Is investment promotion a digital or a people business?
COVID-19 has encouraged us all to find new ways of working, but can we ever lose the personal touch in investment promotion? Sirpa Tsimal, Director of Investment Promotion at Switzerland Global Enterprise, shares her insights before she joins us to host a round table discussion on the digital vs the human approach in investment attraction at City Nation Place Global.
When I started in economic development, my first boss used to remind us frequently that we are in a people business. This resonated with me and the more experience I gained and the more company executives I have advised over the years about site selection, I realized that he was right. Building trust in your IPA as being a true partner during the selection process and building trust in your location are key for winning investment projects.
Fast forward to 2020 where digital seems to be the new normal, I wonder if digital will replace the “people-business” aspect in investment promotion?
Digital vs personal: what is the future of investment promotion?
I am sure every economic developer and site selector has a story about an FDI project where the company executive in charge decided for a location not because the data pointed to that location but because the CEO felt a connection once she/he visited the location in person and met with you in person. I recently worked with a company that decided on a location because the regional economic development team rolled out the red carpet for them, connected them with valuable local partners, and they really felt welcome and supported whereas the other city on the short list where their previous data analysis and desk research seemed better, fell off their list because the economic development team there didn’t seem to care about the company.
On a more entertaining side, my FDI stories also include seemingly irrational site selection decisions based solely on personal preferences: a CEO who thought the place reminded him about his childhood, and another CEO who was set on the location only because it was close to where her son trains as a professional skier.
It looks like location decisions don’t always follow a solely rational and data-driven path but also have an emotional and human component. How are location decisions made and if they are often driven by establishing personal connections, can we replace the entire site selection process in the virtual space?
The typical investor journey: site visits are going virtual
Let’s look at the typical investor journey. As a first step, companies gather information about various locations to prepare a short list of possible locations through desk research and through speaking to their network. Google is everyone’s best friend when finding first information and data on workforce, benchmark analysis, real estate, operating costs, and other comparative data. This early stage in the investor journey offers a plethora of digital opportunities for IPAs to get on the radar of investors, starting from SEO, to digital marketing campaigns, to a data-driven targeting approach. This is commonly used by IPAs and may have intensified over this year as investors become more reliant on the virtual world while travel is suspended. Early in the site selection process being a digital native is important for IPAs.
A next step in the investor journey is usually that company executives board a plane or train and visit their shortlisted locations and meet with local government authorities, economic developers and experts who will show them around. By visiting they get a real sense of the flavour of the location and a first-hand look. At this stage, like the example above shows, it is key to roll out the red carpet and to build trust with investors and ultimately make the investor feel welcome. As establishing a new operation overseas takes time and a lot of resources, these decisions are not made on a whim.
I have noticed that economic development agencies are trying out new virtual formats to replace personal site visits. One example is replacing a personal company visit to a potential manufacturing greenfield by flying a drone over the greenfield and showing the footage to investors in real-time, so they can have a bird’s view and close-ups of the site, or another example is using VR/AR googles to show investors the region or city.
Trust is like music: it happens between the notes
Simon Sinek pointed out in a recent LinkedIn video clip that moving company meetings to Zoom only works well if relationships and trust are pre-existing, but that nothing can replace in-person connections: “Trust doesn’t happen over Zoom. Trust doesn’t happen in a meeting. Trust happens between the meetings. Isaac Stern, the virtuous violinist said: Music is what happens between the notes. Trust is the same. Trust happens between the meetings. – informal discussions, showing empathy, it is that fabric that holds us together. Nothing replaces human contact. Nothing.”
In another study, Harvard researchers argued that zoom and skype won’t kill business travel. They looked at business travel between countries and concluded that the importance of know-how might explain why firms rely so heavily on business travel. Unlike information and codified knowledge in books and algorithms, know-how exists in human brains and moves very slowly from brain to brain: “One way to think about the distinction between moving bytes and moving brains is to consider bytes as data and brains as CPUs that are able to form parallel computing machines when working in groups. Why physical proximity facilitates parallel computing and how much new technologies can substitute for it is an open question, one that the COVID-19 experience will allow future research to answer.”
As a summary, there are many areas in economic development where you can go fully digital and be a data-driven IPA, however we must never forget that we deal with a person who makes that final location decision. I believe that now more than ever, maintaining these personal connections and building trust make the difference in site selection. How much can be replaced digitally remains to be seen, but it is essential that we find the balance between data-driven vs. human-driven decision-making in site selection.
What is your experience in digital vs. people business and how do you develop your place marketing activities accordingly? Join the City Nation Place Global roundtable to discuss with fellow IPAs.
~ Written by Sirpa Tsimal, Director of Investment Promotion, Switzerland Global Enterprise