BNB

Since yesterday I have had almost a dozen requests to comment on the proposed ‘refresh’ at Business New Brunswick.

I have outlined my thinking on BNB over the years on this blog so I don’t feel the need to rehash everything but I will make a couple of points.

First, there are lots of good people working for BNB and I feel, from talking to some of them, that some think an indictment of the model is an indictment of the people. Not necessarily so.  I also would say that there are a considerable number of voices from within BNB that would like to see a new model.  I don’t have the kind of contacts there that I did 5-6 years ago but the few I talk with would like to see changes.

Ultimately, the model you choose to develop and deliver economic development should be aligned with what you are trying to accomplish.  I know that sounds simplistic but at some point the most complex ideas need to be boiled down to basic elements.

I have never been sure of the raison d’etre for BNB.   It delivers a few programs.  It has a small team of folks out knocking on doors and it has a few financial incentives. 

As you know, I believe the most effective economic development agencies in the current context will be those that can build broad sector-based value propositions where there is a compelling case for investment into specific growth sectors. 

Area Development magazine has a list of 25 key site selection factors and nine important quality of life factors that go into a site selection decision.  In other words, these are the primary factors that drive business investment decisions.  As you go down the list, you see that the majority of them are directly influenced by government policy, regulation, tax programs, etc.  For example, they include highways, taxes, energy availability and cost, availability of skilled labour, unskilled labour, incentives, available land, right-to-work state, regulations, fast track permitting, training programs, airports, universities, railraods, waterways, etc.  All directly influenced by government activity. On the QOL front, it’s low crime, healthcare, public schools, universities, recreational and cultural opportunities.

Essentially, other than things like climate, government can influence the vast majority of the issues on which business investment decisions are made.

In addition, it is my belief that companies don’t make investment decisions based on a generic value proposition.  They make decisions based on the value proposition for their industry in your community or province.

Therefore, my vision for BNB is an organization that has a few highly targeted – high growth potential sectors in which the vision is to create thousands of high paying jobs over the next decade – enough economic activity to drive the self-sufficiency agenda forward.  For each of these sectors, BNB would then go down the list of site selection factors and develop a comprehensive and compelling value proposition.  That might mean tax incentive programs, targeting R&D efforts, getting universities to graduate more people with the skills for the targeted industries, aligning immigration efforts to the needed skillsets, developing telecommunications and energy policies that make the province compelling for these targeted growth sectors, on and on.

So BNB should be organized as a network/catalyst organization that links together all the disparate but related efforts throughout government.  It should also be highly focused on a few targeted growth sectors.  Instead of having one person half-time dedicated to a specific sector, there should be teams of people per sector with deep sector knowledge and serious budgets to get things done.

And it should also be a sales-driven organization.  You can’t catalyze economic development without being sales-driven.  It needs to sell sell sell.  Internally, cross-departmental, to elected officials, to other levels of government, to NB based business and to global business.

This view of BNB as banker of last resort is not the proper vision.  That function should be the smallest part of what BNB is.

It should have a corporate structure.  VP of Sales, CEO, etc.  That is just better aligned with the target market. 

I encourage folks to post.  Not just complaints or criticisms – real ideas.

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19 Responses to BNB

  1. Perhaps BNB needs to foster & become a chaordic organization:
    http://www.fastforwardblog.com/category/bio-alliance/

  2. That’s a good point. If BNB started to see itself more as a networking/catalyzing organization – rather than a discrete function within government – it would make a big difference.

  3. mikel says:

    I’m not sure what this actually means:

    “the most effective economic development agencies…will be those that can build broad sector-based value propositions where there is a compelling case for investment into specific growth sectors.”

    Networking is always the key, but there needs to be people to connect with and to. That comes from the universities, and we are outside of what is going on there. To give my familiar example, it is basically one company that now provides tons of money to the biology department at the university of waterloo (certainly the most private sector funding). That came from a networking opportunity, in fact a FLUKE network opportunity that introduced a scientific ‘discovery’ to the Forbes family. The company is now public, but the meat and backup funding still comes from the Forbes and their connections. Those connnections built other connections, which created a Board of Directors (whose almost sole existence is for contacts).

    Ironically, while this regions touts in ‘knowledge economy’, virtually NONE of your QOL factors or placement factors had anything to do with it,except maybe the region co-sponsored the ‘meet and greet’. It located here because thats where the science was.

    It was sort of a fluke because the scientist is actually a fairly unique kind of scientist-half scientist, half barnum and bailey. In other words, he had the knack for getting people interested in what really was a mundane discovery by a grad student. I’d suggest that it may be helpful to have a BNB person like that if the scientists are simply incapable of being ‘businessmen’, which is very likely. I suspect most profs wouldn’t even recognize an economic opportunity within their work if it weren’t pointed out to them. But I have heavy doubts that anybody at BNB is going through the university trying to cheer on entrepreneurship.

    That isn’t just unique to universities, as mentioned elsewhere, developing computer apps doesn’t take a professor. I had a friend who is now with IBM who dropped out of university because of the electives-he didn’t want to learn math, he just wanted to program. And he hasn’t suffered for it.

    That cheerleading is really lacking all over, as David said of his debate, it often seems like ‘commerce’ has become a dirty word. Certainly the way it is structured can be called ‘lousy’, but people forget that even early theologians and even scientists considered commerce ‘sacred’. For Augustine it was one of the divine gifts of god, and an interesting anecdote comes from a jewish intellectual podcast I listened to that talked about how misled people are who have seen or read ‘Merchant of Venice’. It was always accepted that jewish merchants became wealthy because of lending money, called usury by some, at interest, all because they were denied land and couldn’t build other types of businesses. While that is in part true, jewish philosophers (and rabbi’s to a lesser extent) always taught that the reason for usury was because it is far better to ‘loan’ money than to give it as charity. THe interest increased the borrowers self worth, rather than demeaning them, as beggars were apt to feel.

    Business is much like art, there’s a ‘system’ but there is also the act itself. Entrepreneurship is thought of essentially as what you do if you want to get stinking rich, or if you have no other options. It is EXTREMELY difficult to do, and the most successful at it are those that ‘network’ and do it as a ‘team’ (the whole reason for a corporation).

  4. “the most effective economic development agencies…will be those that can build broad sector-based value propositions where there is a compelling case for investment into specific growth sectors.”

    I believe this to be true. When companies consider where to invest they look at a variety of factors. There are things that governments and communities can do to help make themselves more attractive. Until now most economic development agencies in this region have spent their time doing specific things like marketing the community/province or counselling small businesses or offering assistance for companies to attend trade shows. I am saying that a more effective approach would be to determine a small number of sectors with real growth potential and built out activities – across all the areas of government – that would make NB attractive for business investment in those sectors.

  5. richard says:

    ” I suspect most profs wouldn’t even recognize an economic opportunity within their work if it weren’t pointed out to them. But I have heavy doubts that anybody at BNB is going through the university trying to cheer on entrepreneurship”

    Most, if not all, profs in biology, cs, eng., or biochem are well aware of commercial applications of their discoveries. In a large number of cases, making a case for these applications is how they get funding in the first place (no one would rely on just NSERC anymore). A number of universities offer entrepeneur courses to their sci and eng students.

    The problem in many cases is bridging the gap between invention and utility to industry. Its very hard to get NB businesses interested unless the payoff is immediate. I’d say that once the few sectors that David refers to are identified, then BNB needs to include R&D staff working in those areas in its outreach to outside industry.

  6. Anonymous says:

    I have a bit of a different view. I think our universities are doing a pretty effective job in being connected to, and working to get research deployed to, business as well as encouraging talented students and researchers to become entrepreneurs. The fact is, this is tough stuff and absolutely the toughest, lowest probability path to quickly grow the economy. Not every idea will result in a business, not every great researcher will spin off a business; only a small percentage will. We must do it, but we should not expect it to change our economy overnight. We can not look entirely inward for our growth.

    It is critical for our economic development strategy to include other pathways to economic growth. Many successful businesses result from talented employees breaking away and starting their own businesses to either supply, compete or pursue a new opportunitiy. Hence the importance of anchor businesses and core companies. Most clusters are successful because of core industry(s) that drive the sector, attract employees and result in splinter companies and supply opportunities. People suggest successful clusters result because there was a university or perhaps because there was an available business park or incubator. These are helpful, but nothing is more important than a core business that has established access to capital, established distribution channels and a mature customer base. I’m talking about companies who’s entire sales revenue does not depend on the product that is currently on the research bench (we can all think of local examples where they could not get the sales revenues flowing before the sheriff knocked on the door).

    So, with this in mind, we need to aggressively pursue anchor companies that fit our strategic economic sectors (bioscience, IT, energy). We know we will lose battles where the site offering the most money wins, so let’s understand other factors that improve our value proposition. Maybe its access to workforce, proximity to market, transportation, tax policy, energy prices, regulatory policy, etc. These are common/general ideas but research to understand the target and what specifically we have to/can offer needs to be done in detail. We have seen UMOE and Ocean Spray come to New Brunswick, there are other such opportunities that we need to identify. Let’s get buy in from the Federal government to help us with our targeted effort. Let’s get our BNB people fully engaged and motivated; every single person should know the elevator pitch. Every single person should know their contribution to the effort and why it is important. Now, that would be a refreshing facelift.

  7. Anonymous at 15:03, of the 7,800+ comments that have been made on this blog in the past five years, I can count on one hand the number of times someone has so succinctly made the point about research and role of anchor companies. That is exactly the point. I will not add one jot or tittle to it.

  8. mikel says:

    What proof is there that the universities are doing a good job? They MAY be, I don’t know, but we’ve never seen data on it. It would be very odd, considering the low number of start ups and the high bankruptcy rate. The simple fact, and the unpleasant fact, is that if you really ARE an entrepreneur, well trained at a university in New Brunswick, you would be crazy to start a business there.

    Again, one large anchor company CAN be an economic advantage, but it isn’t necessarily the ONLY way to set up an economy. Most european countries don’t have ‘one horse towns’, and that method is fraught with problems-as New Brunswick is a perfect example (as is Canada). Nobody should be thinking that their is ‘only one recipe’. No company is going to have much of a ‘mature customer base’ (which means large I assume) when it first sets up. There is no such thing as ‘established access to capital’-just go ask Irving. Your next door neighbour could invent anything and email the Rockefeller Foundation and get capital. People forget that most big projects in Canada have always been financed from the US. There’s money out there.

    And for an ‘established distribution channel’ you don’t need to look further than the internet. You can do it all online, even get investors.

    But government policy is not aimed at ANY sectors. For Bioscience, the province can do little but provide money to keep people going. I’m in southern ontario and even here there are precious few people who understand and can navigate the FDA waters for new technologies, there certainly aren’t any people at BNB who can, so they can’t help there. Just a thought is that BNB COULD try to find an experienced guy or company to then service ALL the bioscience companies in the province, that would be a real boon. But I don’t think there are enough companies to warrant it.

    You simply CAN”T say that the province is seriously looking at bioscience with the lacklustre efforts they have at education. The medical school is still years away, there seems to be no hurry there. There is no vet school, no pharmacy school. You can really even only TAKE science at three of the universities, and almost none of their community outreach programs in the north have science as an option.

    Doing science takes as much effort as pushing bilingualism, and a frequent poster here will tell you how well that’s been working, and science doesn’t even get the legislation or energy that french does.

  9. richard says:

    ” Your next door neighbour could invent anything and email the Rockefeller Foundation and get capital.”

    You are speaking from experience I assume.

    Its quite true that there is a low probability that any particular researcher will come up with a discovery that results in significant benefits to NB. Its also true that the probability of attracting the right mix of anchor companies (that can work with unis and govt to develop particular sectors) is also low – perhaps not as low but still low. That’s why part of the problem in getting BNB to work is finding ways to reduce the fear of failure.

    For R&D unis, that low level of probability of success can be increased IMHO by getting the unis to prioritize. UNB for example seems to have an undergrad enrollment model – it should have mission model instead. That is, to do what needs to be done in R&D to help develop and transfer technology to NB industries. It can only do this by rationalizing its resources to provide more to selected R&D groups in the uni. Some programs are going to have to disappear or move to STU, MtA, etc, in order to achieve this.

  10. Samonymous says:

    Your blog’s pretty popular, David. You should re-initiate a more comprehensive exchange/debate on the subject (inviting back the people above), plus some who may be weary of posting on a blog but may be adept or knowledgeable of the subject matter (sort of like what they tried with the self-sufficiency chats online, with hopefully a bit more participation across ideological lines). I’m betting it would be one of the best exchanges around. And very informative (even to law makers).

  11. Anonymous says:

    I had difficulty finding the requested constructive ideas in Mikel’s post, but his narrow view and lack of awareness about New Brunswick’s bioscience sector underscores the importance of the awareness and elevator pitch mentioned above.

    Bioscience includes much more than medical research and pharmaceuticals. In fact, those should be the last segments that NB targets due to their capital intensity and multi-decade time to market nature.

    Some established NB bioscience areas include:

    – aquaculture, specifically fish health, new species, feeds, multi-trophic aquaculture etc.

    – Biomedical engineering where UNB’s biomedical research institute is truly world class

    – Potato research where the Potato Research Center has excellent research results and there is an extensive potato innovation cluster

    – engineered environmental technology including arsenic removal, waste treatment and membrane technology. NB engineering consultants are in demand globally for wastewater treatment, water treatment, composting etc.

    – forestry management, research and technology

    These established capabilities and capacities complement excellent research platforms including mature forests, wetlands and extensive marine resources. I don’t buy the argument that New Brunswick has nothing to sell; we have a solid bioscience industry and we can be attractive to external companies.

  12. Anonymous says:

    “And for an ‘established distribution channel’ you don’t need to look further than the internet. You can do it all online, even get investors.”

    Wow Mikel, you have spent far too long away from the real world. Getting products to market is very tough, very competitive. Walmart and Costco have built successful businesses because of their supply and distribution strategies, many others have failed due to their ineffectiveness. It is not as easy as creating a web page.

    Take for example a cranberry researcher who discovers some sort of cranberry juice drink with desireable features (fights a certain cancer, makes hair grow or whatever). Now, most of these ideas end up at farmer’s markets and flea markets. Yes, some get on the internet and can sell to a bit wider customer base. But how about teaming up with Ocean Spray and getting it on the shelves of every Loblaws and Sobey’s over night? Yes, Ocean Spray will take a piece of the action but the inventor/discoverer of the product will do pretty well for themselves.

    We hear lots of talk about poor commercialization of research. In many cases, the idea is good, the research is good and the product is good; it fails when trying to sell it. Remember the 4 Ps from marketing? Well, companies such as Ocean Spray can help overcome place and promotion. We need these types of companies in New Brunswick to help our entrepreneurs.

  13. Anonymous says:

    The TJ is reporting a new BNB office in Bathurst with an ADM and a staff of 20.

    David, you supported this idea at least in principal. Could you give ypur views on how this will help? Was Fredericton holding back on all the answers and now the North will have access to them? Will this BNB office rise above the CBDC, RDC, Enterprise NB, ACOA etc offices to accomplish what they could not? Maybe the real winners here are the landloards renting space to all the government initiatives.

    It appears to be more duplication and redundancy that will blurr accountability and create confusion. Guess we need more details but I will be surprised if these duplication issues are addressed.

    Funny how Savoie’s oped piece Saturday talked of the bloating government that we cannot afford and today they announce more staff and more offices. Guess that hiring freeze is distant memory. Someone will have a lot of cutting to do in the future.

  14. mikel says:

    Not sure where exactly the ‘real world’ is. But selling a product to a customer is a ‘market’. If you are talking about getting a product into retail stores thats a different story. However, unless you are talking about how great it is to have a Wal Mart in Miramichi, then you are misguided. That depends on the retailer, but if you watched that old show ‘Venture’ you’ll know just how difficult that is-even impossible. In virtually every case the entrepreneurs ended up selling their company in order to make it ‘big enough quick enough’ for retailers like Wal Mart.

    However, that’s not ALWAYS the case. I mentioned before the example of the guy with the invention who happened to talk to his local manager of Home Hardware. The manager came here to St. Jacobs and ‘pitched it’ and the result was a tie in with a local manufacturer who built the product, and Home Hardware stocked it. There is no ‘distribution channel’ difficulty, there is a product, and a retailer. If he couldn’t find a retailer, he would have to try to sell it himself at the farmers market, or, better yet, the internet.

  15. Anonymous says:

    Absolutely agree. Having anchor companies like Home Hardware can be powerful for inventors.

  16. mikel says:

    I don’t think retailers are what David is talking about. I seriously doubt having a Wal Mart in Mirimachi will do much. It’s well known they tend to put local people out of business, and VERY little of their product will come from local markets. Go inside a Wal Mart or a Canadian Tire and you’ll find hardly nothing thats even made in Canada.

  17. Anonymous says:

    Mikel, in the example you gave, the Home Hardware has their head office in St. Jacobs. While retail is not a target, the ‘chi would welcome the head offices of Walmart, Costco or any other major retailer.

  18. mikel says:

    We aren’t talking about head offices, we’re talking about distribution channels. Even David doesn’t have any dreams that foreign direct investment is going to consist of a multinational corporation making their head office in New Brunswick! That is more support for local entrepreneurship as corporations headquarters usually stay close to where they grew up. If Irving hadn’t been such a miser they’d be paying canadian taxes, but even so, the Irving and McCain headquarters are still in NB.

  19. Anonymous says:

    I thought we were talking about the importance of anchor companies but thanks for your positive outlook for New Brunswick’s potential.

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