A Common Failure in Economic Development

In February newspapers reported on a city council that was discussing the potential of defunding their economic development department a mere 3 years after its creation and 12 months after it had become fully staffed.  Read Story

Even more troublesome?  The city completed a 62 page comprehensive economic development strategic plan on November 6, 2016 – just four months before this discussion took place.  We reviewed the comprehensive plan and it’s clear they spent a lot of money to develop the strategy.

Unfortunately, this is an all to common occurrence in many communities across the U.S.  Here’s five major reasons why city led economic development efforts are NOT WORKING:

  1. City funded economic development departments often lack an actionable strategy and the views of elected leaders on “what is economic development” often don’t align with how economic developers do what they do.
  2. To develop a formal strategy, cities usually hire a consultant to complete a comprehensive strategic plan with market analysis, a regurgitation of every community plan before it, design sketches of what areas of the community could look like in the future, and other ‘fluff’ that many consultants sell like candy to a toddler.  These plans are expensive and they are usually light on the actions that need to be taken and how those actions will be completed (implementation).
  3. Economic development isn’t cheap and when a city (or county) budget fluctuates, economic development is often viewed as a luxury best afforded when times are good.  When the choice is between public safety and economic development, you know who will win that battle.
  4. Economic development doesn’t happen overnight and without a clear strategy (with clear expectations and timelines) that elected leaders, staff and the public can understand, it’s nearly impossible to show a return on investment (ROI) in an era where everyone wants the pay-back on their investment to begin immediately.
  5. Cities often times fund economic development just enough to hire the qualified staff, leaving them without the resources to do their jobs effectively.

How can this be overcome?

  1. Clarity.  A city investing in an economic development department must have a clear and common vision for what economic development means for the community.  For example, is it retail development or tourism or new industry attraction?  Each of these requires a different approach, comes with a different set of actions and happen over different timelines.  If that isn’t reconciled first, then expect trouble ahead, especially if a city (or county) believes economic development is all of those things.  That’s when priorities need to be established, because no 1-3 person staff can expertly focus on all of it at once.
  2. Simplicity.  Spending 6-12 months and $100s of thousands of dollars on complex market studies, sub-area plans, design standards and all the rest that cities (and counties) typically ask for in a comprehensive economic development strategy can be too complicated for the first action and create unreasonable expectations.  Thus, before biting off a comprehensive plan, a city (or county) needs to adopt a basic and implementable strategy that flows from the common vision (discussed in “Clarity” above) and addresses the top economic development priorities.  This establishes a short term work plan and is the precursor to additional planning and analysis.  Vague strategy like “develop the retail corridor” is bound to fail.
  3. Prioritize results over extravagance.  Cities (and counties) should prioritize results and momentum over more elaborate, extravagant and expensive planning projects.  Starting with the comprehensive plan may be a good idea when you are a well-funded private (or semi-private) economic development organization, but when you’re a newer, publicly funded economic development program the public perception is your spending lots of money and then the expectation for results ratchets up and quickens in urgency.
  4. Planning isn’t an accomplishment.  Cities (and counties) need to realize that completing the plan isn’t an economic development “accomplishment” nor is how much you spent on the plan and measure of how good your program will be?
  5. Another way.  Here’s an alternative to starting with comprehensive planning efforts.  Hire a consultant (or facilitator that understands economic development) to lead elected leaders, staff and a few citizen and business stakeholders through the creation of a vision and common understanding of economic development followed by prioritizing some initial action items and a timeline implementation of additional planning steps.  At fraction of a cost, this truncated strategy can help a city avoid the pitfalls we’ve discussed and more quickly demonstrate progress, build momentum and produce early wins.

Disclosure: we are not working for the city referenced in this example, but we are confident we could help.

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