Innovation in economic development

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Anatalio Ubalde, CEO of GIS Planning, discusses how to innovate in economic development and other markets. Case studies include media relations marketing, corporate site selection, GIS, creative class, young professionals, and predictive analytics. More at http://www.GISplanning.com

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Innovation in economic development

  1. 1. Innovation in Economic Development Anatalio Ubalde CEO & Co-Founder
  2. 2. Innovation /in-uh-vey-shuhn/ Noun 1. the creation of value for customers that either meets new/undiscovered needs or serves old needs in new ways. 2. something newly introduced, such as a new method or device such as more effective products, processes, services, technologies, or ideas that are readily available to markets, governments, and society. Synonyms: revolution – modernization – improvement- advance
  3. 3. That’s actually not a
  4. 4. Dean Barber: “Well, folks, corporate site selection is not Charmin and communities are not Cheerios. It matters little to me or most corporate clients that you believe that you are so unique because of your annual dump truck festival or have the largest stuffed collection of two-headed calves in the world.
  5. 5. It’s not about ideas It’s about making ideas happen. It’s the challenge of adoption & implementation
  6. 6. A tip about getting people to adopt your ideas • No one cares what’s in it for you. • They care about what’s in it for everyone else. • They will follow leaders who care about the community and are generous beyond themselves. • If you are truly generous you are giving something to those that can never repay you.
  7. 7. Maslow’s Hierarchy of Needs Self-actualization – personal growth and fulfillment Esteem needs – achievement, status, responsibility, reputatio n Belongingness and Love needs – family, affection, relationships, work group, etc. Safety needs – protection, security, order, law, limits, stability, etc. Biological and Physiological needs – basic life needs – food, drink, shelter, warmth, sex, sleep, etc.
  8. 8. Anatalio’s hierarchy of ED innovation needs Innovation: Inventing the future Actual Best Practices: Cutting edge that works now; used by elite E.D. pros “Best” practices: Doing what others in the profession says is good economic development (tradition) Inexperienced EDpros You You Traditional EDpro Do something: focusing on the things you are doing better without understanding best practices Do anything: I’ve got to do anything to prove I’m actually working (Ineffective but you can show it to your bosses) New EDpro
  9. 9. Radical innovation changes our profession Innovator “Best” Practice Radical idea DCI Advertise through reach and frequency. Don’t advertise. Third party endorsement through media placement is what matters. Whittaker Associates Target industries Use math to target likely businesses within industries GIS Planning Hoard (broker) information so businesses will come to you and you will convince them. Give valuable data away so businesses will convince themselves to invest Littleton, CO Recruit businesses. Use incentives. Grow businesses. No incentives. Richard Florida Target businesses Target creative professionals Rebecca Ryan Focus: Today’s leaders. Job first. Location second. Focus: Tomorrow’s leaders. Location first. Job second. ZoomProspector.com Specialization. A few site selectors will deliver your projects Democratization. Many businesses can self-deliver your projects
  10. 10. Innovation Case Study Development Counsellors International www.AboutDCI.com
  11. 11. Many of the slides for this individual case study are courtesy of DCI and are used with their permission
  12. 12. Innovation Example Best Practice at the time Innovation revolution Advertise through reach and frequency. Don’t advertise. Third party endorsement through media placement is what matters.
  13. 13. Getting Noticed: Reach & Frequency • Reach – Number of people exposed to your ad • Frequency – How often you send the message • > 90% of TV ads the morning after are not remembered ($9 out of every $10 wasted). So many of these sell the brand and not the product • Muhammad Ali used frequency because it works • It costs money though.
  14. 14. National Survey Marketing Strategy Website Out-of-Town Meetings with Businesses Site Selection Consultants and Familiarization Tours Public Relations Special Events E-Mail Social Media Targeted Lead Development Databases Trade Shows and Conferences Slogans, Logo and Graphic Identity Online Videos (YouTube, etc.) Online Advertising Company Blog Brochures Direct Mail Print Advertising TV/Radio Advertising Videos (VHS, DVD, etc) Telemarketing Rating Effective 82% 74% 68% 65% 60% 50% 47% 42% 42% 41% 32% 31% 21% 21% 19% 17% 11% 10% 5%
  15. 15. “I’M A GREAT GUY” MARKETING Used with permission. copyright
  16. 16. “I’M A GREAT GUY” “I’M A GREAT GUY” “I’M A GREAT GUY” ADVERTISING Used with permission. copyright
  17. 17. “HELLO.” “I’M A GREAT GUY.” TELEMARKETING Used with permission. copyright
  18. 18. “TRUST ME… HE’S A GREAT GUY.” PUBLIC RELATIONS Used with permission. copyright
  19. 19. Attract Attention of News Media Step One: Develop key messages that:     Fit into the news of the day, or Support a trend, or Offer a counter trend, or Are delivered by a newsworthy source Step Two: Determine delivery of message  Email targeted reporters (brief/factual)  Tell directly via “story tellers”/spokespeople  Travel to targeted reporters OR  Invite targeted reporters to you Used with permission. copyright
  20. 20. Attract Attention of News Media Step Three: Play it back at home   Alert local media to national attention Email your investors/board members Step Four: Socialize it  Post it to your website  Tweet the article/post on FB/LinkedIn Used with permission. copyright
  21. 21. Innovation Case Study Whittaker Associates www.whittakerassociates.com
  22. 22. Many of the slides for this individual case study are courtesy of Whittaker Associates and are used with their permission
  23. 23. Innovation Example Best Practice at the time Innovation revolution • Target industries • Use math to target likely businesses within industries
  24. 24. (C) Whittaker Associates, Inc. 2012 32
  25. 25. (C) Whittaker Associates, Inc. 2012 33
  26. 26. Predicting Corporate Behavior • Key Drivers – Change • • • • Leadership Ownership Product/Service Client Preference – Metrics • Sales • Employment (C) Whittaker Associates, Inc. 2012 34
  27. 27. Predictive Analytics • • • • • • Statistics Correlation Relationships Models Pattern recognition Algorithms For the mathematicians, they are using multiple variant regression, gradient decent, and matrix algebra to generate the predictive analytic algorithm (C) Whittaker Associates, Inc. 2012 35
  28. 28. Predictive Analytics • What is it that you would benefit from knowing ahead of time? • Is there data that is plausibly correlated to that which you wish to predict? (C) Whittaker Associates, Inc. 2012 36
  29. 29. Do you really understand your network of relationships? The hidden value isn’t the network you know. It’s the network they know.
  30. 30. Innovation Case Study GIS Planning Inc. www.GISplanning.com
  31. 31. Innovation Example Best Practice at the time Innovation revolution Hoard (broker) information so businesses will come to you and you will convince them. Give valuable data away so businesses will convince themselves to invest
  32. 32. The way of the dinosaur • “I don’t publicly give out information about my community because businesses need to call me so I can explain it to them.”
  33. 33. Reality Because they don’t give the information out, they aren’t going to get called at all.
  34. 34. 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  35. 35. User-defined search for sites and property based on location, use & size
  36. 36. Matching properties are shown in a comparison list & on the map
  37. 37. Drill down into individual property report to see the details
  38. 38. View the area with Google Street View
  39. 39. Competition & Synergies Identify Industry Clusters
  40. 40. Pick any category, like Construction
  41. 41. And only Construction businesses are displayed
  42. 42. Local GIS Layers
  43. 43. Drive Times Legend
  44. 44. Changes the rules for generating economic development investment
  45. 45. Before ZoomProspector You Chasing Prospects
  46. 46. Prospects Chasing You
  47. 47. Many Prospects Chasing You
  48. 48. Innovation Case Study Economic Gardening www.ci.littleton.co.us
  49. 49. Chris Gibbons
  50. 50. Innovation Example Best Practice at the time Innovation revolution Recruit businesses. Use incentives. Grow businesses. No incentives.
  51. 51. Economic Gardening • Fundamental idea is that entrepreneurs drive economies. So, create jobs by supporting existing companies in a community. • Pioneered in 1987 in Littleton, Colorado, when the state was in a recession, is an alternative to traditional economic development practices. • Based on research by MIT’s David Birch, who suggested that most new jobs in any local economy were produced by the community’s small, local businesses. • In Littleton, it evolved into a focus on “gazelles” that created the greatest
  52. 52. Economic Gardening • Economic gardening connects entrepreneurs to resources, encouraging the development of essential infrastructure and providing entrepreneurs with needed information. • Littleton provides local entrepreneurs with access to competitive intelligence on markets, customers, and competitors that is comparable to the resources customarily only available to large firms. • Included in the market information category are database and data mining resources, and geographic information systems.
  53. 53. Economic Gardening • Information: This accounts for 75% of staff time. They provide “very sophisticated search capabilities using tools often only available to large corporations.” They use the tools and lists to which they subscribe to create marketing lists, competitive intelligence, and other information to answer business questions. They also use GIS software to plot customer addresses, as well as demographic, lifestyle, and consumer expenditure data. • Infrastructure: This is not traditional governmental infrastructure. Instead they are focused on the infrastructure for quality of place (open space, pedestrian experience, festivals) and intellectual infrastructure (institutions that provide training for companies). • Connections: They provide connections for their businesses to trade associations, think tanks, academia, and to thought leaders such as CEOs.
  54. 54. Innovation Case Study Richard Florida www.creativeclass.com
  55. 55. Innovation Example Best Practice at the time Innovation revolution Target businesses Target creative professionals
  56. 56. Traditional assumptions • The traditional approach of most EDOs is to focus on companies to achieve economic growth. This happens through business attraction and retention assistance. • The assumption: the more businesses relocate or expand in town, the better it will be for economic growth. • Professor Richard Florida’s book The Rise of the Creative Class showed it was the people in creative professions that were largely responsible for the economic growth and health of a community.
  57. 57. Key points of Florida 1. 2. 3. 4. 5. 6. Creativity has become the driving force in economic growth. The “creative class” is a fast-growing, highly educated, and well-paid segment of society. The creative class works in a variety of industries. They create new things that are transferable and useful. They also work in knowledge-based industries and engage in creative problem-solving. Jobs were the main reason people wanted to live in certain places. Now creative people want to live in places that have high quality amenities, experiences, diversity, and openness. For a community to attract creative people, foster innovation, and spur economic growth, it is necessary to have all the three Ts: Talent, Tolerance, and Technology. Cities that attract and retain creative class workers will prosper, and those that fail will not. Creativity is the source of competitive advantage.
  58. 58. Michael Porter on industries: Traded Industry Local Industry Images © GIS Planning Inc.
  59. 59. What they measured • Economic development – Economic output per person (productivity) – Wages – Innovation (patents) • Talent – Educational attainment – Knowledge workers • Industry (Porter) – Local industries – Traded industries Source: http://research.martinprosperity.org/papers/Talent-vs-Trade-formatted.pdf
  60. 60. What they Discovered: The variation in talent largely explains the variations in regional economic performance Talent Industry Images © GIS Planning Inc. Source: http://research.martinprosperity.org/papers/Talent-vs-Trade-formatted.pdf and http://www.theatlanticcities.com/jobs-and-economy/2012/09/talent-beats-trade-economic-development/3083/
  61. 61. 14 Million 3.2 Million $100 Billion -1% Source: CNBC
  62. 62. Traditional Economic Development COMMUNITIES COMMUNITIES COMPANIES COMPANIES Talent Rich Economic Development
  63. 63. Innovation Case Study Rebecca Ryan www.nextgenerationconsulting.com
  64. 64. Rebecca Ryan
  65. 65. Innovation Example Best Practice at the time Innovation revolution Focus: Today’s leaders. Job first. Location second. Focus: Tomorrow’s leaders. Location first. Job second.
  66. 66. Next Generation Millenials • Today, Baby Boomers/Gen Xers, run most companies, communities, and EDOs. • One of their blind spots is the assumption that younger generations share their values, even though they have had very different experiences. Some of these CEOs, mayors, and other leaders are waiting for the next generation to grow up and start acting like them. • But that isn’t going to happen.
  67. 67. Next Generation Millenials • Communities can succeed by embracing the Millennial generation and their unique set of values and principles. • Her work complements Florida’s in the recognition that Millennials choose where to live before they choose where to work • Her innovation comes from studying the generation gap in order to help older community leaders connect with the leaders of tomorrow and meet them on their terms.
  68. 68. Live first, work second • 3 out of 4 Americans under 28 value living in a cool city over a good job. Skilled young professionals choose their community first and then a job in that city. • Employers must adjust their workplace culture and practices to attract and retain desirable “next generation” workers. • The old model of economic development that focuses on job attraction and incentives doesn’t work if people choose a community before a job. • Economic developers job-strategy doesn’t work in a knowledge economy and EDOs are failing in the metrics of increasing incomes of all people, better education, better health, more sustainable economies, and increased environmental protection. • Communities must integrate and involve the next generation, including leadership positions. • Making “Cool Communities” is a competitive advantage to attract the next generation and foster economic development.
  69. 69. “If you build it they will come” doesn’t work anymore. Bringing the business doesn’t mean the company will attract the people
  70. 70. I can work anywhere I want.
  71. 71. Cool communities • density • collaborative third-spaces • stroll districts I used to be a city planner now I’m becoming one again
  72. 72. My job in the coming years will not be to attract companies. One hundred percent of my job will be to attract talent. Janet Miller Nashville Chamber
  73. 73. Innovation Case Study ZoomProspector.com www.ZoomProspector.com
  74. 74. Innovation Example Best Practice at the time Innovation revolution Specialization. A few site selectors will deliver all your projects. Democratization. Many businesses can self-deliver your projects.
  75. 75. 750,000 businesses need NEW facilities each year
  76. 76. 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).
  77. 77. 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)
  78. 78. Businesses identify the optimal communities to start-up, expand, or relocate based on characteristics that matter to them.
  79. 79. We are closer to your market We have lower cost facilities How do we find the businesses that need our characteristics? We have better transport options I want a better paying job
  80. 80. We want more revenue growth We need better employees How do we find the communities that can solve our problems? We want better access to markets We need to be near the right businesses
  81. 81. We want more revenue growth We have lower cost facilities We need better employees We are closer to your market We have better transport options We want better access to markets I want a better paying job We need to be near the right businesses
  82. 82. Community you know Ranked List Wizard Find Similar… Power search
  83. 83. 369 Site Selectors
  84. 84. Making the Connections That Matter Making the ConnectionsThat Matter Economic Development Professionals Site Selection Consultants & Corporate Real Estate Pros New, Expanding & Relocating Businesses
  85. 85. Businesses finding communities.
  86. 86. What happens to innovators?
  87. 87. In praise of heretics All their ideas were considered heresy at the time. Now all are recognized as model practices that continue to push the cutting edge.
  88. 88. You won’t be popular at 1st, 2nd, or 3rd… “First they ignore you, then they laugh at you, then they fight you, then you win.” - Mahatma Gandhi
  89. 89. Let’s take a trip back in time
  90. 90. Early 2009: It all starts with optimism
  91. 91. Then experts tell you it can’t be done, so you know you’re on the right path
  92. 92. Late 2009: IEDC Annual Conf.
  93. 93. Summer 2010: Ready for launch ?
  94. 94. Thursday, August 12, 2010
  95. 95. Examples of the original SizeUp design were shared at this point in the presentation. If you would like more information about the history of SizeUp please visit SizeUp.com and contact the appropriate staff.
  96. 96. See the best zipcodes in which to See the best zipcodes in which to advertise based on industry advertise based on industry performance in your region performance in your region
  97. 97. Dustin Moskovitz (Facebook Co-Founder)
  98. 98. “Market research and analysis is critical for the success of any small business owner or entrepreneur. Tools like SizeUp deliver data right to the fingertips of business owners to help make smart decisions and have the greatest opportunity to start, grow, compete and succeed. In today’s challenging economic environment where small businesses create nearly all net new jobs in the U.S., help for small businesses is more important than ever before.” - Karen Mills, SBA Administrator
  99. 99. Innovation in Economic Development Organizations
  100. 100. The 2 Reactions You Want in your Innovation Strategy Wow Customers Uh-oh Competitors 2:45
  101. 101. High Breakthrough Innovation Sustaining Innovation Value High Low Low Cost Source: Jon Pittman, VP, Autodesk – lecture Sept. 2013
  102. 102. Orthodoxies /(ôrth-dks-ez)/ Noun 1. Custom, practices, or belief. 2. Adherence to accepted norms, more specifically to creeds, especially in religion. 3. Unstated assumptions that go unquestioned. Entrenched “wisdom” that no one thinks to change. 4. from Greek orthos ("right", "true", "straight") + doxa ("opinion" or "belief", related to dokein, "to think”) Synonyms: unoriginal – conventional – traditional - faith
  103. 103. What is a bookstore? Describe one.
  104. 104. “All of us are prisoners, to one degree or another, of our experience.” - CK Prahalad and GaryHamel Competing for the Future
  105. 105. Different orthodoxies • Internal – Embedded in company culture. – Hardest to change. – Previously defined company success. – Ford Motor: don’t ask for help, only discuss good news • External – What markets and industries believe. – This makes them vulnerable to outside disruption. – Southwest: no hub-and-spoke. Customer service. Concept from: “Flipping Orthodoxies: Overcoming Insidious Obstacles to Innovation by Bansi Nagji and Helen Walters
  106. 106. How to innovate & challenge orthodoxies 1. Be open minded and intentional about challenging orthodoxies. (New and younger people are best at this) 2. Ask “Why not?” regularly. Don’t just find the problem. Find the solution. 3. Look outside your industry market. 4. Be a credible heretic. Acknowledge why there is an orthodoxy and then challenge it in a positive way. Also, orthodoxies only change from the top down. 5. Recognize innovators. Rewarding them for their work. Reward their effort if they fail. Concept from: “Flipping Orthodoxies: Overcoming Insidious Obstacles to Innovation by Bansi Nagji and Helen Walters
  107. 107. OK, but really, how do you do it? For each orthodoxy: • Why does it exist? • Why is it hard to eradicate? • What cases or examples (from any industry) show us a different way? • What could it look like if you flipped it?
  108. 108. Innovation appears incredibly risky
  109. 109. Failure is a certainty. “Success is 99% failure.” - Soichiro Honda
  110. 110. What motivates you? Focusing on failure is the wrong motivation
  111. 111. The world will continue to innovate and change
  112. 112. Will your community and organization be better off if you are leaders or followers?
  113. 113. New Ideas
  114. 114. The moment when you are ready to quit is usually the moment right before the miracle happens. Don’t give up. Try new things. Make mistakes. Suffer public failures. Emerge on the other side with success.
  115. 115. • Michael Jordan – Cut from H.S. basketball team locked himself in his room and cried. • The Beatles – rejected by Decca Recording Studios who said “we don’t like their sound” “They have no future in show business.” • Steve Jobs – at 30 was devastated and depressed because he was kicked out of the company he founded. • Walt Disney – fired from newspaper for “lacking imagination” and “having no original ideas” • Oprah Winfrey – demoted from her job as news anchor because she “wasn’t fit for television” • Albert Einstein – couldn’t speak until almost 4, his teachers said he would never amount to much. • Henry Ford – 1-1/2 years after starting first venture to build a motor car the venture was dissolved because stockholders didn’t have confidence. • Richard Branson – student magazine failed after he dropped out of school to start it so he started mail order music which enabled him to open Virgin Music store. • J.K. Rowling – Harry Potter books rejected my numerous publishers for reasons like 'it was far too long for a children's book' or because 'children books never make any money'. BTW: when she started she was a divorced single mum on welfare. If you’ve never failed you’ve never tried anything new
  116. 116. “Change is not necessary. Survival is optional.” - W. Edwards Deming
  117. 117. Closing advice Question how hard you are really working at creating innovative change.
  118. 118. “Only those that risk going too far can possibly find out how far one can go.” - T.S. Elliot
  119. 119. Innovation in Economic Development Anatalio Ubalde CEO & Co-Founder ubalde@gisplanning.com GISplanning.com ZoomProspector.com SizeUp.com

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