Last year at this time, I wrote about the three persistent trends in economic development – risk mitigation, regionalism, and increased competition within the ED organizations. Each of those had roots in the past, but showed some pronounced changes in how they were playing out. Looking back on this past year, these trends have proven to be spot on.
This year, as I look to the New Year, I see one major trend for 2016: complexity. In other words, in 2016, economic development is going to get messy. Someday, probably soon, we’ll look back to 2015 as a time when life was simpler.
What’s driving this complexity?
- Industry 4.0. McKinsey coined this term to describe this fourth stage of the digitization of manufacturing. This is not just additive manufacturing (3D printing), but the rise of Big Data, the corresponding analytics, and human-machine interactions. This will have profound implications for how manufacturers will compete, which in turn affects economic developers because manufacturing drives a great deal of innovation and investment, while also having a significant impact on businesses up and down the value chain.
- The Economy. Young people have seen their parents get laid off from companies that seemed almighty, while college dropouts became billionaires. This makes anybody who’s paying attention, especially people at the beginning of their careers or those who have reached a plateau or setback, think about emerging new models of personal economic success.
- Incentives Transparency. The Government Accounting Standards Board has issued guidance requiring state and local governments to disclose more information about tax abatement agreements. Nervous local elected officials are likely to question the need and the purpose of incentives, making this uphill battle even more difficult for economic developers, at least in the short term.
- A Perfect Storm in Talent. Many places are experiencing some or all of the following demographic changes: flat or declining populations; aging work forces; and retiring Baby Boomers. Combine that with quickly changing job requirements educational systems that are stuck in the 1990s, and you can see the hand-wringing and finger-pointing that occurs.
- A real change in how economic development performance is measured. I am a strong believer that the conventional measures of economic development – especially the standard bearers of job creation and investment – are insufficient at best. We need to use measures that reflect the competitiveness of our regions and the companies in them, and our companies’ commitment to our geographic regions. This is not about hits to your website and related tactical measures; in fact, it’s not about you as EDOs at all. It’s first and foremost about your region’s performance, and secondarily about what you’re doing to shape its future.
- The need for very nuanced and complex economic development strategies, tailored to the assets of your region. The strategies that successful communities and regions will implement in 2016 are a far cry from the standard business recruitment, retention/expansion, and start-up strategies of the previous decades. We’ll see more about clusters and innovation, we’ll see more about recruiting companies that fit a region’s brand and personality, and we’ll see more about sustainability and supply chain strategies.
- New ways of addressing the people shortage. Let’s face it: there’s nobody in a better position to solve the talent problem than economic developers. We’re master facilitators. We understand businesses’ needs, and we understand how an insufficient workforce can hold back all of our economies. That said, it won’t be easy, and there is no single, silver bullet. You can read more about this in the book we published earlier this year, The Talent Toolbox for Economic Developers.
AS I SEE IT, the combination of these drivers carries the power to reshuffle the economic development deck. What economic assets does your region have and what will its future will be built on? You need to capture all of your region’s current assets, craft your vision, and then stake out how you’re going to get there.
What are you doing to competitively position your region for 2016? What trends are you noticing and what challenges are you experiencing? I’d love to hear about them. Please comment or email your thoughts to me at [email protected].
Need some expert guidance? Our consulting services for EDOs can help. Contact Janet Ady to set up a free, no-obligation consultation.