recommendation: Before applying the Papercomputer, make sure that each CSF is clearly understood, e.g. by de- termining what two opposing incarnations of each factor might look like1 45’ Activities Brainstorming on activities to address the critical / lever- age CSFs Mesocard Pareto Identify the CSFs in south-eastern quad- rant. Keep the KPIs linked to each CSF visible. Brainstorming, CSF by CSF: What are ac- tivities to match each CSF and achieve the KPIs? It is rare that more than two or three CSFs end up in the south- eastern quadrant 90’ Determine responsibility Discussion in plenary Pfeiffer’s six questions on each activity Make sure that each question is answered properly Six questions: see above 45‘ Targets Definition of a number and deadline for each indicator Mesocard Discussion Indicator by indicator, each participant writes his/her estimate of a realistic indica- tor onto a small circular card Results are discussed, result is determined by consensus 1 Example: Diversification might come up as a critical success factor. First. clarify what kind diversification is meant – diversification of products, of distribu- tion channels, of final customers? Second, determine two opposing expressions: highly diversified distribution channels (e.g. more than 5), little diversification of distribution channels (three or less).
  • 30. Time Step Description Tool Basic rules / mesocard questions to be asked Observations In a situation where a substantial number of stakeholders is involved in the workshop, and in particular in a situation where several of those stakeholders suffer from time constraints, so that even a 1.5 day workshop may border the impossible, there is the option to go for a sequence of three workshops: Workshop Objective Participants 1. Brainstorming Workshop: All steps un- til the definition of KPIs Define CSFs and KPIs of LED programme or specific initiative within an LED programme Representative group of stakeholders in- volved in the programme or initiative 2. Technical Workshop: Core group re- visits and defines KPIs and targets Match CSFs and KPIs with ongoing activities Identify gaps in programme / initiative Define targets Small group of stakeholders with a par- ticularly keen interest; LED officer, Cham- ber official and similarl 3. Way-forward Workshop: Core group presents results to wider group. KPIs are validated. Activities are defined. Agreement on targets and accountability Agreement on next steps regarding identified gaps Representative group of stakeholders in- volved in the programme or initiative
  • 31. Time Step Description Tool Basic rules / mesocard questions to be asked Observations Things to prepare Moderation materials Minimum: brown paper, cards, masking tape, markers Optimum: moderation panels, brown paper, cards in at least four different colours, pins, masking tape, markers Cards and flipcharts • Cards with the questions for each step • Cards with the titles for the four quad- rants • Flipchart with sequence of workshop • Flipchart that indicates the four quad- rants of the Compass • Flipchart with SMART criteria
  • 32. The Compass of Local Competitiveness 29 Step-By-Step Explanation of Compass Workshop: Additional Explanations [This section is work in progress – please share your insights and comments with Jorg Meyer- Stamer, jms@mesopartner.com] Step 1 -- 15‘ -- Presentation Step 2 -- 10’ -- Objective Step 3-- 5’ -- Schedule Step 4 -- 5’ -- Compass Briefly explain the background of the Compass in the balanced scorecard method for corporate strategising: 1. financial indicators To succeed financially, how should we ap- pear to our shareholders? 2. the customer perspective To achieve our vision, how should we ap- pear to our customers? 4. the learning and growth perspective To achieve our vision, how will we sustain our ability to change and improve? 3. the internal process perspective To satisfy our customers and shareholders, what business processes must we excel at?
  • 33. The Compass of Local Competitiveness 30 Step 5 -- 15‘ -- Framing Step 6 -- 30’ -- Look back Step 7 -- 30‘ – Overall objective Phrase the question in such a way that it neither generates to vague and fluffy a result (a “vi- sion” in the negative sense of the term) nor responses that are too focused at “here and now”. The participants should not get the impression that you are asking for the next activities that need to be formulated. It can be helpful to limit the number of cards to 1 per person. Organise the outcome. Try to define a hierarchy, i.e. highlight the ultimate outcome and be- low it the factors that will contribute. Example:
  • 34. The Compass of Local Competitiveness 31 Step 8 -- 5’ -- Revisit framing Based on the conversation you had regarding the overall objective, you may find that the framing is not entirely adequate and that you want to word it differently. Make sure that the reworded framing is visible for all participants. Also, in Step 7 you asked a question that included the term “we”. While revisiting the fram- ing, you may want to ask: Do we all agree on who is “we”? And also, who is “them”? Step 9 -- 30' -- Critical success factors Step 10 -- 30' -- CSF into quadrants At this step, your Compass may look like this: This is, quite obviously, a very unbal- anced Compass. The majority of cards ended up in the “process” quadrant, which reflects the current state of mind of local stakeholders: they are very con- cerned about the challenges involved in getting their collaboration effectively organised. As a facilitator, you would not accept this result but rather ask to consider the other quadrants as well: Are there more CSFs regarding knowl- edge and learning, such as conducting market research and upgrading local skills? Are there more CSFs regarding customer satisfaction and relationships, and relationships to other external ac- tors? Are there more CSFs regarding fi- nancial and economic issues? You would hope that participants come up with more CSFs for the other quadrants. If they don’t, this may imply a serious lack of understanding of the issues involved in their business field and in the successful development of their sector or location. Step 11 -- 10' – Prioritise
  • 35. The Compass of Local Competitiveness 32 Step 12 -- 30’ -- Matching The rationale for the Matching step is that local stakeholders are already implementing some activities and have more or less specific ideas about activities they would like to launch. It is crucial to match the ongoing and planned activities with the CSFs and to verify that all CSFs are properly addressed. The picture below illustrates how the matching may look like. The horizontal row indicates the CSFs, the column the ongoing activities. Step 13 -- 10’ -- Identify gaps Step 14 -- 30’ -- Brainstorming on activities Step 15 -- 60’ -- Determine responsibility for implementation of activities Step 16 -- End of workshop
  • 36. The Compass of Local Competitiveness 33 9 Annex 1: An Example of the Application of the Compass of Local Competitiveness in a Subsector: An Upgrading Project with Fresh Vegetable Producers in Gampola, Sri Lanka This section summarises a workshop conducted in 2006 as part of the Sri Lankan - German Economic Strategy Support Programme (ESSP). ESSP has used the PACA methodology since 2002. In 2004, it conducted a PACA Exercise (or as it is called in Sri Lanka, a LOCA Exercise) in Gampola division, a municipality in the Central Province. The PACA had a strong focus on agriculture. One of the sectors with particularly strong activities after the PACA was the production of fresh vegetables, where local stakeholders were especially moti- vated and dedicated. The Compass workshop documented below involved a group of stakeholders from the fresh vegetable sector as well as representatives of supporting institutions. Structure of the workshop The planned format was supposed to involve the following steps 1. Clarify the objective and the object of the exercise: Who and what exactly is it about? 2. Look back: What have we done and achieved so far? 3. Clarify the vision, i e the overall objectives of the object of the Compass 4. Brainstorming on critical success factors (CSFs) 5. Brainstorming on key performance indicators (KPIs) 6. Definition of targets and accountability 7. Brainstorming on activities related to each CSF. In this workshop, the brainstorming on activities had to be cut short as we had run out of time. A number of first ideas on activities were ventilated. The ESSP facilitators and the stakeholders agreed to have a follow up meeting to define the details of those activities. Documentation of the steps in the workshop1 1 Vision Contribute to improve the local economy through increasing productivity of the vegetable cultivation 1 This section has been captured by Jayalal Chandrasiri, a consultant under contract with ESSP to conduct an impact assessment on ESSP’s LOCA activities.
  • 37. The Compass of Local Competitiveness 34 2 Objective Achieving higher income through market aimed, organized vegetable production 3 Critical Success Factors Economic and Financial • external financial facilities available • stable market • satisfactory price for the produce External Relationships • better institutional and personal re- lationships • good quality seeds available in the market Knowledge and Learnings • acquire technical knowledge • developed new varieties Internal Processes • minimised cost of production • minimised post harvest losses • planned cropping cycles 4 Key Performance indicators Economic and Financial 1. Number of credit facilities to farmers from agrarian services centers with a grace pe- riod 2. Financial support extended to farmers by ESSP 3. Prices for produce 4. Percentage increase of income of producers after a given period of time 5. Continued growing market 6. Percentage increase of the business of vegetable buyers External Relationships
  • 38. The Compass of Local Competitiveness 35 1. Training programmes increased due to linkages with government and other organisa- tions 2. Input costs reduced 3. Wider use of quality seeds 4. Number of shops selling quality seeds in the market Internal Processes 1. Percentage decrease in cost of production within a given period of time 2. Percentage increase in production within a given period of time 3. Percentage increase in higher quality, higher shelf life, fresh vegetable products 4. Percentage increase of producers engaged in planned cultivation 5. Percentage decrease in excess stocks in the production process 6. Percentage increase in maximum utilisation of limited croplands 7. Percentage increase in the use of good agriculture practices in production 8. Percentage decrease in wastage at the market Knowledge and Lessons Learned 1. Percentage decrease in rejected quantity of produce in a given period of time 2. Percentage increase in production of producers after a given period of time 3. Percentage increase in producers who have released their produce as a finished prod- uct to the market 4. Percentage increase in producers who are using new varieties 5. Percentage increase in quality and quantity of produce after a given period of time Photos taken during the workshop
  • 39. The Compass of Local Competitiveness 36 The stakeholder group involved in the project Deciding which quadrant a critical success factor belongs The completed Compass
  • 40. The Compass of Local Competitiveness 37 Working groups of stakeholders elaborate the Key Performance In- dicators (KPIs) One of the stakeholders presents the KPIs his group has elaborated At this point, it was mid-afternoon and participants indicated that they had had enough work- shopping for that day. Thus, no time was left to progress to the formulation of activities. After this workshop, we actually decided that we needed the Plan B outlined above, i.e. moving from the CSFs directly to activities and leaving the formulation of indicators to the ESSP spe- cialists.
  • 41. The Compass of Local Competitiveness 38 10 Annex 2: Documentation of a Compass workshop – Investment promotion in Baybay, Philippines As usual, some of the participants ar- rived early, some on time, and some were late. Facilitators engaged those stakeholders who had arrived early in conversations, which is a practical way of both creating a nice atmosphere and generating some relevant information. The workshop then starts with a self in- troduction by all participants. The fa- cilitators explain the purpose of the workshop, and they explain the Com- pass. Participants then agree on the framing of this Compass workshop, meaning they define what exactly is the focus of the workshop.
  • 42. The Compass of Local Competitiveness 39 They also clarify who is us and who is them, which stakeholders are relevant and which are actively involved in the initiative that is addressed in this Com- pass workshop. Participants then look back: What have we done, and what have we achieved so far? The next question is: Why are we doing this anyway, what is the ulti- mate purpose of our initiative? Partici- pants respond on cards, which are or- ganised in a hierarchical way, with the overarching purpose on top and the factors contributing to it organised be- low. The next question: If we want to achieve what we just declared to be our intention, what are the critical success factors that we need to address? The critical success factors are first pinned up and then organised into the four quadrants of the Compass.
  • 43. The Compass of Local Competitiveness 40 The participants then apply the Pareto method, theyvote quadrant for quadrant for the most important critical success factors. In the next step, the participants match the critical success factors with the on- going or planned activities. A matrix is put up. For each activity, the facilitators ask: Does this activity address critical success factor A, B etc.? Participants give scores between 0 (not at all) and 3 (strongly). In this case, at first glance it would ap- pear that all critical success factors are addressed. However, a closer look re- veals that three critical success factors receive no or just one “3”, which means that they are mostly addressed in an indirect way (and probably not all that much, since stakeholders tend to be somewhat optimistic in their scoring). Thus, the critical success factors on top of the first three columns should be ad- dressed more consistently. It is really striking that in spite of the 0 to 3 vote, all scores are very close to each other. Is this a pattern?
  • 44. The Compass of Local Competitiveness 41 The next task is to identify activities. However, at this stage, participants tend to be tired and low on energy and creativity. Thus, the following brain- storming exercise on activities that would address the under-matched criti- cal success factors is only a first at- tempt, to be followed by a further work- shop with a more systematic brain- storming and action planning. The last step in the workshop is either a detailed action planning or an agree- ment on the next meeting to be con- ducted for action planning.
  • 45. The Compass of Local Competitiveness 42 11 Annex 3: The Paper Computer The Paper Computer is a tool which may be useful in a Mini-workshop setting. It is particu- larly practical when it comes to identifying priority action, like in the Results Workshop or a Way-forward Workshop. It is very powerful in persuading local actors to ignore, at that stage, some issues that figure high on their list of priorities but that are very difficult to address, or to make a difference. The elaboration of a Paper Computer involves the following sequence: 1. Conduct a card-writing-based brainstorming on a question like: What are the factors which influence the success of our organisation? 2. Organise the cards. Eliminate duplicates. Prioritise them (Pareto: no. of cards : 5 = num- ber of points per participant) 3. Take the top seven to ten highest scoring cards. Pin them underneath each other. On each card, ask: “What are opposing expressions for this factor?” For example: The initial question was “What are the critical success factors of a Genesis exercise?” One high scoring response was “Facilitators have an understanding of the location before starting the exercise”. Opposing expressions would be: “Facilitators locate information (reports, studies etc.) on location and read it” and “Facilitators stumble into the Genesis exercise without digesting any information on the location”. The purpose of this step is to make sure that everybody understands the factors in the same way. 4. Take six to ten cards with highest priority. Write each item onto a second card. Create a matrix like this, A being the first high priority card, B the next, etc.: A B C D E F G Active sume A X How does A influence B? How does A incluence C? etc. B How does B influence A? X How does B influence C? etc. X Passive sume X Note: The values can be between 0 and 3. Negative values are not allowed (i.e. we don’t dis- tinguish between a constructive and a destructive influence).
  • 46. The Compass of Local Competitiveness 43 Participants often find it difficult to distinguish the directions of influence, especially when factors are mutually influential. However, if A influences B strongly (=3), this does not nec- essarily mean that B influences A also strongly. It rather depends. The depth of the river you wade through influences how wet you get, while the wetness you can personally generate will have next to no influence on the depth of the river. The facilitator will have to emphasise this point repeatedly. Perhaps you want to give an example, for instance: What is the relationship between the weather and the wetness of my feet? There clearly is a relationship. It is strong. What is the influence of the wetness of my feet on the weather? It is zero. 5. Add the numbers horizontally (active sum) and vertically (passive sum). The result may look as follows: A B C D E F G Active sume A X 3 1 0 2 2 1 9 B 1 X 2 3 0 0 1 7 C 2 3 X 3 2 1 0 11 D 3 3 2 X 3 3 2 16 E 2 2 1 1 X 3 1 10 F 2 3 2 2 1 X 1 11 G 3 3 2 3 3 3 X 17 Passive sume 13 17 10 12 11 12 6 X 6. Prepare a scatter diagram. The horizontal axis takes the active values, the vertical axis the passive values. Each factor has an active value (on the right of the matrix) and a passive value (at the bottom of the matrix). Locate each factor according to its active and passive value in the matrix. The result may look like this: Passive B 15 A 12 F D E C 9 6 G 7 10 13 15 17 Active 7.
  • 47. The Compass of Local Competitiveness 44 8. Calculate the mean for the active and the passive sums (in this case, it is 11.5). Draw an according vertical and horizontal line in the scatter diagram. For example: Passive B 15 A 12 F D E C 9 6 G 7 10 13 15 17 Active 9. The resulting matrix is labeled as follows: Impact: Factors which are receiving a lot of in- fluence, but who are exerting little influ- ence. You can ignore them for the time being. Complex: Factors which receive a lot of influence and which are ex- erting a lot of influence. Many stakeholders may want to attack those, but this is actually very difficult since each factor is so heavily interconnected with other factors. Posteriority: Factors which receive little influence and exert little influence. Leverage: Factors which receive little but exert a lot of influence. These are the factors which you want to attack initially, since they offer you the best leverage point. In our example, factor “G” would be the one with the strongest leverage factor. 10. Option: Conduct card-writing brainstorming exercise about the factor(s) which are located in the leverage square, asking: What can we do to strengthen / leverage this point?
  • 48. The Compass of Local Competitiveness 45 Preparation Materials you need Cards, flipchart-paper or brown paper, markers Things you can prepare Typical problems and errors Problem / error Solution Confusion between active and passive side Convince participants that, at one stage, they are exclusively to look at the influence of factor A on factor B, and that they will look at the inverse relationship later. At no stage we ask spe- cifically for interaction / mutual influence / reinforcement be- tween two factors. Participants insist that the influence is a negative one. Convince participants that positive or negative influence is not the issue here. It is all about the strength of the influence. Examples
  • 49. The Compass of Local Competitiveness 46 The evolution of the Compass is based on the collective effort of a Community of Practice that includes, but is not limited to, the following individuals: Name Country Email Desiderio Belas Philippines pdbelas@yahoo.com Shawn Cunningham South Africa sc@mesopartner.com Wolfgang Demenus Ecuador wdemenus@web.de Anura Ekanayake Sri Lanka emaekanayake@yahoo.com Sonja Ende Germany info@sonja-ende.com Aruna Gunasinghe Sri Lanka essp_aruna@sltnet.com Ulrich Harmes-Liedtke Argentina uhl@mesopartner.com Kgomotso Matthews South Africa kgomotso@netactive.co.za Jörg Meyer-Stamer Germany jms@mesopartner.com Deepabandhu Ratnayake Sri Lanka 2000.dr@gmail.com Christian Schoen Vietnam cs@mesopartner.com Volker Steigerwald Sri Lanka volker.steigerwald@gtz.de Gabriele Trah South Africa gabriele.trah@gtz.de Frank Wältring Germany fw@mesopartner.com This document was written by Jörg Meyer-Stamer.

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