This is a longer version of an article written for "Ideas from IEDA" (Indiana Economic Development Association). It was originally published in March 12, 2014
If you know baseball you know this story. Or, if you know great books and good movies, you might know this story as well - how General Manager Billy Beane turned the 2002 Oakland A’s into a winning team despite the smallest total team salary in major league baseball. Conventional wisdom said hotshot pitchers and big hitters were the only ticket to a winning season. Instead, he built a team by finding the right collections of players, overlooked by conventional wisdom. While other GMs were concentrating on batting averages, Beane was looking for on-base percentages. He changed baseball, as a game and a business, and paved the way for stats geeks to become rock stars. Case in point, boy genius Nate Silver went from crunching baseball stats to successfully predicting electoral maps
As an economic developer, if you are not paying attention to data and statistics, being your community’s Billy Beane, you might not be doing your job as well as you could. This is the era of Moneyball Economic Development. There is a variety of great data available to you, many at your fingertips. If you are not diving into them, you are likely missing opportunities to grow your economy - opportunities that may be right under your nose.
Economic developers spend a lot of time and resources scouting for the home run hitters - the relocation or expansion that brings dozens, or even hundreds, of jobs with it, or that start up that's in someone's garage right now but has the potential to turn your region into a mini Silicon Valley.
But what about the singles or even the bunts? What about the parts of your economy that always seem to get on base? Do you even know what they are? How can you find those assets and help them move from first to second base and eventually to home plate? Just like Billy Beane, you can use data to find them and add them to your line up.
I sometimes get to teach advanced strategy to economic development professionals and one of the things we do in that course is look at some great data sources that are freely available on the web. These are tools that help us look under the hood of our economy (if you allow me to switch metaphors for a moment).
A regional industry cluster analysis, for instance, which often relied on a consultant to complete at a cost in the range from $10,000 - $100,000 in years past, can now be done in about three mouse clicks at virtually no cost. Another tool lets you do the same thing with occupational clusters, learning what skills the people of your region or community specialize in. Yet another tool helps you do a shift-share analysis to identify which sectors in your economy are more resistant to national economic changes than others, recession resistant, in other words.
Here's an example of how moneyball economic development could play out.
Midville had seen brighter days. Its largest employer, ABC Manufacturing, had closed its doors a decade ago and the cascading effects are what you might expect – economic decline, an eroding quality of life. Civic leaders and economic development professionals, in their efforts to develop a new set of strategies for growth, discovered something interesting in the data they were reviewing. Despite having no information technology (IT) FIRMS in Midville, they had about 30 IT WORKERS, embedded in other non-IT firms – like hospitals, the schools, a few small manufacturers that still existed.
Recognizing these workers as potential economic assets, the chamber of commerce launching Tech Tuesdays, inviting these IT pros for a series of brown-bag event. It was not long before new relationships were developed among the attendees and some new business ideas emerged. The Small Business Development Center (SBDC) was asked to provide some start-up assistance, the community bank got involved, and two of these folks had an idea for a new smart phone app. At first they worked on the new enterprise evenings and weekends, but when their app launch was successful, they quite their day jobs, leasing space on the town square and hiring three locals to assist with programming and marketing. Midville had its first IT firm!
These are the kinds of singles and bunts and even walks that can get an economy moving again; and data, the sorts that exist beyond the demographics and household income stats, can help uncover them, fueling the imaginations of civic leaders and economic developers with ideas for how they could leverage these assets. For many communities, a home run is a long shot and it may never come at all; but a line up that includes these kinds of solid performers, and the policies and resources to support them, can be a winning strategy.