The power of collaboration

I have been thinking a lot lately about how jurisdictions proactively foster new growth sectors in an economy.  New Brunswick, right now, doesn’t have a lot of sectors that have obvious growth potential.  We put a lot of faith in the energy hub but that fizzled somewhat (although I think there is potential here).  Shale gas could be a significant growth driver – but we are not sure as to the scale (or even the scope given the number of folks calling for a moratorium).  I think there could be more potential from mining.

But my point here is how do we prime the pump?

We have a few examples in the past where an ‘opportunity’ became a serious growth sector through deliberate collaboration between the public and private sectors.   Think call centres (circa 1990s), aquaculture (circa 1985) and Learnsphere (circa mid 1990s).  These three initiatives all involved formal partnerships between key stakeholders and everyone put something into the pot in terms of time, money and effort.    They all show that the whole can be greater than the sum of its parts.

I think the future of economic development will be in more of these tightly defined collaborations.    In my view, the generic stuff (tax environment, transportation infrastructure, etc.0 will continue to be important in setting a positive environment for economic growth but the real guts of it will be in more public and private sector collaborations.

The government spends (all levels) over $200 million on economic development in an average year in New Brunswick.  As more and more stakeholders are calling for a clear sense of the ROI on this taxpayer investment, there will be a need to get focused.

Imagine if we had 15-20 of these opportunity development groups in place made up of industry leaders, BNB, INB, ACOA, PETL, Dept. of Finance, NB Power and others depending on the sector and opportunity.  They would be tasked with developing a roadmap for the opportunity’s growth and leading its development.  They would work directly on enhancing the value proposition for that opportunity  and building a strong case for business investment and job creation in that area.

I wouldn’t even speculate where these opportunities could lie but think data centres, social media, rare earth metals, energy, food manufacturing, nutraceuticals, legal outsourcing, health back offices/shared services, industrial fabrication, foreign student education, etc.

The key to this collaborative model is having a group of important stakeholders (relevant to the opportunity) build it together.    Not BNB.  Not an industry group. Not Invest NB.  As many of the stakeholders that are critical to the success of the initiative (be they educational institutions, energy providers, supply chain participants – even the tax guys)  should work on it together.

This obviously would require a huge shift in way things are done now.  We would have to move off the model of government as bank and companies as client petitioning government for their share of the money.  It still amazes me how much of New Brunswick’s economic development activities involve matching taxpayer money to company needs.   No one has ever done an audit on this but I would suggest the vast majority of time and effort revolves around the banking function.  There are over 100 different funding programs scattered around two dozen different provincial and federal departments and agencies.   One company from Northern New Brunswick recently told me they have a full time staff person just trying to figure out where all the potential sources of government funding are located and pursuing their share of that funding.

We have got to streamline that process and get the focus back on economic development – that is developing specific opportunities for growth.  The banking function could literally be done by a single agency.  If a company needs funding, they go there.  Why do we need a dozen?  You might be able to argue that R&D/innovation funding could sit in a separate agency but beyond that I can’t see the logic.    Defenders of this labyrinth of funding agencies and programs defend it by saying they all cater to different markets and clients.  But imagine if a bank split into 25 different (completely unrelated) companies many of which were working with the same clients and duplicating all the financial due diligence, program development, marketing, etc.  That would be nuts.  But that is what we do in New Brunswick when it comes to government funding.

I find a growing interest in the business community to work directly on economic development opportunities.  We saw this at the Future NB summit last fall.  We just need to figure out how to catalyze this interest and get alignment between the private sector, government, education and other stakeholders.

2 thoughts on “The power of collaboration

  1. David,

    You’ve hit upon a very important area of discussion!

    There are a number of empirical analysis techniques that can be engaged to help limit the scope of viable industry targets. Two important categories are:

    1) Input output analysis techniques (which can help quantify and rank multiplier/spillover impacts that industries will have. Industries with lowest spillover can then be assessed for import substitution opportunities, and those with the highest for growth opportunities).

    2) Cluster/agglomeration analysis techniques that can identify which industries will find New Brunswick’s business environment appealing/beneficial relative to other regions. (Over the past 10 years, these have evolved to become much more sophisticated than Porters simple LQ analysis)

    The next key area is community alignment. The feasibility of a targeted industry depends heavily of community attributes. An industry not accepted by the community will not flourish. We tend to think that any industry that creates jobs implies acceptance and alignment with a communities vision, but this is much too simple (and short term) a line of thinking. (A robust ED strategy does not view the community as “mushrooms” to be kept in the dark, or influenced into compliance). There are a number of engagement/facilitation frameworks that can be used to engage the communities, AND garner consensus (which is necessary to keeping a program from falling into a clamour of uncooperative self interests… which I believe, is one of the key disencitives ED faces in engaging more of these techniques).

    Finally, there’s execution. This, ironically, is where New Brunswick is probably most competent. Most other regions would drool over the resources , structure, and money we have available to make things happen.

    I think New Brunswick may be failing by having an over abundance of resources in ED (arguably driven by the substantial amount of transfer payments we receive) coupled with a lack of transparent planning. (Ironically, if we were faced with more scarcity, more effort would naturally be placed in SMART planning, and utilizing more of the techniques above).

    To close on a more positive note. If New Brunswick were to focus on targeting techniques, and feasibility analysis (that incorporated identifying community vision and uniqueness) NB could evolve a very succesful ED program. There’s no shortage of resources, but there is a shortage of transparency, engagement, and smart planning.

    PS
    If anyone is aware of reports/analysis for the New Brunswick Economy that incorproates Porter’s Location Quotient, or newer/other techniques… please respond. I will be doing some analsysis on the NB Economy, but I don’t want to duplicate anything that has already been done.

  2. A couple of observations, negative ones unfortunately…

    > Imagine if we had 15-20 of these opportunity development groups in place made up of industry leaders, BNB, INB, ACOA, PETL, Dept. of Finance, NB Power and others depending on the sector and opportunity.

    Not to offend anyone, but these are the same people who have been failing year after year. Perhaps we might do better if we asked people with less of a direct self-interest in certain outcomes.

    > It still amazes me how much of New Brunswick’s economic development activities involve matching taxpayer money to company needs… There are over 100 different funding programs scattered around two dozen different provincial and federal departments and agencies.

    My personal feeling is that this labyrinth exists to disguise the process. If the public knew how much of government expenditure in all departments is simply a transfer from government to business, they would rebel.

    I have no desire to be negative, but talking to the same people and doing the same thing time after time will simply yield the same results. In New Brunswick especially it is important to bump ‘the usual suspects’ off their seats at the table.

    I’ve said before, the only way we succeed in the future is if we’re all in this together. New Brunswick suffers because of parochialism, partisanship and patronage.

    As TCS says, “There’s no shortage of resources, but there is a shortage of transparency, engagement, and smart planning.” I concur.

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