America has always sought selfless and passionate leaders who have the vision, moral certitude, skills and integrity to persuade people to come together for the best of causes. Look closely and you can spot such leaders everywhere in the non-partisan domain that is the economic development profession.
Economic developers help businesses grow so that communities can prosper.
Their work is an ever-evolving process to make sense of complicated situations involving competing agendas, to negotiate solutions and manage change processes. In this way, they help revitalize shared values and beliefs as they mobilize others to do what is right to realize positive changes in people’s lives.
This is the modern story of economic development. It is a difficult story for those in the profession to tell and for others to understand. I suspect that’s because while the goals of the past and present day are the same—achieve greater economic prosperity—the playbook for how it gets done has dramatically changed and the number of players on the field doing it has exponentially expanded.
The profession morphed over the decades from one dominated by real estate and banking executives (from which the profession emerged) to an established industry with multiple fields that required people who could be change agents on a larger stage. Those who came before today’s economic developers viewed themselves as disciplined professionals responsible for facilitating commercial and industrial development deals—the bigger, the better.
They were transaction-minded individual contributors who were judged by the number of deals they closed, projects built, size of investment and jobs created. It was not standard industry practice to engage multiple, diverse interests in a collaborative process to influence outcomes, as that went against the maxim of the deal making process, namely, control uncertainty and minimize risk.
Transparency in an information-laden, networked world has fundamentally changed the nature of the game. The most effective economic developers in the public domain today are called as leaders to fill voids in our communities, to identify problems and, through highly developed facilitation skills, unite diverse social, economic and political interests so that together they can break down barriers to economic prosperity.
This requires putting people and process first to share information, developing trust and reaching consensus on what needs to happen to create an environment for businesses to flourish so that jobs are created. If, at the end of the process, deals are to be made, then economic developers are expected to embody and represent the best interests of the community as they negotiate with businesses to close deals.
At a recent leadership conference of economic developers, one person respectfully described it this way, “I feel that we are expected to be the next generation United Way leaders in our community.” By that, she meant that her role as economic development leader has taken center stage as the person the corporate community, politicians and others turn to for help in advancing critical issues affecting regional quality of life. Presumably, she is to do this while also working to advance the more narrowly focused interests of specific businesses.
It is not surprising that some who work in the profession struggle to succinctly describe what they do and how things get done.
The lack of clear messaging creates voids of understanding into which rushes all kinds of misconceptions and fears people have of change. The dissonance has reached such a fevered pitch that many economic developers now find themselves in the uncomfortable position of being on defense. It is an ironic place to be for those who have dedicated their lives to helping people and communities prosper.
The International Economic Development Council, through its think tank Economic Development Research Partners group, released a report last month, titled “Championing Economic Development.” It describes the challenges the profession is facing and provides some guidance to economic developers. Think of it as a guidebook for telling a better economic development story.
Some challenges outlined in the report include how best to respond to:
- Citizens who believe development will have a negative impact on their communities
- Existing businesses that resist efforts to attract more industry for fear that they will lose market position and valuable talent
- Ideological opposition to any kind of government involvement with private industry, including provision of economic incentives to businesses, often lambasted as corporate welfare
- Criticism of economic developers and the organizations they work for; namely, that its leaders are paid too much, they operate in secrecy, only care about big business and are not concerned with addressing economic inequities.
The authors of the report provide case studies and suggestions for how economic development organizations might respond. They recognize that some groups can benefit from rigorous management and accountability measures, and that all must be open to hearing criticism and adapting when necessary. Consistent communication, education, and relationship building are necessary to produce strong alliances.
Of course, in some communities, there are kernels of truth and real-life examples of poor decisions made by public officials and economic development leaders that back-up the critics’ worst fears. Fortunately, however, these are the exceptions. Most economic developers I know are honorable and work for the benefit of the larger community.
Unfortunately, the competition for Amazon’s second headquarters site exacerbated problems for the industry. Some economic developers say that even though their community was passed up, the process of competing helped to bring people together. But damage done to the profession is deep and will have long lasting impact. It reinforced to many a terrible message that economic development is still a secretive process driven by politics and incentives in a big-game hunt for legacy projects. Amazon used the old playbook to their advantage.
Critics pounced on the selection process and outcome as the most egregious examples of public fleecing, corporate welfare and aggregation of jobs and wealth in places that are already doing well. Non-disclosure agreements all but assured limited flow of public information. And, of course, Amazon came out the biggest winner as it will profit in countless ways, including capitalizing on the valuable data and inside political intelligence it collected from every major market in the land.
There are many of us who long for the day when incentives take a back seat to a saner approach to positioning businesses and communities to compete not with each other but in the global marketplace. Until that day arrives, the best we can hope for is that the economic development community does rigorous due diligence, develops community based strategic plans, adopts and adheres to principles for investment, conducts credible return on investment analyses for any public funds expended and builds in ironclad claw back provisions for deals that don’t work out.
At different times in my career, I have had the honor of managing economic operations of four state governments, a metropolitan county, and major city. I estimate that in each, negotiating deals involving incentives comprised less than 10% of all departmental efforts. The daily grind for the economic developer centers not on providing incentives and doing deals in back rooms, but on bringing people together in an open process to solve problems.
We now give more emphasis to improving conditions for business growth within the community than structuring incentive deals to attract new businesses. We help entrepreneurs and businesses of all sizes get to the next level of their growth, work with residents and civic interests to develop vibrant places for people to gather, collaborate with companies and educators to design curricula so that graduates land good paying jobs, and conduct empirical research to identify weaknesses in the economy that need to be mitigated to become more competitive, to name just a few roles.
Economic developers know that the greatest threats are failure to sustain business growth and diversify their economies to withstand the next economic downturn. They know that what was cherished yesterday in their communities may not appeal to future generations. They live in the world of transition. Change for them is not a threat, but rather the imperative. In this sensitive arena, they embrace working with diverse stakeholders to seek compromise and consensus to produce forward leaning action.
At a time when the nation seeks leaders, it is humbling to be part of a profession that moves others to do what is right to bring economic prosperity to communities. I agree with the opening sentence of IEDC’s report: “Economic development is a noble calling.”