How has the business of economic development changed since you first started working in the field?
I started my career as a site selection consultant some 20 years ago. Back in those days, when you would do site selection analysis there was no real internet. Email was just coming into being. When we used to learn about a specific community there were a couple of ways to do that. One was you got on a plane and flew there and met with the local economic development people. Second was you got on the phone and were mailed a bunch of hard copy materials such as brochures and lists. This lent itself to building strong interpersonal relationships. Economic development professionals would start to ask me if I had any other companies that I knew were in growth mode, and from there we built some great relationships around the world. The majority of our clients back then were very large multinationals that were either expanding or consolidating globally.
It soon became very clear to us through these relationships that the international economic development community had a great thirst for knowledge and data as it related to companies that were considering expansion. From there we thought to ourselves, would it be possible to build a business intelligence collection organization whereby we could look for companies in growth mode, given our understanding of how companies expand, and then sell that data to organizations?
We spun ROI off in the early 2000s. It started as myself and two other part-time people, and then we grew very quickly to now over 60 people with offices in San Diego, San Francisco, Chicago, New York, Denver, Toronto, and of course our headquarters in Montreal. Over the course of the past 14 years we have done work for over 300 economic development organizations around the world, including the governments of Finland, Sweden, Thailand, Japan, as well as U.S. State governments such as Florida, Virginia, Washington, Georgia, New Jersey, New Hampshire; and Canadian provinces of Ontario and others. Our research runs the gamut of every industrial segment. But our primary work is in industries such as life science, bio, pharmaceuticals, advanced manufacturing, materials production for aerospace and automotive companies, clean tech and energy, and financial and business services.
ROI developed a humanly curated database that we have built on our own that comprises over two million companies and 10 million contacts. We have developed our own internal data warehousing and customer relationship management (CRM) solutions. Applying very strong analytics capabilities and sharing these with companies allows us to show them from a qualitative and a quantitative perspective why we had success in a given region, given the kinds of companies they may be going after. It has also led us to try and continually improve the way we work and build our model to show what kind of companies converted at a more favorable ratio from suspect to prospect, prospect to lead, lead to meeting, meeting to active project.
We have always been very interested in technology and big data. We were one of the first companies to have a cloud-based CRM solution for our clients to use and see how each effort was going. We were one of the first to use social media aggregating software to see if there was any noise in the social media world that might lead us to identify companies that were in expansion mode. And now we are the first to be using artificial intelligence and machine learning applications to help us identify companies that we think are in growth mode.
What are some of the most recent developments in ROIs activities over the past 12 to 18 months? How is the lead development game changing?
When I started doing economic development and lead generation work around 25 years ago, we would buy a database of companies that we would order on the telephone. It would arrive a month or so later in a huge manila envelope and was basically a hard binder containing about 800 pages. Fast forwarding to today, we have access to an amazing array of data. Census, Bureau of Economic Analysis, Bureau of Labor Statistics, Department of Labor, Department of Commerce data; trade, financing, and patent data, and many more. There is so much data out there. The world has changed so much since I started lead generation, especially in terms of access to huge volumes of data. Big data.
Nothing trumps a company Executive telling us that they are looking to expand. But second to that, the ability to use all of this data in meaningful ways to find patterns, trends, and specific signals that companies are emitting out into the world – that in general lead us to believe they are expanding – is very, very powerful. We think that because a company has revenue growth or employment growth, or because they are in a specific industry or region that is growing, that they, too, would be growing. Those signs form the fundamental basics of economic development. We look for companies that are in high-growth regions of industries. But that does not necessarily tell the whole tale. So what we have been doing at ROI is to hire a number of experts, including a PhD economist, a PhD mathematician, a Master’s-level mathematician, Python developers, and to utilize their skills over the past 18 months to develop regressions and train algorithms to try and look for signals that would lead us to believe that companies are indeed in growth mode. Machine learning and big data as they relate to economic development and corporate growth are what we have been primarily focusing on here over the past two years or so.
At ROI we have managed to combine, then, traditional economic development as it relates to nascent prospecting – which means that we still have 50 researchers out there talking to companies and quantifying from a humanly curated perspective a company that is in growth mode – with other algorithmic training and business intelligence and big data that we now have access to, to help ourselves and our clients find lift and be successful. The fundamental reason why economic development organizations exist is to find and attract FDI. We are building tools and signals and intelligence that we think will render that job more efficient moving forward.
What are some of the current trends in terms of using data to attract companies, especially as they relate to FDI?
There are a number of signals that we at ROI have picked up on regarding effective economic development as it relates to FDI. A number of these tend to fly under the radar. Not a lot of people tend to look at things like pension data, or overseas companies that have recently translated their website. These may seem like simple things, but clearly a company in Germany that may have recently translated its website into English could be looking to expand to the North American markets. All FDI is driven by either access to markets or by workforce. All these things are tied together. There are some fairly obvious data points that we have always looked for and will continue to look for. There are some less-obvious ones that don’t necessarily have to do with Big Data. And then there are some that we now can get access to that were not available before. And so we think that a combination of all of these things forms the best kind of investment prospecting, strategizing, and efforts.
How might this approach lay out with a specific client?
A company may come to us and, based on their best assumptions, tell us where they think their sweet spots are in terms of target industries. Oftentimes they will ask us for our opinion, if we have done similar kinds of work – but not necessarily for companies or organizations that are in close proximity to each other, since just because a company may be in close proximity doesn’t mean it has the same assets. In order to do this, we need to look up reasonable comparatives so we can see, for example, what kind of university graduates are being produced and in which fields in a particular region; what is the population; what kinds of clusters exist there. From there we can benchmark against those comparatives and give our clients a better idea of what kinds of companies they may want to go after.
In addition, we have always had a 100% transparency policy with our clients. Any of them can come into our system and track any progress that we are making for each specific effort. The more data a client can see and get its hands on, their greater their knowledge base is. Our clients are smart people; they are very savvy and well-versed in economic development. With both sides having access to the largest amount of data possible, the more powerful and synergistic the conversations are. That is one big difference between ROI and some of the other lead-generation firms. We really try and make as much of the data we collect as available as we possibly can in the most strategically useful format.