February 2002, Volume: 5, Issue: e/2, ISBN 1527-5175

~~~"Top Ten List Why Cold Calling is a Waste of Resources for Economic Developers" =Receptionist does not understand why you are there and doesn't care (suspects you sell fork lifts) =You have to sit and wait with the office supply salesperson and nonprofit looking for a donation. =Business suspects you are really there to find code violations =Muzac in waiting room will destroy any planned opening you had prepared in your mind =You ruin your suit walking around the factory looking for the decision maker =Management suspects you are really a commercial realtor =Owner sees you and thinks, "grant" =Management shows lousy financials and wants guaranteed low interest financing. World War I building has nothing but Lamborghinis and Porsches parked in reserved slots. =Owner tries to slip you $100 as he does to every local official who visits =Management tries to hide the drums before you are admitted...chip of asbestos falls into your coffee (Clever, Kevin Monahan of Jacksonville, Florida!) =It's rude! (Barb Koch, Illinois Valley CofC)

~~~Contrary boards... appeared in the Dec. newsletter with responses in the Jan. issue. From Metro Orlando EDC we received another perspective. "Industry peers are very compelling community sales persons.  In that regard, cold calling is impractical.  Sure, a blind dog will occasionally find a bone. But if you know any existing industry leaders in your community at all (a no-brainer) you can work with them to identify targets rationally and logically. Thanks, John Krug!

~~~Results and Outcomes... will change the way YOU look at business and retention programs. A new study on the effectiveness of retention and expansion programs in North America shines new light on the fatal flaw in R&E. Results of the study will be released at the Annual BREI (Business Retention Expansion International) conference, Friday, May 10, Memphis, TN. The Results and Outcomes research was conducted by Marie-Christine Pence (Cinergy, IN), Brett Vassey (VA Dept. Business Assistance), Joe Reagan, (Greater Louisville Inc.) and Blane, Canada Ltd.

If you attend BREI for nothing else, this session will make the investment pay off.  http://www.brei.org

~~~2 for 2... at a dinner party the other night, 2 men were recently unemployed. Both were executive level types. The sales guy is searching for a software firm to buy. The second, an engineer, is considering forming an IT consulting company. Where are you likely to find the ambitious, recently unemployed execs in your community? Hint: they won't be in an entrepreneurship class or knocking on the door of a small business development center. They have experience. They are looking for opportunities. Can you help?

~~~"I've done R&E surveys before using Excel - Wow, what a pain. I'll never go back after using the Synchronist for 3 years now!" Shelia, WA

~~~20-20 hind sight... In 10-15 years, what will economic development professionals regret not having done in 2002? P.S. Once you answer the question, put it on your to-do list.

~~~Growth occurs in all industries... not just in growth industries. While growth industries will generally have more growth companies, declining industries will have their share. Growing and declining industries share one very important characteristic needed to spawn growth companies. Both are unstable. Change is an integral ingredient for growth companies: new ideas, new methods, and new leaders. Source: "Economic Development: Marketing for Results!" http://www.blanecanada.com/frameset_books.html

~~~Benefits are hollow... without a "reason to believe." The reason to believe lends credibility to the benefit. Therefore, benefit + reason to believe yields greater marketing effectiveness.

~~~The difference between a goal and a rabbit... A target (goal) is out there in the distance. When approaching a goal, the natural tendency is to "let up" as it becomes obvious the goal will be made. As an aggressive runner, now cyclist, I look for a rabbit. A rabbit is a pacesetter. A rabbit forces us to keep pressing, trying harder. If we let up, the rabbit pulls away. Pass a rabbit and you can feel their breath on your back, forcing you to push even harder to pull away. Who's your rabbit?

~~~Resumes... are important to review periodically. Update yours at least semi-annually. Quantify your accomplishments when possible. If necessary, create individual resumes appropriate for different positions. This might require that you emphasize certain accomplishments over others.

~~~Think about it... In CIO (Chief Info Officer) Magazine recently one CIO talked about banning the use of presentation software. Think about it. When preparing a presentation, one is essentially thinking about topics and categories (bullet points). So, by definition, the presentation is neutered! Both topics and categories are an effort to classify and relate to the familiar. What is said under any particular category will undoubtedly be different, but the prospect's focus is on familiarity. So, the client remembers what?

Years ago, when we worked on an assignment with A.T. Kearney, the global international consulting company, their rule on the client presentation was, "get away from the script (a presentation which we put hundreds of hours into) as soon as possible and get them talking." The point: You can't customize your presentation and show your strengths until you know what they want to know. Conversation in lieu of presentation? Now that's one powerful way to differentiate.

~~~$2.00 Tip... Do not use your driver's license as your airport ID. Too much handling increases the opportunity to misplace/lose which means 1) you won't be able to board a return flight; 2) you won't be able to rent a car. Go to the Secretary of State's office and get a photo ID. It is cheap insurance.

~~~P.S... While were talking security, take your passport, walk over to the copier and make two copies of the inside page with your photo. Place the first in a safe place with your valuable records. Place the second copy in your international travel bag. We are told it is much easier to get a replacement if you have a copy.

~~~A Deal is a Deal... Last month we shared the details of the penalty clause of the incentive package agreement United Airlines, Indianapolis, the county and the state. We asked for your feedback. Here it is:

"The State should give an extension on the contract.  It still has been a great deal for the State, a net capital investment of $241.5M and the creation of 3,000 jobs.  For these types of deals you need to look long term at the economic impact.  I think consideration needs to be given to the extraordinary circumstances that have happened in our Country, the impact it has had on different sectors of private enterprise and not be so bureaucratic in the contract compliance." Susan Noe Lee County (Ft. Myers), FL

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"I have a strong opinion of what is fair based on my dealings with United on this very project.  (I was the ED guy for Oklahoma City, one of the 4 finalists for the project). United was ruthless in pursuing incentives for this project. They purposely played the negotiations in the national media to pressure political leaders to up the value of packages. They set a firm timetable for submitting final offers, got all four teams up to their Chicago (project) headquarters to negotiate, and then postponed the timetable when the Indy package hit the table. The whole process was so bizarre that (a governor) walked out of the negotiations. I still remember him telling United's top negotiator that 'I have never been treated like this by a public company and I'm going to make sure that everyone in the country knows how United does business."  Not exactly a normal conversation with a megadeal prospect.

"The numbers in the Indy clawback agreement are a negotiated reduction of the numbers that United gave us to do our economic models.  The project was a minimum of 5,000 jobs, growing to 10,000. Everyone's revenue calculations were based on these numbers, not on 4,000 jobs. We couldn't get the project to work in OKC at the incentive levels that Indy put up. Indy only did this by RAISING taxes on the existing companies in the airport TIF zone. The TIF zone businesses were promised that the United project would eventually lower their assessments, I think.  What was fair about raising taxes on your existing businesses to subsidize a new one?

"What's fair under the circumstances? Communities make these deals expecting something in return, jobs and increased tax revenues. United puffed the project and the potential community payoff. If corporations think they can be ruthless and one sided in their negotiations with communities, they should not expect any mercy when the shoe is on the other foot. This too is part of the short-term reward/long-term reward tradeoff that all of us in business face every day. United gambled and lost on this one. It would be tragic for the future of economic development in America if United is able to negotiate itself out of this one. Clawbacks are the only tool that communities have to insure that they are not being swindled by a company, since companies deal all of the cards at the negotiating table and have all the facts for the analysis. Honesty goes out the window otherwise.  Ed Bee, Mandeville, LA

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"What is equitable is the airline doing what it agreed to do in the contract. I would expect no less from my own organization, the county I represent and/or the state.  Everyone understands that there are extenuating circumstances, but that in itself does not invalidate the contract. The airline should abide by their agreement." Mitchell B. Mays Talladega County Sylacauga, AL

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"One must be careful to avoid a situation where one wins the battle and loses the war. Yes, the community is justified in invoking the penalty clause - it has the right. However, it should only do this if it has concluded that there will no longer be an on-going relationship, or if it believes that the dynamic with the company is such that a show of force is necessary to garner respect.

"I learned this in my life as a commercial lender. When I was with GE Capital, it was entirely common to reduce (or completely waive) penalties for early payouts as an indication that we wanted the customer's business...On the other hand, I was occasionally dealing with someone who had questionable motives. They had never intended to keep their end, and was simply telling me what I wanted to hear in order to get what they wanted. This was far more prevalent when I was with a community lender than with GE - such people tend to assess situations based on power, and few companies pack the clout of GE. However, when I was part of a community-based risk capital group, I had to make the occasional example of a company in order to reinforce our position and keep the predators at bay.

"The test is the company's conduct and perceived motives. If they have done all they could, and have been unable to meet their end due to forces outside their control, I would advocate working with them.  If they have consistently failed to keep their part, they have it coming." L. Charles Scott Prince George Development Corp. British Columbia

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"It is possible that 10 years ago we were a great deal hungrier for these deals than we are today and therefore crafting an incentive package that spanned more than 5 years made sense.  In today's economy, I have trouble seeing the wisdom of paying incentives before they are earned.  In other words, incentives should only be paid after the company has performed to expectations.  Using this strategy when crafting incentive packages results in everyone being a winner no matter what happens down the road.

"Short of having a leanable position on the assets of United Airlines as part of the penalty clause written into the contract, I doubt if the state has any other choice but to take whatever settlement the company offers.

"The other option is to work with United to help them achieve a successful recovery and hope that as the travel industry rebounds, their original plans can still become a reality. It is a given that if the tax payers demand satisfaction and force United into a compromised settlement, United will never consider returning to the original plans."  Tim Chase, Wichita Falls, TX

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"Based on information provided it appears United met about 40% of the promised project. Therefore a push for $175M penalty seems appropriate." Barb Koch, Illinois Valley Area Chamber of Commerce and Economic Development

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"If the community's contract calls for $190M penalty then that is what should be repaid. Communities are not typically venture capitalists. The voters won't allow it. Incentive dollars buy jobs and tax base. If we do not enforce our own agreements we will all be at the mercy of companies that are only takers and not givers. A deal needs to be good for all."  D. Dale Fowler, CED, Victoria Economic Development Corp., TX

~~~WHAT was that quote?... OK, so you remember reading the perfect point in an earlier issue of the ED Marketing Letter. But now when you need it, you can't remember the details. We created an ED Marketing Letter archive on our web site to help you. Search for the key word, and find the reference you need. Check it out at http://www.blanecanada.com/Newsletters/frameset_newsletter.html

~~~Succession planning... is an economic development issue. This fact was recently unearthed during the existing business interviews conducted in a major metropolitan area. A Synchronist client found this "issue" to be significant enough to partner with a major financial institution to develop appropriate options.

~~~What do employers want... in their prospective employees? What skills, what knowledge? Obviously, this is unique company to company, so is there a survey instrument you have developed to explore this issue with your employers? Let us know and we will share the results in a future edition of ED Marketing Letter. Question: Whit Roberts, OK.

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