Economic Development Strategic Planning...Class Objectives 1. Define economic development strategic planning 2. Identify benefits of economic development strategic planning 3. Understand

Economic Development

Strategic Planning

GA Tech Basic Economic Development Course

Lisa Collins, CEcD, EDFP March 13, 2013

2 EC2055 Proprietary & Confidential

Class Objectives

1. Define economic development strategic planning

2. Identify benefits of economic development strategic planning

3. Understand 8 steps of economic development strategic planning

4. Review methods for analyzing and profiling a local economy

5. Identify common problems of economic development strategic planning

6. Develop a successful economic development strategic plan


What is Economic Development Strategic Planning?

A METHOD in which a community can look at its current situation and compare that situation to where it would like to be in a certain period of time

A PROCESS by which the steps to reach the vision are clearly laid out and defined in practical and feasible actions steps

A TOOL that economic development organizations can use for effective development



"If you don't know where you're going, any road will get you there."



"Would you tell me, please, which way I ought to go from here?"

"That depends a good deal on where you want to get to," said the Cat.

"I don’t much care where--" said Alice.

"Then it doesn’t matter which way you go," said the Cat.

"--so long as I get SOMEWHERE," Alice added as an explanation.

"Oh, you’re sure to do that," said the Cat, "if you only walk long enough."

(Alice's Adventures in Wonderland, Chapter 6)

http://www.alice-in-wonderland.net/books/1chpt6.html



An economic development strategic plan should:

Chart a reasonable path to address

identified GOALS

Have clear OBJECTIVES to reach the goals

Have practical and feasible action steps -

STRATEGIES



Goals Represent overall vision and desired

outcomes

Must be prioritized

May be comprised of several short and long-term objectives

Objectives

Strategies



Goals

Objectives Enumerate exactly what is to be

accomplished

Specific

Easy to measure

Strategies



Goals

Objectives

Strategies Answer the question “How do we get there?”

Should be based on: ED goals and objectives Economic assets of community Available resources of community Constraints of community Desired direction for growth / development

of community



Example:

GOAL: To develop a technically educated and

skill workforce prepared for employment

OBJECTIVE: Enhance the technical skills of the existing workforce

STRATEGY: Create a shared worker program among like manufacturers


Benefits of a strategic plan

1. It SHAPES a community’s future

Steers economic development

Helps community reach long range economic development goals

Keeps long range plans in context Tyranny of the urgent

Ankle-biters



2. It provides a STRUCTURE

Builds consensus within leadership /shared vision

Goals mutually accepted / common agenda

All rowing in the same direction



3.It defines the PURPOSE of the community

Lays out clearly what the plan is

All focus on the same goals

Avoids misunderstandings



4. It BALANCES goals with resources

Realistic assessment of community resources and assets

Identifies available resources to achieve goals

Eliminates pie-in-the-sky plans

Avoids frustration among leadership


Timeline for an Economic Development Strategic Plan

3 Key Phases/usually completed within 6–12 months

Phase One / Pre-planning Phase Meet with stakeholders / 1 month

Assess local economy / 3-5 months

Analyze data collected / 4-6 months

Phase Two / Planning Phase Formulate economic development plan / 3 months

Phase Three / Post Planning Phase Review strategic plan with community, finalize,

prepare for implementation / 1 month


Eight Step Approach to Economic Development Strategic Planning


Step 1: Preplanning

The time frame in which:

The process is organized

The players are identified

Consensus is built

Areas to be assessed is identified

Technical and financial support requirements are determined



Step 2: Assess the local economy



To develop a strategic plan, economic development practitioners should address:

Local economic conditions /driving forces in the economy

Current economic activity

Fiscal well-being

Community attributes

Development capacity

The economic base industries

External trends and events

Future trends and developments



Assessing the local economy helps to:

Determine existing and potential competitive advantages

Identify local assets and potential liabilities that will affect local economic development

Assess regional, national and international environments and their impacts on the local economy

Discover challenges economy is experiencing, or will face

Project or forecast local economic trends

Begin to monitor economic performance over time

Locate resources for implementation of the ED plan



Avoid the pitfalls of data collection and analysis!

Identify area of analysis and limit information gathering to that area

Keep information gathering simple

Gather and analyze information over time

Make information relevant and understandable to decision makers



Define the Economic Area/Jurisdiction

To gain full understanding of the economic environment, look at the local and regional economic setting

Areas of study include:

1. Region-wide Analysis

2. City-wide Analysis

3. Sub-city Analysis Neighborhoods Central business district

4. Sectoral Analysis - particular parts of the economy, i.e.: Manufacturing sector Service sector Labor force



Assessing Institutional Capacity

Why?

To gain full understanding of existing resources such as existing programs and organizations

An organizational “audit” reveals capacity to implement and administer proposed projects

Avoids duplication of services

Can conduct a SWOT analysis of organizations or existing programs and services



Create an Economic Development Profile / Economic Inventory of Community

Include:

Economic Condition

Population Characteristics

Labor Force Characteristics

Physical Condition

Business Climate

Knowledge-based Resources

Institutional Capacity

Quality of Life



Information on the local economy can be obtained from:

Economic analysis of federal, state and local data

Surveying local businesses and residents

Holding focus groups

One on one interviews with key stakeholders and local leaders



Assessing Economic Data

Many different analyses are available to help a community to understand its economy

To be meaningful, data must be put into a frame of reference and compared to some standard




Most common comparisons are:

1. Trend Analysis How a factor has changed over time

Ex. Which industries are growing and which are declining

2. Cross Variable Analysis Comparing variables

Ex. Comparing changes in income with changes in wages





3. Cross Area Analysis

Compares local data to that of other areas

Provides perspective on local economy’s comparative position and performance

Identifies local economy uniqueness

Time consuming, but provides most useful information





4. Cross Sectional Analysis

Provides a clearer understanding of the composition of economic activity

Ex. A cross sectional analysis of local employment divides total employment into industry categories

Identifies industries that provide largest share of local employment

Can become competitive advantages



Other Economic Analysis Tools

Economic Base Impact Analysis The economic base of a local economy is

composed of those industries that account for a significant portion of an area's economic activity and performance

An Economic Base Impact Analysis shows Economic composition, and in what sectors local

industries are concentrated

Balance between industries that “export” their products and industries that produce solely for local market

Which sectors are growing (declining) and why

How changes compare with national trends




Target Industry Analysis

The Economic Base Analysis can be combined with business climate factors to identify “best fits” for a community, particularly industrial and office sectors

Those “best fits” become targets for business attraction and the focus of business retention

This analysis can project industry growth and land absorption into the future




Retail Leakage Analysis

Provides a retail picture of the city

Indicates which retail categories are adequately serving residents from within city limits, and which retail types are serving residents from other locations

Can pinpoint store types that are failing to capture a reasonable share of the local and extended market for goods and services




Fiscal Impact Analysis

Projects the relevant net benefit to a community

as it expands

Looks at impact costs (utilities, public safety

traffic, etc.) associated with various land uses




There are several methods of measuring and

analyzing the foundation of the local economy

These analyses are only applicable at the sub-

national level, for they all require the

incorporation of a larger economy’s patterns into

the calculations




Location Quotient (LQ) LQ identifies export-base firms by comparing the share

of local employment in an industry to the national employment share of that same industry

LQ gauges industry sector concentration in an area, thus indicating the specialization of a location

Employment is the most common unit of measurement

LQ identifies local competitive advantages or disadvantages of different industries

Relatively high concentrations in a particular industry can indicate a local competitive advantage in that industry




Shift-Share Analysis A technique used to probe the growth components of

different industries located within a “local” economy (such as a county or state) in relation to their counterparts belonging to a “larger” economy (such as the entire state or country).

The growth (measured as change in employment) is usually calculated for a period ranging from one to several years.

Helps identify industries where the local economy is more or less competitive than nationally

Helps identify industries with a local competitive advantage




Input Output Analysis

Input-output (I/O) analysis traces the linkages, or

flows of commodities and money, between

industries within, and between, geographic areas

Very complex and time consuming effort




Cluster (Analysis)

Clusters are geographic concentrations of related businesses

Are complementary or competing

Drive wealth creation in a region

Are regional entities

Two types of clusters:

Buyer-Supplier Clusters

Vertically linked

Consists of core companies and their supporting suppliers

Shared Resources Clusters

Horizontally linked

Consists of companies that rely on same sources of raw materials, workforce and technologies




Different analyses involving clusters include:

Shift share analysis

Input-Output analysis

Retail Opportunity analysis

Pinpoints store types failing to capture a reasonable share of local and extended market for goods and services




SWOT Analysis

SWOT stands for:

Strengths: the community can promote

Weaknesses: the community acknowledges or fixes

Opportunities: the community can prepare for

Threats: the community mitigates, if at all possible



SWOT Analysis

Internal Forces: Inherent characteristics of the community that local action may or may not be able to influence

Internal forces usually defined in terms of strength and weakness

Strengths are factors that give a community its

competitive advantage High quality of life Skilled workforce Close proximity to a university

Major Assets / market them Limited Assets / potential strengths that require low

level of investment to establish a competitive advantage



SWOT Analysis

Internal Forces: Inherent characteristics of the community that local action may or may not be able to influence

Internal forces usually defined in terms of strength and weakness

Weaknesses are factors that are obstacles to economic development

Poorly skilled labor force

Inadequate infrastructure

High crime

Weaknesses should be categorized:

Those that can be corrected

Those that cannot be corrected



SWOT Analysis

External forces are factors external to the economy and have an impact on the local economy

External forces usually defined in terms of opportunities and

threats

Opportunities are conditions external to the community that make it easier to develop competitive advantages

Structural changes in the economy

Demographic changes in the community

Technological changes (SGRITA)

Threats are unfavorable trends external to the community that

lead to a decline in a community’s economy in general

Regulatory changes

Social and political changes



SWOT Analysis

Once the SWOT analysis is complete, the next step is to prioritize them by identifying which are most important to the community’s future.

Successful communities build on their strengths while addressing their weaknesses and taking advantage of opportunities.



Step 3: Formulate goals and objectives


Step 3: Formulate goals and objectives

Goals and objectives:

should be realistic, clear and concise

should represent the overall vision and desired outcome of the economic planning process

are developed based on the assessment of conditions

provide direction for the courses of action



Step 4: Identify, evaluate and prioritize projects


Step 4: Identify, evaluate and prioritize projects

Prioritize projects based on best return on project’s goals and objectives

Calculate each project’s degree of impact and rank accordingly

Calculate time horizon of projects

Calculate financial costs of each project

Rank projects according to degree of community support

Determine degree of technical feasibility for projects



Step 5: Develop plan of action


Step 5: Develop plan of action

Define the physical steps that can lead to accomplishing goals

Include:

who /what group is responsible

funding needed for each project

expected outcomes

timelines



Step 6: Implement the plan


Step 6: Implement the plan

Remember:

flexibility is the key

sound management techniques can help avoid delays

resolve problems quickly and competently



Step 7: Monitor and evaluate the outcomes



Monitoring and evaluation: ensures that projects are effective and on track

justifies the costs involved

determines if adjustments need to be made

enables the promotion of project success

is a good way to make public spending accountable and transparent



Monitoring and evaluation: Program success rests on 3 performances factors:

Economic benefit or impact: Is the community better off as a result of the project? Are the economic benefits positive as a result of the project?

Most common measurements of economic benefits are: Number of businesses created / retained

Number of new jobs created / retained

Salaries of new jobs created / retained

Investment dollars into community

Organization efficiency How well project is being managed

Customer satisfaction



Step 8: Retool and adjust


Step 8: Retool and adjust

Review the strategy, and adjust regularly, to meet changing conditions

Difficult to develop future strategies and plans without a clear understanding and measurement of what has been achieved


Common problems with strategic planning process

No clear identification of priorities

No leadership buy–in

Absence of a strong leader to keep process going

A lack of commitment to implementation

High initial costs in terms of time and money

Not a quick fix that be developed in a matter of days


When developing a strategic plan

Remember to: Enlist cross-section of leadership

Involve general public in meaningful ways

Have clear understanding of the strategic

planning process

Clearly identify priority issues that effectively address key problems

Involve appropriate organizations for implementation

Develop means for evaluating performance so the process can be appropriately adjusted


Best Practices DO

Put together an “A team” committed to coming together at a moments notice

Work to bring factions together in a common vision Be creative in marketing your community on a budget Research to find best fit business and industry targets for

your community. Set reasonable goals with benchmarks, action steps Identify staff, which organization will do what, and

determine financial costs up front Constantly review the plan Retool and re-adjust as necessary Keep your eye on the prize

DON'T Don't forget your current businesses in your community Don't forget to think "out of the box" Don't let naysayers deter you

Remember, economic development is a long term process.


Questions?

Lisa S. Collins, CEcD, EDFP

Director of Economic Development

Early County 2055, Inc.

229.724.7558

[email protected]

www.earlycounty2055.com

mailto:[email protected]

Documents

Economic Development Strategic Planning...Class Objectives 1. Define economic development strategic planning 2. Identify benefits of economic development strategic planning 3. Understand