By Marian Kansas, Consultant
In our annual Economic Development Index Survey of more than 100 EDOs across the U.S., we asked, “In the past year, have there been discussions in your community about changing the organizational model for economic development?” Almost 50% of respondents said yes.
This confirms our suspicion that what we’re seeing in many of our client communities is true: There is a nationwide conversation about the effectiveness of the current economic development model, and we may see shifts in how EDOs operate in the future.
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Respondents who said “yes” were then asked what factors were driving those discussions. Four factors emerged that are causing a re-examination of the economic development model in many communities today: a move towards regionalism, changes in the economy, budget concerns, and leadership.
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EDOs move towards regionalism means that smaller firms are joining forces to enact change throughout their region as a whole, rather than piecemeal within city limits. Some communities are already taking action, such as multiple organizations combining to create an entirely new regional entity or EDOs forming alliances to cover an entire region. This is a smart move for many organizations.
We’ve seen in the past that regions are often more competitive and have greater name recognition than individual communities. We saw this in Amazon’s search for a second headquarters. Communities that pulled partners together to market everything their region had to offer tended to fare better than regions that submitted ten different proposals for ten different cities within one metropolitan area. Whether it’s through an informal partnership or the creation of new, overarching EDOs, we’re likely to see more organizations move towards a regional, collaborative approach in the future.
Another major factor instigating conversations around changing the organizational model for economic development is changes to our national economy. An EDO’s responsibilities now often go beyond just increasing jobs and investment; they now require a holistic approach that examines talent, quality of life, economic mobility, transportation, and more. Many respondents to the ED Index Survey specifically cited that the demand for talent was driving change. With the demand for skilled labor higher than ever and low unemployment across the country, many EDOs are making workforce development and talent attraction a top priority alongside job creation and investment.
The third major factor, budget concerns, is closely tied to the previous two factors. EDOs are seeking to do a lot more, but with the same budget. EDOs must now consider how to shift their focus to holistic economic development activities while operating under the same budget. This can stretch an EDO’s budget fairly thin and might require organizational changes to support long-term financial success.
The final factor driving these conversations is leadership. New leadership brings new visions for the future and sometimes that calls for changes in the organizational model of EDOs. Responses to our survey showed mixed feelings about leadership changes. Some respondents are excited about new energy and direction, while others are uncertain and nervous. This highlights the importance of internal communications to ensure everybody is on the same page and educate leadership about the changing role of economic development in communities. Changes in leadership or their priorities can be a force for good, but only if the EDO is willing to reach out, be collaborative, and be transparent about what the community needs and how to serve them.
It’s likely that you might be having a conversation about any or all of these topics in your community, and whether the impact of regionalism, economic shifts, budget concerns, and leadership will affect your EDO. We’re interested and excited to see how EDOs grow and change in the future to better meet the needs of their community and address challenges. If you’d like Avalanche to facilitate this conversation in your community, please contact Jennifer Vernon at jennifer@avalancheconsulting.com.