How to build a value prop

As you know my two big themes in economic development these days are value proposition and networks.  The latter builds the former.   If you realize that creating an environment where an industry can prosper requires dozens if not hundreds of various stakeholders, than networks will achieve primacy.  The value proposition depends not just on an economic development agency, or a government department, or an industry association or a group of suppliers or an educational institution or an airport or a highway or a community’s living environment or a tax structure or a building or  – you get the picture.

Communities that will be successful building 21st century industries will be those that understand these linkages and build networks.

But, as I am known to offer more theory and less practice, let me give you a practical example.

I was asked this week about what can be done when you have an industry that has potential for growth but is so nascent that the value proposition is not particularly strong.  How can you whip up interest and begin the animation process of a growth cluster?

We have few examples but the call centre one – that everyone loves to hate – has relevance here.  Beyond NBTel, which was a key animator, the province knew the importance of attracting a few lead players to seed the industry.  CAMCO was one of the first customer contact centres attracted to New Brunswick and they were given $23,000 per job to set up in Moncton.  That is between 2 and 4 times more than the amount given to subsequent call centres.  The point is not the money.  The point is that the government realized it would have to do even more to get those lead anchors for the industry.

Again, this is not just about money.  Governments have a variety of levers to promote the attraction of those few initial industry partners that will anchor a growth strategy.  They could use R&D.  They could use tax-based incentives.  They could themselves be the draw.  A company could set up in New Brunswick as the result of a large government contract (say e-Health or CGI’s eGov) and then anchor a broader growth effort.

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4 Responses to How to build a value prop

  1. theory… theory… theory… theory… give a big company some money… take a bow.

  2. Anonymous says:

    Here in New Brunswick we overuse the contact center example but with good reason; it is the only significant ED success we have had in the last 30 years.

    However, if we look to our neighbours, PEI has a nice example with aerospace repair and overhaul. They matched an asset with a market need and added enough incentive to nudge business to come. They focused on it for about 7 years. Most of their funding was channeled there. Community colleges focused their education on aerospace. Exports will exceed $300 million this year. Keep in mind this is a province the size of Saint John. Now they are focused on biotech and already have some substantial industry growing.

    Downes is right that the MLAs worry only about photo ops and getting re elected. So, strategic thinking has to come from the civil service. This is why the restructuring of BNB is so important to get right. We need have a compact, focused group that avoids the politics. It is fun to hand out money and get votes (eg this week BNB bought a fork lift for a company) but this has nothing to do with ED. Politics will be with us for ever so seperate the photo op stuff from the strategic efforts. Resource the strategic efforts properly, allow them to focus and give them some time for a sustained effort. If we don’t get something happening soon, we best start building large flea market at the NB border so we can sell our arts and crafts to our wealthy neighbours.

  3. Anonymous says:

    NB Power is already a foundation piece for a value proposition and could be even bigger if it was viewed as an ED catayst rather than a source of cheap power and cheap politics.

    Many of New Brunswick’s engineering, construction and service companies would list NB Power as one of their top customers. Many of these companies developed export opportunities from their NB Power experience. We should be utilizing NBP as a strategic asset to propel renewable energy and energy conservation technology. It is one a very few assets that NB can leverage a competitive advantage and we should be exploiting it.

  4. Tom Rivington says:

    RE: Downes reply.

    Where in David’s post is there an indication that the contract be given to a big company? Industry partners (forgive me if I am off-base here) does not necessarily mean large enterprises but refers to a sector, that sector could be telecom, energy, mining and the partner could be a small growing firm or a established company. The point I thing David is making is that we can’t focus on money. Subsidizing the working capital of a firm may be throwing good money after bad. Contracting for services or products gives the company sales, allows the company to expand its business and at the same time lessens the risk to the government. If the company fails to perform or worst case goes under, the government hasn’t lost say $1M but simply re-issues the contract to another firm. The only problem I see here is the spectre of government contracts being given out to friends and party supporters but that’s a watchdog problem.

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