5 Trends in Economic Development You Can't Ignore

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Economic development is changing rapidly and dramatically. It's reshaping our work, how we work with our customers, and even who our customers are. If it feels like you're operating under new rules, it's because you are - and you might not even know what they are. Learn 5 ways our profession is changing and how you can come out on top. For more information visit http://www.gisplanning.com

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5 Trends in Economic Development You Can't Ignore

  1. 1. 5  Trends  (You  Can’t  Ignore)  Shaping   Economic  Development’s  Future     Anatalio  Ubalde   CEO  &  Co-­‐Founder  
  2. 2. Economic  Development  Under  AEack  
  3. 3. 5  BIG   Disruptors    in  Economic  Development  
  4. 4. Trend  1:    Big  Data  
  5. 5. “Trust,  but  verify.”     -­‐  Ronald  Reagan  
  6. 6. We  resist  change  when  it’s  true   •  1840.  Austrian  Dr.  Semmelwis  uses  data  to  calculate   mortality  rates  during  childbirth  could  be  reduced   from  12%  to  2%  if  doctors/nurses  washed  their   hands  before  seeing  paJents.  Leads  to  germ  theory   of  disease.     •  He  was  ridiculed  by  other  physicians.  They  rejected   they  were  causing  deaths.  Washing  hands  was  a   waste  of  their  valuable  Jme.    
  7. 7. We  sJll  don’t  make  change     •  2004.  Dr.  Don  Berwick  uses  research  to   show  a  90%  reducJon  in  infecJons  from   central-­‐line  chest  catheters  from  systemic   hand  washing.     •  This  change  =  25,000  lives  saved  per  year.    
  8. 8. Which  of  these  ways  of  dying  concerns  you   more  and  do  you  spend  more  Pme  focused  on?     Terrorism   Heart  disease   Not  even  on  the  list   #1  cause  of  death  in  USA  We  suffer  from  cogniJve  failings  &  biases   We  overesJmate  “newsworthy”  deaths  and   underesJmate  common  causes  of  death.    
  9. 9. Big  Data  in    Economic  Development  Example  1:  Whi^aker  Associates   PredicJve  AnalyJcs  
  10. 10. (C)  Whi^aker  Associates,  Inc.  2012     12  
  11. 11. (C)  Whi^aker  Associates,  Inc.  2012     13  
  12. 12. PredicJng  Corporate  Behavior    •  Key  Drivers   –  Change   •  Leadership   •  Ownership   •  Product/Service   •  Client  Preference   –  Metrics   •  Sales   •  Employment   (C)  Whi^aker  Associates,  Inc.  2012     14  
  13. 13. PredicJve  AnalyJcs  •  StaJsJcs  •  CorrelaJon  •  RelaJonships  •  Models  •  Pa^ern  recogniJon  •  Algorithms       For  the  mathemaJcians,  they  are  using  mulJple  variant  regression,  gradient  decent,   and  matrix  algebra  to  generate  the  predicJve  analyJc  algorithm   (C)  Whi^aker  Associates,  Inc.  2012     15  
  14. 14. PredicJve  AnalyJcs  •  What  is  it  that  you  would  benefit  from   knowing  ahead  of  Jme?  •  Is  there  data  that  is  plausibly  correlated  to   that  which  you  wish  to  predict?     (C)  Whi^aker  Associates,  Inc.  2012     16  
  15. 15. Do  you  really  understand  your   network  of  relaJonships?   The  hidden  value  isn’t  the   network  you  know.  It’s  the   network  they  know.  
  16. 16. Big  Data  in    Economic  Development   Example  2:     ZoomProspector  Enterprise  
  17. 17. 1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011  
  18. 18. User-­‐defined  search  for  sites  and   property  based  on  locaJon,  use  &  size  To  see  this  live  on  the  Internet  go  to  www.gisplanning.com    
  19. 19. Matching  properJes  are   shown  in  a  comparison  list   &  on  the  map  
  20. 20. Drill  down  into   individual    property  report  to   see  the  details  
  21. 21. View  the  area   with  Google   Street  View  
  22. 22. CompeJJon  &  Synergies  IdenJfy  Industry  Clusters  
  23. 23. Pick  any  category,  like   ConstrucJon  
  24. 24. And  only  ConstrucJon  businesses  are  displayed  
  25. 25. Local  GIS  Layers  
  26. 26. Drive  Times  Legend  
  27. 27. Big  Data  in    Economic  Development   Example  3:     Economic  Gardening  
  28. 28. Economic  Gardening   •  Database  intensive   •  Market  research   •  GIS   •  Customer  analysis   •  Demographics   •  Gap  analysis   •  Supply  chain  
  29. 29. Economic  Gardening   •  Great  tool  to  support   local  businesses  and   entrepreneurs.     •  Uses  data  to  inform   acJon  and  reveal  what   wasn’t  obvious.     •  Gardening  has  challenges   with  scaling  to  serve   many  businesses   •  Requires  experJse  that   doesn’t  exist  in  many   local  EDOs  
  30. 30. Big  Data  in    Economic  Development   Example  4:     SizeUp  
  31. 31. Enter  your  industry   and  your  city  
  32. 32. Choose  from  SizeUp’s  3   core  features.  
  33. 33. Input  informaJon  you  already  know   about  your   business  
  34. 34. View  consideraJons  for  how   to  interpret  the  data   Chart  how  you  compare  to   your  industry  locally,   regionally,  and  naJonally   Find  resources  relevant  to   the  report  you  are  viewing  Map  the  performance  of   surrounding  areas  
  35. 35. See  trends  in   business  starts  over  Jme  in  your   industry  
  36. 36. Quickly  summarize  how  you  “size  up”  against  the  rest  of   your  industry  
  37. 37. View  your  compeJtors   on  a  map  
  38. 38. Locate  the  businesses   you  buy  from  
  39. 39. IdenJfy  areas  where   you  can  be  close  to   suppliers  and  with   limited  compeJJon  
  40. 40. See  the  best  zipcodes  in  which  to   adverJse  based  on  industry   performance  in  your  region  
  41. 41. Switch  to  find  the  most  underserved  markets  in  your   area  
  42. 42. Filter  your  list  of  places  using  many  demographic   and  industry  criteria  
  43. 43. Trend  2:    Talent  AEracPon  
  44. 44. Which  came  first,    the  people  or  the  businesses?    
  45. 45. Michael  Porter  on  industries:  Traded  Industry   Local  Industry  
  46. 46. What  they  measured  •  Economic  development   –  Economic  output  per  person   (producJvity)   –  Wages   –  InnovaJon  (patents)  •  Talent   –  EducaJonal  a^ainment   –  Knowledge  workers  •  Industry  (Porter)   –  Local  industries     –  Traded  industries   Source:  h^p://research.marJnprosperity.org/papers/Talent-­‐vs-­‐Trade-­‐forma^ed.pdf  
  47. 47. What  they  Discovered:     The  variaJon  in  talent  largely   explains  the  variaJons  in  regional   economic  performance  Talent   Industry  Source:  h^p://research.marJnprosperity.org/papers/Talent-­‐vs-­‐Trade-­‐forma^ed.pdf  and    h^p://www.theatlanJcciJes.com/jobs-­‐and-­‐economy/2012/09/talent-­‐beats-­‐trade-­‐economic-­‐development/3083/  
  48. 48. 14  Million  3.2  Million  $100  Billion  -­‐1%   Source:  CNBC    
  49. 49. Talent  Rich  Economic  Development   TradiJonal  COMMUNITIES  COMMUNITIES   COMPANIES   COMPANIES  
  50. 50. Choosing  place  first  and  job  second  
  51. 51. This  has  impacts  on  rural  communiJes  
  52. 52. Where  will  the  talent  to  grow  the  US  economy  come  from?    
  53. 53. Source:  h^p://www.bos.frb.org/economic/conf/conf46/conf46e1.pdf  
  54. 54. Where  will  the  talent     to  grow  the  USA  come  from?     OpPon   Popularity   Reality   Next  generaJon   Popular   Slow,  can’t  fill  senior/ expert  posiJons   Retrain  current  workers   Popular   LimitaJons  &  slow   Outsource  jobs   Unpopular   Market  already  doing  this   ImmigraJon   Unpopular   Market  already  doing  this   Robots   Could  go  either  way   Doesn’t  create  jobs  Why  are  we  sending  USA-­‐trained  Ph.D.s  to  compete  with  the  USA?    
  55. 55. Trend  3:    Small  Business  &   Entrepreneurs  
  56. 56. Entrepreneurs  are  a  top  priority  
  57. 57. Local  conomy   US  EEconomy   Big     Small  Business   Business  50%   50%   60%  
  58. 58. In  your  local  economy  Civic  Economics  Study   InsPtute  for  Local  Self  Reliance   Total  Impact   Secondary  Spending   $68     $45     $43     $14     Local  Independent   Chain  CompePtor   Local  Independent   Big  Box  Chain   Read  about  both  studies  at  h^p://bit.ly/tTiv5s  
  59. 59. SMB’s  Create  Most  New  Jobs   Over  recent  10  years  small  business  created   93%  of  all  net  new  jobs.         Big   Businesses,               7%   Small  &   Medium-­‐ sized   Businesses   (SMB),  93%  Source:    U.S.  Small  Business  Authority  1996  -­‐  2006  -­‐  h^p://www.sba.gov/advo/research/dyn_b_d8906.pdf  
  60. 60. SMB’s  Create  Most  New  Jobs   8,000,000   6,922,576   Created  100%  of  net   7,000,000   new  jobs  over     6,000,000   last  5  years   5,000,000     4,000,000   Last  recession  (2001)   3,000,000   –  Big  Businesses:     4  years  of  job  losses   2,000,000   –  Small  Businesses:     1,000,000   1  year  of  job  losses   –  Smallest  Businesses:     0   Small  and  Medium  Businesses   Large  Businesses   0  years  of  job  losses   -­‐1,000,000   -­‐2,000,000   -­‐2,071,779   -­‐3,000,000  Source:    U.S.  Small  Business  Authority  2001  -­‐  2006  -­‐  h^p://www.sba.gov/advo/research/dyn_b_d8906.pdf  
  61. 61. 12,000,000   Total  Job  CreaPon  10,000,000   8,000,000   Small  Businesses   6,000,000   Big  Businesses   4,000,000   2,000,000   0   1980   1985   1990   1995   2000   2005   2010   4,000,000   3,000,000   Net  Job  CreaPon   2,000,000   1,000,000   0   Small  Businesses   Big  Businesses  -­‐1,000,000  -­‐2,000,000  -­‐3,000,000  -­‐4,000,000   1980   1985   1990   1995   2000   2005   2010   Source:  Census  Business  Dynamics  StaJsJcs  
  62. 62. IncenPves  Big  Business   Small  Business  Threaten  to  leave     Rarely  get  any  incenJves   More  money  for  your  community,   residents,  local  businesses  
  63. 63. Trend  4:    Site  SelecPon  Has   Changed  
  64. 64. Site  Selectors  &  EDOs  have  different   targets  
  65. 65. Most  targeted  industries  of  EDOs   % Targeted by Economic Industries Site Selectors DevelopersManufacturing – advanced* 24.2% 43.7%Manufacturing - alternative energy/renewable energy* 16.9% 40.6%Manufacturing – traditional 36.3% 35.6%Distribution/wholesale trade 35.5% 30.2%Information technology/high-technology 27.4% 29.1%Aerospace/aviation* 11.3% 26.9%Healthcare 12.1% 25.0%Biotechnology 17.7% 23.7%Retail 15.3% 21.4%Manufacturing – advanced 21.8% 20.9%*denotes at least a 10% difference between the targeting of the industry by EDOs and Site Selectors.   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012  
  66. 66. Industries  most  served  by  site  selectors   % Targeted by Economic Industries Site Selectors DevelopersCorporate headquarters* 44.4% 18.3%Manufacturing - traditional 36.3% 35.6%Distribution/wholesale trade 35.5% 30.2%Call centers* 33.1% 9.1%Finance/insurance* 31.5% 9.3%Business services* 29.8% 17.2%Information technology/high-tech 27.4% 29.1%Manufacturing - advanced 24.2% 43.7%Research and development 22.6% 12.3%Retail 21.8% 20.9%*denotes at least a 10% difference between the targeting of the industry by EDOs and Site Selectors.   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012  
  67. 67. How  do  site  selectors  gather   informaJon  about  communiJes?   Brokers   65.2%   Websites  of  economic  development  organizaJons   62.5%   Third-­‐party  data  sources   51.8%   Peers  and  colleagues   46.4%   Proprietary  database   41.1%  InformaJon  the  organizaJon  has  sent  you  in  the  past   27.7%   PublicaJons/media   26.8%   Businesses  in  their  community/service  area   18.8%   Other  (please  specify)   5.4%   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012  
  68. 68. How  do  site  selectors  gather   informaJon  about  communiJes?   Corporate  real  estate  professional   Site  selecJon  consultant   Brokers   26%   8%   Websites  of  economic  development  organizaJons   18%   20%   Peers  and  colleagues   15%   10%   Third-­‐party  data  sources   11%   19%   Proprietary  database   9%   17%   PublicaJons/media   7%   9%  InformaJon  the  organizaJon  has  sent  you  in  the  past   7%   8%   Businesses  in  their  community/service  area   5%   6%   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012  
  69. 69. What  sites  selectors  &  CRE  pros  value  1.  Where  they  get  the  most  valuable   informaJon  &  communicaJon  2.  What  type  of  informaJon  they  want  
  70. 70. Site  selectors  rate  websites  #1…   ahead  of  themselves!  MarkePng  Strategy   RaPng  EffecPve  Website   76%  Site  SelecJon  Consultants  and  FamiliarizaJon  Tours   71%  Out-­‐of-­‐Town  MeeJngs  with  Businesses   54%  Special  Events   47%  Targeted  Lead  Development  Databases   46%  Public  RelaJons   37%  Trade  Shows  and  Conferences   37%  E-­‐Mail   31%  Online  Videos  (YouTube,  etc.)   16%  Online  AdverJsing   16%  Direct  Mail   15%  Social  Media   14%  Brochures   13%  Print  AdverJsing   10%  Company  Blog   9%  Slogans,  Logo  and  Graphic  IdenJty   9%  Videos  (VHS,  DVD,  etc)   8%  TelemarkeJng   5%  TV/Radio  AdverJsing   5%   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012  
  71. 71. When  would  you  first  contact  an  EDO?  100%   (contact  staff  vs.  visit  website)   90%   80%   70%   60%   50%   40%   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012   30%   20%   When  beginning  an   When  developing  a   During  evaluaPon/ Aher  narrowing   During  evaluaPon/ To  confirm   Only  if  the  company   Never   iniPal  site  selecPon   long-­‐list  of  possible   analysis  of  a  long-­‐list  opPons  to  a  short-­‐list   analysis  of  a  short-­‐ informaPon  I  have   or  client  specifically   search  for  possible   areas  in  which  to   of  locaPons   of  a  few  finalists   list  of  locaPons   already  gathered   asked  me  to  contact   locaPons   locate  based  on   an  EDO.   restricPve-­‐criteria   Contact  an  EDO   Visit  an  EDOs  website  
  72. 72. When  would  you  first  contact  an   economic  development  organizaJon?  100%   90%   80%   70%   60%   50%   Source:  Economic  Development  MarkeJng  by  Ubalde  &  Simundza  ©  2012   40%   30%   20%   When  beginning  an   When  developing  a   During  evaluaPon/ Aher  narrowing   During  evaluaPon/ To  confirm   Only  if  the  company   Never   iniPal  site  selecPon   long-­‐list  of  possible   analysis  of  a  long-­‐list  opPons  to  a  short-­‐list   analysis  of  a  short-­‐ informaPon  I  have   or  client  specifically   search  for  possible   areas  in  which  to   of  locaPons   of  a  few  finalists   list  of  locaPons   already  gathered   asked  me  to  contact   locaPons   locate  based  on   an  EDO.   restricPve-­‐criteria   Contact  EDO  11   Contact  EDO  07  
  73. 73. 750,000  businesses  need  NEW  faciliJes  each  year  
  74. 74. How  can  22  companies  do  750,000  deals?     •  They  can’t.     •  EDOs  have  missed  that  most  businesses  do   their  own  research  and  that  intermediaries   aren’t  the  true  gatekeepers  they  used  to  be     (if  they  ever  were).    
  75. 75. There  are  no  gatekeepers  
  76. 76. How  can  22  companies  do  750,000  deals?     •  They  can’t.     •  We’ve  missed  that  most  businesses  do  their   own  research  and  that  intermediaries  aren’t   the  true  gatekeepers  they  used  to  be  (if  they   ever  were).     •  There  are  actually  no  gate  keepers.     •  They  ways  to  reach  expanding  businesses   have  changed  and  expanded  in  possibility  (We   are  beyond  the  TV-­‐industrial  complex)  
  77. 77. Trend  5:    Fast  &  ChaoPc   Change  
  78. 78. Context  We  are  trying  to  prepare  our  communiJes  for  the  future  economy  when  we  can’t  even  anPcipate  what  the  economy  will  look  like  next  week      •  Europe  •  Housing  •  Energy  •  ElecJons  •  War  •  Corporate  Scandal  
  79. 79. Jobs  Context  The  promise:    •  Work  hard  >  do  well  >  go  to   college  >  get  a  good  job.       Work   Go  to   Get  a   Do  Well   Hard   College   Good  Job  
  80. 80. Jobs  Context  The  reality:    •  Widely  known:     Technology  and  globalizaJon  have   reduced  the  number  of  unskilled   jobs.    •  Gexng  known:     Technology  and  globalizaJon  are   reducing  the  number  of  skilled  jobs.   –  People  used  to  say  “America  should   focus  on  skilled  jobs  and  innovaJon   because  those  won’t  get   outsourced”.     –  Marc  Andreessen  “The  spread  of   computers  and  the  Internet  will  put   jobs  in  two  categories,  people  who   tell  computers  what  to  do  and   people  who  are  told  by  computers   what  to  do.”  (Source  USA  Today  9/14/2012,  p.  4F)      
  81. 81. Jobs  Context  The  result:    •  DisrupJon  •  Unemployment.     And  this  is  the  only   reality  many   Millennials  know.   Median  Income  &  Middle  Class   There  are  no   guarantees.    •  Good  bye  median   income  and  middle   class.    
  82. 82. The    Economic  Development  SoluPon  to  Problem    Mismatch  
  83. 83. The  current  system  of  economic  development  was  designed  for  a  different  era   •  Industrial/   manufacturing   •  Stealing  business   domesJcally   •  TV-­‐industrial  complex   •  Pre-­‐globalizaJon   •  Pre-­‐women  &  minority   execuJves     •  Pre-­‐Internet   Most  of  what  is  popular  ED  came  from  the  SE  USA.    
  84. 84. Trying  to  meet  the  future    By  doing  what  we’ve  done  in  the  past.     This  approach  further  alienates  new  economic  development  professionals   who  don’t  relate  to  our  profession’s  history  within  today’s  context.      
  85. 85. SoluJon  to  problem  mismatch  Many  brilliant  people  in  economic  development  are  told  they  are  not  brilliant  because  they  are  being  measured  on  an  academic/professional/credenJal  system  that  rewards  tradiJonal  approaches  and  thinking.    
  86. 86. Conv ersion  Innova DisrupPon   Pon  Outside   Re place   ange   Economic   Ch Shih   Inside   Development   Best     PracPces   Switch   sloc ate   Di RevoluPon   Transfor maPon  
  87. 87. “Change is not necessary.Survival is optional.” - W. Edwards Deming
  88. 88. Thank  You.  
  89. 89. GISplanning.com        ZoomProspector.com        SizeUp.com      

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