As we rethink how we do economic development, we need to give up the idea that the primary way to grow a local economy is through business recruitment. As much as we keep saying we’re really about the whole package–local businesses and entrepreneurs and all that stuff– let’s come clean, shall we? For lots of people who touch economic development, the trade shows, the sales pitches, making the deals…that’s still the primo part of the job.
This essay was revised and included in The Local Economy Revolution: What’s Changed and How You Can Help. If you like this, chances are you’ll like that book. Learn more here.
I’ve made lots of arguments before about how I think that doesn’t work. I’ve talked about the importance of little bets, shifting from direct-touch to ecosystem-building, of growing your own, yah yah yah. Fine. Whatever.
If that stuff isn’t convincing, maybe here’s one that will, straight from the world of those business types we keep wanting to attract:
Business recruitment is inherently costly, time-consuming, high risk work. For anyone. Even the best. And the best are at highest risk of wasted effort because they are the most likely to believe their own sales pitch. So the less we put ourselves in the position of having to do business development, the better off we will be. And the only way to put ourselves in that position is by developing a niche.
To explain that, here’s my own business development story.
When I was in my 20s, I found myself running a consulting business. That’s not because I was some Mark Zuckerberg entrepreneurial hotshot, but because I didn’t have a hell of a lot of other options. I had gotten married to a guy with a good job, but in a place where my teaching degree was pretty much useless. Through a long and contorted process, I ended up turning my writing and research skills into a little business that did National Register nominations and tourism materials. I didn’t get rich, but I could stay afloat.
When I look back now, the piece that amazes me the most is how little money or time I had to put into marketing in order to get jobs. Through no fault of my own, I had landed in niche–both because of where I was located (I was one of few doing this work In my part of the state), and because I was willing to take on the weird or obscure or plain ugly. (I have the distinction of being responsible for listing many of the ugliest buildings in northern Wisconsin on the National Register of Historic Places. You’re welcome.)
The point is, though, that projects that fit me typically found me– at least in enough volume to keep me busy. The projects that found me, that cost me so little to acquire, were the ones where I had a distinct inherent advantage. The ones that fit my niche.
Fast forward 12 years, and I found myself leading business development for a planning practice in a large firm. We spent hours upon hours upon hours preparing proposals. If you work in local government, you probably know what a proposal looks like — a book-length account of how wonderful firm X is, and how firm X will do everything you need, and what it will cost and how quickly they will do it and so on and so on.
For the proposal preparer, it’s a hugely time consuming process. And nine times out of ten, all of that time goes into a complete, unmitigated crap shoot. You, oh hotshot consultant, might have a little different approach, or a grey haired eminence or some other kind of special sauce, but at the end of the day, you’re 90% the same as every other team going after that job.
I’ve seldom had a client tell me that selecting the firm to do the work was an easy or obvious choice. What I’ve often heard: any of the firms that submitted could have probably done ok.
But here’s the most telling part: I, myself, always believed that our team was the best. Hands down.
I wasn’t just doing a sell job… I deeply, truly believed it. Maybe there are people out there who can sell professional services without the belief that their team really is the best, but I don’t think there are many. In most cases, we deeply believe our own spin.
Every time I lost– and if for no other reason than sheer odds, I lost a lot– I don’t think I ever said that the other team was probably better. Instead: the client didn’t understand the benefits of our approach. We didn’t adequately communicate our obvious advantages. They weren’t sophisticated enough to see past the other guy’s flash and dazzle and appreciate our deeper value. Of course. Of course.
Think about that internal justification in terms of your business recruitment. Chances are, on some level, you honestly buy your own sales pitch. Economic development types spend enormous amounts of time and money selling their communities to the Big Deal Projects. And in the process, we sell them to ourselves. No wonder it’s hard to walk away.
Here’s the problem: the cost of landing those projects, especially when that cost is spread out over all the ones we didn’t win… it’s a lot. It’s a hell of a lot.
Consulting firms that chase requests for proposals know this…and they do their damnest to limit the company’s exposure to all those self-believers and the hours upon hours they would spend proclaiming that message. That staff that wrote the proposal for your last project probably did a decent proportion of it “on their own time.” That means time that they didn’t get paid for…often nights and weekends. Because whatever amount of time they were supposed to be able to spend on proposals within their paid time wasn’t enough to get those proposals done. A lot of planning and engineering consultants pull routine 60 hour weeks, although they only put 40 on their time card. It comes with the job, they shrug.
The worst part, though, is that the treadmill of proposals prevents you from taking stock, figuring out how to do it differently, how to find or build the inherent market advantage that I stumbled into with my first firm. I could never do that at the Big Engineering Firm, in part because almost all the time I might have spent building something special got sucked up by proposal after proposal.
And as project budgets got squeezed harder and harder over the years, the benefit of landing the projects that we did get shrunk as well. The value of what we won, compared to the cost of winning it, didn’t look like such a good deal after all. Which both pushed the company to cut back business development hours and pushed is to do more of it on our own time.
What consultants don’t usually admit: you can’t sustain this system.
Think about those two different marketing approaches within your own community and your efforts to build your local economy. Which one are you doing? Are you spending the limited money and time you have on expensive crapshoots, buying your own sales pitch and believing in your gut of guts that this time will be different, this prospect, this one will get it?
If you are, are you getting enough return on that investment any more to make it objectively worth it? Or are you caught in the tightening vise?
Would you be better off if you invested your business development dollars in finding or reinforcing your community’s market asset, its niche?
My first business(and this one) will never touch the total amount of money that the Big Engineering Firm made. But my expenses and headaches were a lot less, too. If we can gain benefit from our assets, then we will probably come out at least as well, and with less wasted effort. And once we stop buying our own sales pitches and learn to clearly see what our places uniquely have to offer, we can use what we have to build healthier economies…and communities.