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The Value of Impact in Economic Development

I had the honor of meeting with the management team from a state Commerce department, economic development division this week, focusing generally on the topic of preparing for a challenging future. Of particular interest were the characteristics required to create a ‘magnetic’ environment that attracts business and industry.

Focus on the Future

While it seems obvious that any strategic thought would rely on a future focus, the nuance in this discussion related to perspective. That is, these talented pubic managers and planners are dedicated to building economic vitality throughout the state and see the future through that lens. A key question is, ‘How does a business planner see the future and what characteristics are most critical in his or her decision making process – i.e. whether to pack up and move from one state to another?’ Business is comprised of people and most want the same things – decent health care, good schools, accessible higher education, recreational opportunities, reasonable home prices and home availability, a sensible cost of living, low crime rates, and a decent place to live. Business wants viable and accessible markets, good transportation, a reliable supply chain, a reasonable tax structure, a capable workforce, low operating costs, and localized support services. Many economic development professionals work tirelessly to provide these things for new and existing enterprises. But what provides the greatest ‘magnetism?’

There’s more to it. Less than ten years ago the prediction was that people would change careers five to ten times in a lifetime. This has changed. It was another ‘bubble’ that did not get much attention. The emerging trend is reversing again toward stability. When given the choice, businesses and employees would rather have a stable environment in which to live and work than the tenuous promise of riches tied to high risk. Our research shows that businesses would trade a higher profit margin for a reduced margin that is accompanied by long-term stability, more predictable opportunity, more safety, and an environment that, over time, provides the best possible platform for stable growth. When given the choice, more people will now choose less short-term reward for more long-term opportunity and the intangibles that come with it. Provide that environment in tandem with traditional success factors and you’ll attract business.

A new ‘Center.’ Times are changing. The past year was merely a prelude to a major shift toward more thoughtful, prudent decision-making and a re-centering of society. To create more ‘magnetic’ communities, economic development teams must concentrate on intangibles as much as tangibles. While tax rates, land availability, supply chains, broadband capacity, and transportation infrastructure remain important, the enterprise of the future will also be attracted to areas that epitomize balance, safety, stability, acceptance and opportunity – for individuals and businesses.

The key is to be aware of what motivates people in troubled and challenging times. Most would rather make less money but know they have a job (or viable business) and longer term prospects. My message – economic growth may very well depend on creating what Richard Florida terms ‘a place to be.’ And much of that environment will be defined in social-cultural terms, not business terms.

The Value of Impact

From personal experience as a public employee in both local and state government, I can attest that a great frustration is the process of gaining the attention of decision makers. An endemic issue in state government is the enormously talented cadre of well-educated and experienced professionals whose advice and counsel is not followed by elected officials. However, very often, our analysis finds that presentation is an underlying cause of inattention.

Properly executed strategic plans should have as their foundation a platform of issues and challenges that negatively impact the state and its citizens. Focusing this day on economic development, questions must be raised regarding what issues or circumstances exist in the state that inhibit economic growth and dampen attempts to maintain vitality? 

Everything distills down to If-Then scenarios. Decision makers need to not only be informed of the issues, but absolutely MUST understand the IMPACT of each issue. There is an implied “So what?” to every issue or problem statement. And, unfortunately, many do a poor job of explaining with good data the ramifications of each issue.

Elected officials live in a world of triage. Having understandable metrics that relate directly to IMPACT will allow them to weigh resource allocation options. The professional economic developer must demonstrate that IF resources are allocated to a particular effort, THEN predictable results will accrue. Conversely, IF the issue is not addressed, THEN a negative, less desirable result will most likely occur (the classic, ‘Choose your news.’)

Being Prepared for Challenge requires an understanding of the value of impact in the context of the evolving future. It is a vital tool of public managers at every level and in every discipline. Consider intangibles as much as tangibles and always take time to preemptively answer the question, “So what?’ 

 

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

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A Culture of Trust

One of my favorite authors, Warren Bennis, recently teamed with James O’Toole to write a powerful commentary on the subject of candor and trust.  It can be found in the June issue of the Harvard Business Review (p. 54).  It is primarily directed toward business and is fueled by increasingly vile breaches of ethics over the past few years, but it clearly resonates just as well for public leaders.  

As I read the article, I compared the cited research with other data and commentary posted over the years in other books and journals.  All are worth repeating and certainly make sense for elected and professional managers throughout municipal, state and federal government.  Among the recommendations that seem most germane to public managers and decision makers are:

  • Tell the Truth
  • Encourage people to speak truth to power
  • Reward contrarians
  • Know how to have difficult conversations (crucial confrontations)
  • Use multiple/ diverse information sources
  • Admit your mistakes
  • Build a culture that supports transparency
  • Share information and data openly

A successful public manager must embrace and embody these characteristics, particularly in a world that has lost its openness, trust, and belief in traditional systems. With a struggling economy and, in many areas, a future that appears bleak, communities need leaders who reflect character, commitment, and a willingness to confront reality. With so many ‘converging variables’ (many cited in earlier blogs), every community and public agencies at all levels need an entirely new level of candor and truth. During many programs and conversations about the future, I have asked people if they would prefer to know the facts in order to make an informed decision or not be told and just find out when something bad happened. Overwhelmingly but often reluctantly, people virtually always choose to know the facts so they can plan and prepare.

The Country, states, and every community are no different. I noted a week or so ago that it is time for many public managers and elected officials to begin developing criteria for performing triage on public services. The days of telling agencies to find another 5 or 10 percent to cut are almost over. The real question is, “What does the community truly need at this point and to prepare for a predicted future? And, ultimately, what is the best use of finite resources?” To reduce not only service levels but to potentially eliminate entire programs requires open, forthright discussion about choices, value and overall contribution for dollars spent.

Citizens need truth in government and truth breeds trust. Various polls have shown that the average citizen does not think highly of government. The same can be said of the public’s general view of elected officials. Why is that? Historically, has government been transparent, understandable, approachable, and accessible?  Has it always been seen as fair, equitable, and essential? To all, the answer is ‘no.’ So…if public managers and elected leaders are to build trust, understanding, and support for the enormously difficult decisions that are just now beginning to emerge, the above list just might be a reasonable guide. 

Preparing for a challenging future will take all the intelligence, candor, creativity, and spirit we can muster. Share everything, be interested in everything, and explore every option. An open, collaborative culture will make a huge difference. How does your culture measure up? Are you Prepared for Challenge?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

What Elected Officials and Citizens Want To Know

Local government is rapidly transitioning to an environment wherein citizen expectations for public programs are higher than at any other point in history. Due to lagging economies funding is tight and will become even more contracted as competing services are driven by multiple challenges related to population growth/ demand, growing operating costs, conflicting priorities and deteriorating infrastructure. As demand for services grows, public scrutiny, competition for limited resources, the complexity of regulations, and the need to sustain fundamental program quality will escalate.

To succeed in the context created by these competing and very complex variables, public agencies must commit to internal operations founded on principles of financial accountability, exceptional quality, consistent performance, and meaningful contribution to the community.

The Value of Operations Plans

Our research has shown that far too few public agencies take time to develop and maintain Operations Plans. Quite often, there are no formal (or even informal) internal plans that describe each department and division, what programs they are accountable for, what activities are undertaken, or what basic outcomes are expected. Critically, there are far too few municipal governments that tie performance measures to budget allocation and create a ‘triage’ system based on what services are most essential to sustain an economically vibrant, safe, and harmonious community. Instead, the annual budget appropriation and allocation process is too often a battle among departments that pitches director against director and occasionally elected officials against each other as they collectively grapple with funding priorities.

What Do Tax Dollars Buy?

From a management standpoint every budget is created to fund programs that directly or indirectly serve the public. Very simply, whether a Mayor, Council or Board, all want to know and must be able to explain what is being accomplished for the dollars spent – no different from any business enterprise. Public managers must understand that a preemptive approach to program review and performance is much more powerful and meaningful than a reactive approach. That is, it is always better to report ahead of time what a department, division or program is doing and what it will contribute for the funds allocated. The best approach is reflected in operations planning, wherein managers report:         

  • What services are provided
  • What outcomes or contributions accrue to the community
  • Significant achievements made by the program unit
  • Standards that are being maintained & why they are important
  • Measurement criteria (metrics) used to assess performance
  • Cost-benefit of the programs and services

I work with many public organizations to develop strong operations plans that contain detailed operating systems, processes, and protocols, and include the essential elements listed above. For city and county departments my caution is to never wait for this type of information to be requested. Far too often, required support data is unavailable or is unclear, there is no time to prepare adequate reports, and managers can appear foolish trying to justify program expenditures when there are no performance criteria or formally established expectations. Business is not conducted in this manner – nor should public agencies operate without pre-existing operations plans that clarify what is being done according to what standards and at what cost.

The message is clear…understand the audience and build operations plans to educate officials and fully explain what the community is getting for their tax dollars. Don’t wait to be asked.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

‘Pandemic’ – An Evolving Characterization

By now most citizens realize that a pandemic is a global disease outbreak exacerbated by populations that have little immunity to the pathogen. Much has been written about historic influenza outbreaks, mostly about the 1918 pandemic of “Spanish Flu” that killed an estimated 20 to 40 million people in one year. With no natural immunity, an estimated 28 percent of all Americans contracted the disease and an estimated 675,000 died – ten times as many as were killed in WW I. During this time the influenza epidemic was so potent that it reduced the average life span of a U.S. citizen by close to 10 years.

Where did it come from? The precise origin of the 1918 epidemic remains uncertain, although some retroactive forensic work has suggested that it may have first appeared in China. But, due to primitive medical care and no public health system, it was not tracked and curtailed before it began to spread to other countries. It could have been incubating for decades before finally reaching its exceptionally virulent stage and rampaging through populations.

As others have pointed out, this pandemic has interesting characteristics that should moderate any inclination to panic. While we live in an enormously connected world where any disease can quickly spread, we also have a superbly connected and communicative scientific community with huge resources to battle a new disease. So, while the swine flu can potentially spread fast, treatment and curative solutions will emerge just as fast.

This is not the ‘Big One”

With all this in mind, is there a chance that this pandemic could generate the level of destruction and tragic loss of life that occurred in 1918? Clearly, no. From reports just today, Mexican health authorities feel the outbreak has already lost its momentum – not to say it could not re-energize and infect thousands more over the next few months.  It is interesting that it is barely news when 36,000 people die from the flu annually in the United States. But this flu is ‘new’ and has associated unknowns. (It really isn’t new – it has been around for decades.)

Because a pandemic typically is caused by new combinations of avian, human or swine viruses, spreads among humans, is contracted by healthy younger populations, and continues to evolve, the swine flu has characteristics associated with a pandemic. Historically the CDC has had cases of swine flu reported in the U.S. (12 cases from December 2005 through February 2009), so this basic form of pathogen is generally known. This H1N1 strain is already being addressed through rapid, coordinated, and sensible actions through public health and scientific organizations in virtually every country. In 1918, fully one fifth of the world population was infected with the influenza virus. The chance of this level of contagion is very remote.

From my perspective, it seems a bit premature for Egypt to slaughter an estimated 300,000 to 350,000 pigs to avoid disease spread – especially in swine populations where no sign of the disease has been found. It is even more curious because swine influenza viruses are not transmitted by food and humans cannot get the disease from eating pork or pork products. Properly handled and cooked pork and pork products are safe.

It would appear that the best course of action is similar to most responses – don’t panic, take precautions, be careful, and pay attention. There are much nastier bugs out there – many we don’t understand and aren’t prepared for. For this ‘pandemic,’ communities and public organizations need to share information with a message of calm assurance when providing facts about the disease and what is being done to address its spread and impact. Similar to the current economic crises, it isn’t 1918 and there are more tools in the tool kit in 2009 that were available then. Pandemic or not, there is also a very potent ‘pandemic’ of response.

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With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.