At Ady Advantage, we’ve worked with utility economic developers for over 15 years. Never have we seen utilities express such an interest in being more forward with their economic development efforts.
We work regularly with utility economic developers, and recently had the opportunity to poll a few dozen of them to get their take on the biggest economic development challenges and opportunities facing them. I thought I would share our findings, along with my observations, because they provide fresh insights that are relevant to all economic development professionals. The challenges and opportunities tended to fall into several discrete categories; Alignment, Readiness, Differentiation and Organizational/Internal Issues.
Utility economic developers say it’s a challenge getting all the stakeholders they work with — cities, local chambers, economic development teams, and their own organizations — moving in the same direction. It’s also challenging to generate community interest in economic development generally.
Along with the traditional challenges of economic development – having suitable sites and buildings available for prospects, adequate infrastructure, etc. – some utilities find it challenging to be able to serve the needs of large potential customers (while those with lots of capacity see large customers as an opportunity). Utilities also are contending with the workforce shortage, as well as with barriers to talent recruitment such as available housing.
The utility professionals we spoke to are aware that they have a lot of competition and wonder how to create the kind of business case and marketing strategy that will differentiate their communities and attract the kinds of businesses they want.
Along with capacity issues and the need for rate structure adjustments, utilities are challenged to obtain the staff and budget they need to meet their economic development objectives.
It’s not a surprise that many of these challenges and opportunities fall into the categories of Alignment, Readiness, or Differentiation, which we’ve identified in our analysis of the megatrends affecting economic development as the three critical success factors for EDOs.
Of these three factors, Alignment is the one that appears to be becoming more of a challenge, and it’s also the one that takes the most experience to address. I believe that’s being driven by the increasing competition for talent, and economic developers, especially within utilities, aren’t equipped to address this issue alone. Developing, recruiting and maintaining the right talent pool requires the cooperation of government, workforce development agencies, public schools and universities, leading corporations and banks, downtown development groups, visitors and convention bureaus, and more.
This involves coordinating the efforts of a variety of stakeholder groups that aren’t under a central authority, and which all bring different interests and perspectives to their roles. Developing trust, buy-in and consensus among all these groups around talent goals is no mean feat, to say nothing of harmonizing the actual implementation of training, housing, placemaking and marketing initiatives.
As a result, all of the utility economic developers we talked to saw Alignment as a challenge, not an opportunity. Certainly, achieving the right alignment of key partners can be challenging; but a talent initiative can also be an opportunity to bring stakeholder groups together around talent issues, and help them understand the relevance of what they do to the economic health and well-being of the community. The demand for talent dovetails with the interests of all of these groups and can provide a strong motivation for coordinated action.
On the Readiness side, utility economic developers have a certain familiarity with infrastructure and site readiness — perhaps because so many engineers roam their hallways.
Many economic developers struggle with what site selectors consider to be “fatal flaws” – lack of suitable sites, utility infrastructure, and available, reliable utility delivery capacity. We recommend to our utility clients that they have engineers proactively identify the sites with the greatest capacity within their service area and sharing that information their economic development partners.
Today, however, Readiness means much more than physical readiness. It also refers to being ready to offer a competitive workforce, a vibrant entrepreneurial ecosystem, and other assets. Utility economic developers recognize that their key business proposition has to include more than just the physical attributes of their sites and buildings.
The key themes of Differentiation focused on identifying and articulating the unique characteristics that make you’re your community a great place to live, work and play. Marketing efforts can only be effective with a sound message and strategy; otherwise, they are likely to be ignored, or worse, contribute to negative perceptions of your community.
None of these strategies can work if you don’t devote the people and budget to implement them properly, which speaks to the importance of internal organization issues at utilities. Never have we seen utilities express such an interest in being more forward with their economic development efforts. While there are many reasons for this, the principal one is that utilities have a laser focus on load growth. This goal used to harmonize well with the focus of non-utility economic developers on jobs and investment. However, today we are seeing some non-utility economic developers shift their emphasis to such goals as promoting economic equity and mobility, or to talent strategies that may or may not have a direct correlation with load growth. At the same time, the rise of automation means that load growth may not equate directly to job growth. This divergence in interests will likely create new challenges to utilities working with other economic development partners.
At Ady Advantage, our capacity development programs, community assessments, and ED strategic plans help communities and their ED ecosystems address these challenges and help economic developers stay ahead of economic trends and increase their competitiveness. We would value a conversation with you about how you can maximize your success. Feel free to reach out to me by email ([email protected]) or telephone (608.663.9218) to start continue the conversation.