Beer is The Answer

I am fast coming to the conclusion that beer is the answer to the ills of the world and should be foundational to economic development.

I say that partly in jest, but partly not. I actually believe and have witnessed how the establishment of craft breweries have transformed communities for the better.

Now if those ISIS fellas would only have a pint or two, I think they would calm the hell down. Of course, they’re not going to do that, being the teetotaler bunch that they are, which is part of their problem.

Not Your Father’s Beer

The consumers of craft beers are typically, although not exclusively, millennials who want something better.

The proof is in the numbers, the overall beer market in 2014 was flat, registering one half of 1 percent growth. But the craft beer industry,  made up of small niche players, grew by nearly 18 percent.

And let me tell you, the craft beers being made today are far better brews. They are not your father’s beer, the largely massed-produced stuff with the character of white bread.

Today’s millennials, if I can generalize broadly, do not subscribe to blind consumerism and an unquestioning “follower” mindset, certainly not as much as my generation, the baby boomers. Many have no desire to work for a large company and are attracted to purchase products tailored to their tastes.

The craft brewers inherently get this. By definition, they are makers, engaged in small production runs, or batches, often seasonal and aimed at a niche market.

I mean, why buy a Bud when you can get, for instance, a Velvet Hammer or a Blood & Honey or a Bent Rut? Now those are beers.

A Precursor for Manufacturing

I think in many respects the craft brewers, typically young entrepreneurs, are foretelling the future of manufacturing in this country. And I know certain communities, certain economic development organizations are taking notice.

A couple weeks ago, I proffered that very theory while participating in the Consultant Connect Summit in Dallas. I was one of nine site consultants meeting with nine economic development leaders from throughout the United States.

And while the other consultants talked about workforce and infrastructure, all worthy subjects indeed, I spoke about how craft beer is a revealing forerunner of things to come.

A Different Birmingham

A few weeks back, I was in my old stomping ground – Birmingham, Ala. – where I lived for many years.

When I left Birmingham eight years ago, I did not have a very optimistic view of the city. Local government was dysfunctional, nothing was really happening.

But when I returned a few weeks ago, I saw how local, really non-establishment investors had essentially created entire new entertainment districts. Four craft brewers, that had not existed when I left Birmingham in 2007, were now key to neighborhood vibrancy that was previously not there.

A Neighborhood Transformed

A neighborhood called Avondale was not the Avondale that I remembered. An old-brick mechanic’s garage, probably circa 1930s, where I used to get my truck worked on was now a restaurant/café with many people sitting outdoors. The same was true across the street in another building that was once an auto repair shop.

Up the street, sat Avondale Brewing, and a host of other high-end pubs and restaurants, including SAW’s Soul Kitchen, which has made my list of favorite barbecue restaurants.

SAWS wasn’t around when I lived in Birmingham. Back then, Avondale was a depressed, working-class neighborhood, with a smattering of small businesses just trying to hang on. It is far from that today.

A Personal Brew Tour

My friend, Don Erwin, with the Barber Companies (unfortunately no relation to me) and Doug Neil, with the Daniel Corporation, took me to all four craft breweries in Birmingham during the three days I was there.

In addition to Avondale, there was Trim Tab Brewing Co., Good People Brewing Company (great T-shirt) and Cahaba Brewing Co. (great hat), all populated by patrons who were young, educated, and who I thought of as “hipsters.”

And talking to them, I got a real sense that they had an optimistic view of Birmingham. They saw Birmingham as a good place to live. No need to go to Atlanta, Charlotte or Nashville to get your groove on, to live the way you want to live.

That was not the same Birmingham I left eight years ago. Now Birmingham is cool.

The Coolness Factor

So I have to think this coolness factor should be worthy of serious consideration to economic developers who should want to retain in their communities youth and vitality – the next generation of workers and entrepreneurs.

Bottom line is we are talking about quality of life. And that means different things to different people. For some seasoned citizens like myself, quality of life might mean the availability of good health care.

For others, it might mean good schools for which to send their children to. For others, it might mean outdoor recreation opportunities, or restaurants or whatever. Quality of life is in the eyes of the beholders.

Smart Companies Want to Have Fun

The point is there is an emotional aspect to decision making, where we want to work and where we want to live, and this is especially true of younger people.

The smart companies, the 21st century companies, get that and they are coming up with ingenious ways to connect with their customers.  They don’t necessarily play by the same rules as their predecessors, which was the subject of my Nov. 8 blog.

Sure, there are some constants. Even smart companies will want to be cognizant of costs. They would prefer a favorable business climate pertaining to taxes, permitting and regulation. But they also tend to gravitate to places where they can find the kind of people that they want.

Riding the Youth Train

By definition, youth represents the future. Always has. More and more, youth will be calling the shots in this new digital age that we are entering. Of course, they are that already.

And don’t you know the moneyed establishment in Birmingham and throughout the country is trying to grab a ride onto to that youth-driven train. I want some of that. There is money to be made.

After I gave my talk at Consultant Connect, several economic developers told me how craft brewing had made a significant positive mark in their respective communities.

One was Ron Kitchens, who served as the moderator to the Consultant Connect. Ron is also CEO of Southwest Michigan First. He said he had 15 microbreweries in his region, with the vast majority having located in downtown Kalamazoo in historic buildings.  Another five are on the way.

“Beer creates a mixing bowl for the community. We are no longer members of private clubs. I am a Mason and I am younger by 20 years than anyone else at my lodge. Microbreweries have replaced that in the community,” Kitchens said.

“It’s a place where people meet and where they get to enjoy a local product. It’s a culture. It’s become the Midwest’s version of California wine country. Many of the craft breweries are now adding gourmet restaurants, or gastropubs, with really unique food. Then they will often add entertainment to go with the food and beer.”

Kitchens said there are now walking beer tours and bused beer tours in and around Kalamazoo, which got its first commercial brewery in 1837. In 2015 Kalamazoo Beer Week featured over 250 events all across Kalamazoo County.

With more breweries per capita than anywhere else in the U.S., Asheville, N.C., was first named Beer City USA in 2009. Asheville has 18 breweries and counting, making about 100 local beers. You’ll find artists, farmers, lawyers and possibly the mayor rubbing shoulders and drinking craft beer there. A great mixing bowl, indeed.

Duluth has claimed to be the craft brewery capital of Minnesota. I was there a couple years ago, and I won’t argue that point. North Shore brewery tours are scheduled for Dec. 5 and Jan. 16 to six of the ten local breweries. My kind of fun.

The International Economic Development Council to its credit has sponsored seminars on how craft brewing and craft distilleries have been able to grow local economies. But as my grandfather used to say, even a blind hog can find an acorn ever once in a while. Ok, that was a low blow.

No Small Potatoes

According to the Brewers Association, the trade industry group for the craft brewing industry, the craft brewing industry contributed $55.7 billion to the U.S. economy in 2014 and more than 424,000 jobs.

Those numbers are derived from the total impact of beer brewed by craft brewers as it moves through the three-tier system (breweries, wholesalers and retailers), as well as all non-beer products like food and merchandise that brewpub restaurants and brewery taprooms sell.

Now those are no small potatoes by any account.

There are now about 4,000 breweries in more than 2,000 cities across all 50 states. At the same time, there are also nearly 1,000 cities with a population of more than 10,000 that don’t have a local brewery yet, and numerous neighborhoods in larger cities without a local brewpub or taproom.

So there is hope. There is room for growth.

In the Dallas-Fort Worth area, where I live, there are currently 39 craft breweries, according to the website Dallas Brew Scene, with more on the way, which indicates that I live in a bastion of civilization.

As an aside, my hobby is music, and the Lone Star String Band, to which I am a member, has performed at a number of local craft breweries, including Franconia, Deep Ellum, Martin House, and Cedar Creek. (With more on the way.)

Cradle of Civilization

The cultivation of grain saw man transition away from a hunter-gatherer lifestyle and drove the desire to settle down and start a farm. This started happening about 10,000 years ago.

Some scientists say it was brewing that drove agriculture, that bread actually came afterward.

Now if this is true, and I am emotionally biased to believe that it is so, then this is further proof that beer is a foundational block to civilization as we know it.

Yes, beer is the answer, creating culture, prosperity and that great mixing bowl. So Cheers!

 And I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas.  If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at dbarber@barberadvisors.com or at 972-767-9518.

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And There Will Be Blood

In the wake of carnage in Paris, could the Islamic State jihadist group wage a similar multiple-team, commando style terrorist attack here in the United States?

It might be tougher to pull off, but I think you don’t have to be security expert to believe that such an attack could take place here in the U.S., despite what the White House says.

What is clear is that ISIS has revealed a new dimension to its demented death cult, with the downing of Russian airliner in Egypt, suicide bombings in Beirut and now the massacre of innocents in Paris.

A growing issue worldwide, terrorism has caused around 130,000 fatalities worldwide between 2006 and 2013. Business people instinctively know that there is a cost, not just in lives but where and how investment takes place.

No doubt the Paris attacks will test already-fragile global markets, especially in Europe, where a shaky economy is still attempting to recover from a series of debt crises and lackluster growth.

There are costs. There are always costs.

Analysts Point to Resiliency

Analysts trying to put the Paris attacks in some historical context say prior events like this in Europe have tended not to have any durable market or economic effects.

“As horrific as these events are – and this is truly awful – economic activity does tend to be pretty resilient,” Howard Archer, chief UK and European economist at His Global Insight, told Reuters. “The UK, Spain and France itself has all seen its economies little damaged by terrorist atrocities in the past.”

Europe has suffered similar coordinated attacks on public transport systems in Madrid in 2004 and London in 2005. Almost 250 people were killed and more than 2,500 wounded in those bombings on trains and buses by Islamic militants.

Still, I’m not sure I buy the argument that economies are little damaged by terrorism as there is evidence of the contrary.

While the direct economic costs of terrorism may be shorter-term in nature, the indirect costs can be significantly larger as they affect the economy in the medium term by undermining consumer and investor confidence.

Consumer Spending at Risk

Just imagine for a moment all the soft targets posed by Christmas shopping, both here and abroad. If such an attack were waged on American shoppers in an enclosed, crowded mall, well, I don’t even want to think about it.

If the U.S. were to be hit again, depending on the scale of the attack and damage inflicted, an economic contraction would likely happen as fear and uncertainty would cause people, at least initially, to stay home.

Consumer spending, which accounts for 70 percent of the U.S. economy, could be severely affected. Airlines, restaurants, entertainment, cruise lines, automobiles, appliances, and big box retailers would take the biggest hits, while utilities, pharmaceuticals, and consumer staples would do well.

The Global Economy Pays

According to the 2015 Global Peace Index, war and violence cost the global economy upwards of $14 trillion each year. These costs include lost productivity due to conflict, falling levels of consumption and costs associated with homicides and terrorism.

A 10 percent reduction in global violence would inject $1.43 trillion into the global economy – that’s over six times the value of Greece’s bailout and loans from the IMF, ECB and eurozone combined.

A decade after 9/11, the New York Times published a survey of estimates of the true economic costs of the attacks. The total cost of 9/11 was pegged at a staggering $3.3 trillion.

It was the U.S. military response which accounted for 95 percent of the costs, whereas the economic toll from actual damage due to the attacks is estimated at $178 billion.

White House Policies Under Scrutiny

President Obama’s counter-terror policies are now under serious scrutiny by both Democrats and Republicans. It has become increasingly apparent that ISIS was re-born in the power vacuum as a result of Obama’s 2011 decision to withdraw virtually all U.S. forces from Iraq and his 2012 decision to renege on his “red line” threat to take action in Syria if chemical weapons were used.

Remarks by the president last week that ISIS is “contained” seemed as out of touch as President George Bush’s “mission accomplished” moment. And wasn’t it Obama who not so long ago referred to ISIS as a “JV team”?

It’s becoming clear that we don’t have a strategy, but are just employing half-measure tactics. Presidential leadership is needed.

I have to believe that Paris will serve as a wake-up call – that there will be a realization in this country that a more robust military approach is required, which unfortunately will entail boots on the ground along with a coalition force.

And there will probably be a respondent increase in military spending. Watch for market analysts to be recommending many defense and security stocks as buying opportunities.

After the 2001 attacks on New York and Washington, Congress approved the Patriot Act, which expanded access of law enforcement agencies to business records, including library and financial records.

Europe already had similar measures, which were enacted in the 1970s and 1980s following attacks by communist terror groups. But in the wake of Paris, the push to increase surveillance and boost police powers will intensify further. Moves that once seemed politically unthinkable may well become unstoppable.

G-20 Point to Rising Inequalities

Leaders from the world’s largest industrial and emerging economies meeting in Turkey won’t exactly ignore GDP, but the attacks in Paris have shined a light on Islamic extremists and hundreds of thousands of people fleeing war in their homelands.

The G-20 will say that rising inequalities in many countries may pose a risk to social cohesion, according to a draft of the final conclusions obtained by Bloomberg News. In it, member governments will pledge to create jobs and bolster inclusiveness while targeting an additional 2 percent growth in gross domestic product by 2018.

As well as the economic communique, a separate statement on terrorism will talk of striking at the heart of terrorist financing and tightening border controls.

“We have to wonder whether one of the causes of these terrorist attacks is jealousy,” Turkish President Recep Tayyip Erdogan said in a speech Sunday at the opening of the two-day summit. “We have to investigate whether unemployment, poverty caused these attacks.”

A Third World War

Well, maybe there is some truth to that. I am certainly no expert to argue. But I must point out that many of the Jihadists have been college educated, with seemingly bright futures ahead of them if they only didn’t become radicalized.

The Saudis responsible for 9/11 were not poor and unemployed. Nor was Nidal Hasan, a U.S. Army major responsible for the fatal shooting of 13 people and wounding of 30 others at Fort Hood near Killeen, Texas, on Nov. 5, 2009.

How and why the perpetrators of these horrendous crimes against humanity became jihadists, with no fear of death, is something we have to figure out, as I don’t know if we can kill them all to prevent their atrocities.

The terror attacks in Paris are part of a “piecemeal Third World War,” Pope Francis said Saturday.

And the economic impact of this Third World War is likely to be significant. There will be costs to be borne by us all, from the plains of West Texas, to the mountains of East Tennessee, to the shores of Boston Harbor.

And there will be blood.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas.  If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at dbarber@barberadvisors.com or at 972-767-9518.

21st Century Companies: The Makers Make It Cool

Consider this, Alibaba, the world’s most valuable retailer, holds no inventory.

Airbnb, the world’s largest provider of accommodations, owns no real estate.

Uber, the world’s largest car service, owns no cars.

And Apple, classified by the U.S. government as a manufacturer, says “substantially all” of its products are made by others.

Now do you think maybe, just maybe, there is a new paradigm at work here?

And do think economic developers, the good folks charged with aiding and abetting economic growth in their respective communities, have adjusted accordingly?

I posed that question at a conference of the Young Professionals group with Southern Economic Development Council this past week in Dallas.

Most of the attendees had been employed in economic development for less than a year. Being millennials, they already had a strong hunch that some of the stuff being sold to them as economic development truisms (and I have been guilty in propagating some of this stuff) comes from a 20th century mindset.

Look, there is something to be said for traditional, tried and true approaches that have worked well in the past. But we are entering a new era in which labor, information, and money move easily, cheaply, and almost instantly, largely because of digital technologies.

Not surprisingly, some of us oldsters have a hard time wrapping our heads around that.

As a result, some companies, typically run by old white guys, are quickly finding themselves not where they want to be. And I could make the same argument with some economic development organizations.

21st Century Companies

Forward-looking companies, 21st century companies, are creating new, more fluid relationships with customers, workers, and owners.

Alibaba, Airbnb, Uber and Apple have found ingenious ways to connect buyers and sellers directly and conveniently, enabling new, nearly capital-free business models.

The one and only single slide that I showed to my YP-SEDC audience, (I did not want to subject them to death by PowerPoint) was labeled “The New Reality.”

It was a bar chart showing big-named companies creating high value with scant hard assets. The subhead read: “Assets? We don’t need no stinkin’ assets.”

Older Companies Can Change

The 21st century companies are learning that they can thrive while owning less, creating value in new ways as they reinvent R&D and marketing.

And we’re not just talking sexy Silicon Valley startups here. Older companies can transform themselves into a 21st century companies if they bring in the right people who stay abreast of new technologies.

Nike is reinventing manufacturing with 3D printing and using social media for marketing. Companies that don’t adapt, well, they are likely to fade away.

The highlight of my time with the YPs was not giving my speech, but showing one of them an app on my android phone that captures business cards. I know some senior, high-ranking economic developers that don’t even know what an app is.

The New Reality Begins With Capital

The new realities begin at capitalism’s foundation, capital. A company doesn’t need nearly as much as it used to.

As technology continues to advance, barriers to entry, commercialization, and learning continue to erode.

New players with access to new tools can operate at much smaller scale, enabling them to create offerings once the sole province of major companies. 3D printing screams out for the classic garage or basement business to be born.

Make no mistake, some large companies will continue to dominate certain segments of manufacturing, but we’re seeing a rise of local, small-scale, agile manufacturing ecosystems, precisely because the cost of entering the game has been lowered by advances in technology.

Makers Make It Cool

I recently spent a few days in Birmingham, Ala., where I took it on myself to visit all four craft brewing companies that have set up shop in the city in recent years — Avondale, Good People, Trim Tab, and Cahaba.  (Yes, conservative, Bible Belt Alabama is home to 24 breweries, with at least another six in process.)

They were are all the vision of young “makers” who wanted to bring great value, great beer, to a niche audience.

I call them hipsters, but that is likely stereotyping or just unflattering. My point is these were young entrepreneurs who had formed companies to purposely make small batches of their product for small audiences. And this small-batch maker environment they had created was making Birmingham a pretty cool place with the creation of new entertainment districts.

I cannot help but believe that their maker mentality foretells of things to come with manufacturing in this country – more small manufacturers, making small runs of product specifically tailored to niche groups of consumers.

Numerous factors are leading manufacturers to build to order rather than building to stock. In this environment, intermediaries that hold inventory are becoming less and less necessary.

And again, this poses opportunities for both big and small communities alike.

Wherever they reside, whether it is an urban or urban setting, economic developers should work toward fostering an environment that encourages and, yes, even coddles and protects, business startups. And then watch for the gazelles, those fast-moving, fast-growing companies that are fulfilling a niche by offering true value to their customers.

What I Didn’t Want to Talk About

Facing these young professionals who are just now getting their feet wet in economic development, I didn’t want to talk to them about ceiling heights or how big a spec building should be or whether they needed more rail-served sites.

That is pretty mundane stuff, and they are going to hear that ad nauseam from others.

What I wanted to talk about, what I wanted them to think about, was how these 21st century companies are  taking root and often disrupting the marketplace with imaginative ways to bring value to customers.

The New Destroyers

McKinsey Global Institute says “some tech and tech-enabled firms destroy more value for incumbents than they create for themselves.”

Microsoft’s Skype brought in some $2 billion in 2013, yet McKinsey calculates that in that year Skype transferred $37 billion away from old-guard telecom firms to consumers by giving them free or low-cost calls.

When Airbnb entered Austin, hotel revenue dropped 8 to 10 percent, and hotel rates dropped accordingly.

Frankly, this new breed of forward-thinking disruptors are reflective of younger demographics, the very people that I was speaking to at the SEDC conference.

So there you have it. That’s much of what I said to the young professionals at the SEDC conference. They were a bright bunch, and I had this lingering thought that they could actually teach the teachers a thing or two.

Twernt Me

The Tennessee Economic Development Partnership was also in Dallas last week. I had breakfast with a couple of economic developers one morning.

That night, I was invited to attend a Tennessee singer-song writers event, sponsored by the Tennessee economic developers. I couldn’t make it because I had work to do.

But at the SEDC conference the next day, I learned that some drunk guy had stumbled up to the gathering, saw my name tag sitting on a table, put it on and wandered into the group.

“He asked me what we were doing here, what we were about,” said one young economic developer. “He was obviously drunk, and I tried to be polite, but it was a bit unnerving. Several people came up to me afterwards to tell me that was NOT Dean Barber.”

Which was absolutely true. It twernt me.

Now I wish I could claim that I have never been in my cups or full of myself. All I can say is that I wasn’t guilty this time.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas.  If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at dbarber@barberadvisors.com or at 972-767-9518.

SWOT THIS!

When a community calls me in to provide counsel on matters of economic development, the end goal is almost always the same – economic growth.

Communities want to know how they can be more competitive in order to attract or support corporate investment. (This would include both recruitment and business retention and expansion. Never forget existing industry provides the most new jobs in any given place.)

Communities also want to know if they are pointed in the right direction and are barking up the right (or wrong) tree.

I like to keep things clean, simple and understandable, not only for the benefit of my clients but for me, too. Clients are not paying me for going down the wrong rabbit holes.

To that end, I like a structured planning method to evaluate the strengths, weaknesses, opportunities and threats of a community.

A SWOT analysis involves specifying the objective. Again, it’s almost always economic growth and identifying the internal and external factors that are favorable and unfavorable to achieve that growth.

This past week, Tim Feemster, the managing principal of Dallas-based Foremost Quality Logistics, and I spent three days in a rural Texas community engaged in a SWOT analysis.

Confidentiality prevents me from naming that community, but I will tell you that it faces many of the same problems that other small, rural communities throughout this country have to deal with.

By virtue of it being small and rural, there are limited opportunities, principally because of the size of the universe with fewer people (and jobs) with certain skill sets. And this corresponds with what vocational education opportunities are made available and existing infrastructure.

But we don’t give up the ship. All places have strengths, which can be leveraged with planning and execution. In the dozen or more interviews we did over the course of two days (and we’re not done), it was clear to us that people in this small town were proud of their school system and hospital, both of which were excellent.

Without going into great detail, we asked questions about the local labor market, financial capital, transportation and access to markets, buildings and sites, infrastructure and utilities, education and training, business climate and quality of life.

And in the course of our investigation, I learned, among other things, about shooting wild pigs, Charles Goodnight, and the Comanche, who were truly fearsome lords of the plains.

The Feemster

Tim’s strength is that he is a logistics guru par excellence. On a corporate site search for a manufacturing client shipping product, you can bet that I’m bringing Tim into the equation to analyze cost structures involved shipping product both in and out of a proposed plant site.

Believe me, this is a huge cost that is frequently not factored in during the site selection process. Tim has an expertise that I don’t possess and besides, he’s fun to work with and be around.

The Wizard

Then there is my homie, Jason Hamman with the Hamman Consulting Group based in Cleveland. Jason is a topnotch geographic information systems operator and all-around data base dude. Think Wizard of Oz guy behind the curtain and you get the idea.

Mark my words, utilizing Big Data effectively to target opportunities and potential customers will separate the winners from the losers in business and economic development in the future. It’s already happening. Jason will be examining our subject community through a host of data bases.

Me, well, my strength as a consultant is that I ask a lot of questions. I was a business journalist for many years and I am not too shy about probing and trying to determine what is real and what is not. When I get conflicting information or stories, it just makes me want to dig more.

Now pointing out the truth can get you fired in Corporate America and even in economic development, but as consultant, that’s what I am being paid to do. I’m not trying to embarrass anyone by pointing out shortcomings.

Rather, we want to point our clients in the right direction as a result of our findings and provide practical counsel on achieving their goals. Now let’s briefly take a look at the elements of SWOT and how it works.

Strengths: This would be characteristics of the community that would or could give it an advantage over others.

Weaknesses: Naturally, this would be just the opposite — characteristics that place the community at a disadvantage relative to others.

Keep in mind that strengths and weaknesses are internal factors in that they are internal to community. Then you have your external factors, those presented by the environment external to the community.

Opportunities: These are the things that the community could exploit to its advantage.

Threats: These are the things in the environment that could potentially cause trouble with a capital T.

External threats are things like tornadoes and hurricanes, ISIS, and cyber criminals. Sometimes you just feel kinda helpless about them.

But external factors may also include macroeconomic matters, such as low interest rates and low fuel prices. They can include technological change, legislation, sociocultural changes, as well as changes in the marketplace or in competitive position. (Interstate highways, railroads and airports have hugely influenced growth for some communities.)

The purpose of identifying strengths, weaknesses, opportunities and threats is important, because the analysis can be used in coming up with recommendations. And that’s what we do. It’s why communities and companies turn to us.

When we find a strong connection between strengths and opportunities in a community, well, that’s a good thing, because it allows for embarking on an aggressive strategy of business development. But if we come across a strong interaction between weaknesses and threats, then we point that out as a red flag and advise on defensive measures that we think should be considered.

Ideally, we want to identify a competitive advantage by matching the strengths to opportunities. We also hope, when possible or practical, to convert weaknesses or threats into strengths or opportunities. Finding new markets is one way to do that, although it’s easier said than done.

Competitive Advantage is Key

Companies and communities that want to grow are looking for a competitive advantage, attributes that allow an organization to outperform its competitors. These attributes may include access to natural resources, inexpensive power, highly skilled personnel, geographic location, etc.

New technologies, such as robotics and information technology, can also give a community a competitive advantage, especially if it is being taught in local schools or being utilized in a big way by existing industry.

A community typically hopes to exploit its competitive advantage in two ways: lower cost or differentiation. The advantage derives from the attributes that allows a community to outperform its competition.

Cost Matters

On the cost side, a community would want to demonstrate that there would be a distinct cost advantage to making a particular product or providing a particular service in relation to its rivals.

I think a community should want a company to earn a good profit, as that increases the odds that the company will expand and create new jobs. Kinda basic, but you would be surprised how many folks don’t get that.

Being Different Matters

The goal of differentiation strategy is to provide a variety of products, services, or features that competitors are not yet offering. For an innovative company like Apple, this is the central strategy. It’s what makes them different and a star.

Communities can also look for ways that differentiate themselves from other places. They may not be the low-cost provider, but they are providing something else, something different.

Silicon Valley comes to mind. Certainly not a low-cost environment, but the innovation taking place there sets it apart and makes it different.

So there in a nutshell is what we are doing with SWOT and how we are trying to leverage it in ways for a community to find a competitive advantage.

Economic developers should be all about building and sustaining competitive advantage. At least that’s what I think. I believe  Tim and Jason would agree.

If they don’t, I reckon I’ll hear from them. In the meantime, I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas.  If you liked what you read here, invite Dean to speak at your next meeting. He can be reached at dbarber@barberadvisors.comor at 972-767-9518.