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You need sound and practical solutions if your goal is to address major economic development problems / challenges. We work with governments, businesses and research communities to develop practical solutions that accelerate national and regional economic development and improve the global competitiveness of locally embedded activities.
Very simple free advice: "When hiring consultants, make sure you have a problem for which you want them to help you find a workable solution. Don’t be naïve and fall for an illusion that someone is going to solve your problem instead of you. Have your consultants work with you on creating a solution rather than relying on them to deliver a pre-cooked solution."
Foreign direct investment attraction
You may not like it but it’s the foreign direct investors who are the buyers and it’s the locations and their socioeconomic systems that are the products for sale. Some products are displayed neatly on the shelves at eye height. They’re nicely packed, perhaps a little pricy but everyone knows them because they’ve been buying them for years or because they’re hot and everyone has to have them right now. Other products are piled in the corner – you have to dig through them, and although they’re cheaper, often you don’t know what you’re buying. What is your product? What are its features, its value proposition? How is it packaged, promoted, advertised?
Having said that, beware that there are different types of foreign direct investor shoppers – those who come without much effort on your part are market-led or resource/asset-seeking. Many locations get it wrong by trying to “attract” these types of investors. Many locations get it wrong by focusing on the number of jobs and the value of the investment while compromising on quality and the strategic complementary character of the activities. Many economic development agencies don’t have a clear understanding that it is precisely those investors who come to utilize the efficiency and knowledge potential of their local economies who have the highest positive impact in the long run.
Berman Group helps regions and countries get the investment product / sales systems right. It’s hard work. And it’s much needed. How is your product displayed? Do you realize you’re selling? Do you know where your customers are?
Štefan Bošňák, Mayor, City of Trnava, Slovakia
(quote from a letter to Chemonics International)
Clusters / global value chains
Global success comes from interlinked co-operation which is intense locally but extends globally without any limits. Some people call it clusters. It’s no longer individual firms that compete as in the old days. It’s open and flexible localized economic and social systems that compete. Is your system ready? Do you know what your economic engine is? Which sectors? What are their contributions to growth? What are their global perspectives / trends? What are the hot growth locations for these sectors? What is their knowledge intensity?
Some people have lost their faith in clusters. This is because we’re naïve in how we design our policies. If you have a situation where two logical partners don’t trust each other you won’t improve the situation by giving them money to learn co-operation. In many national and regional economies huge collaboration-related opportunity-costs are incurred daily. Do you realize that?
We haven’t lost our faith in clusters. There’s evidence from around the world that local specialization and intense value-chain interlinked co-operation within the Triple Helix leads to global market leadership with positive effects on local / regional and national economies regardless of market maturity (such as New Zealand dairy systems). There is also evidence that many former cluster policies have failed. The public sector has a hard time “creating clusters”. The activity must come from within and it must not be primarily motivated by public money or external advice. Some regions just don’t have the strength to give birth to clusters and in such cases other types of sector approaches to policy are appropriate.
Berman Group assists in the design and implementation of national / regional sector development policies. We have experience with both a top-down and bottom-up cluster identification on national and regional levels. We have experience with exhaustive value-chain mapping and cross-sector strategic linkages. We attempt to match regional research excellence with industry and locate their strategic international counterparts (from global centers of excellence in related fields). We help those economic development teams who have the courage to take their development agenda to the next level – i.e. strategic value-chain cooperation and specialization. Do you have the courage? Talk to us.
Innovation, competitiveness and entrepreneurship
Globally competitive regions are home to globally competitive business activities. These activities form parts of multinational enterprises and their global value networks. They can only be competitive if they can generate, access and organize new ideas, identify global market opportunities, develop new concepts and launch products and services that meet (or create) customer demand globally (and do so faster than their competitors).
These innovation activities no longer occur within the boundaries of one single firm. Instead, a collaborative network needs to emerge around a promising value-chain activity in order to fully exploit it. It’s therefore vitally important that the regional business ecosystem works well, i.e. that it produces new firms easily, that these are able to grow rapidly and connect with existing firms, regional and national knowledge infrastructures and global networks.
This requires entrepreneurial culture, business support services, and specialized infrastructure and assistance programs. It requires internal marketing and promotion of innovation and entrepreneurship cultures and of their importance for the future. It requires a region-wide supportive socio-cultural re-tuning towards innovation and entrepreneurship.
Yet regional entrepreneurship policies that create and strengthen entrepreneurial and innovation culture are perhaps the hardest ones to design, implement and manage. Resources are scarce and copying systems that work elsewhere doesn’t work (Trust us, it doesn’t!) because entrepreneurial appetite builds on the socio-cultural profiles of local communities and these are spatially highly differentiated. This is especially true in Central and Eastern Europe, where the entrepreneurial tradition was long suspended. There is thus no single formula for how to do it, which is why many regions don’t do it at all. And that’s not good. Do you agree?
We help regions create and implement entrepreneurial strategies that aim to maximize new firm formation and support the creation of new regionally based value networks. It’s hard work and in order to succeed we need sophisticated / ambitious clients who are determined to achieve change in the long run. Just because it’s hard work doesn’t mean we should give up on doing it. In the long run we don’t have this option. Are you ready? If so, talk to us!
Business & Innovation Infrastructure
We don’t like to see regional economic development / innovation policy reduced to the development of hard infrastructures. Unfortunately, this is happening across Central and Eastern Europe. It seems to be easier for the public sector to develop a building called Science and Technology Park, Business Park or Innovation Incubator than to actually implement a program that would encourage new company formation and growth, productivity increases, knowledge upgrades and internationalization (of which business and innovation infrastructure would be one component).
Just to clarify, we aren’t against critical strategic business and innovation infrastructure; in fact we’re very much in favor of it but we want to see it having a real impact. It must be part of an integrated economic development policy. Such a a policy needs to have priorities on the strategic level as well as on the sector level. These priorities will determine the scope and design for the infrastructure. And cities don’t operate in vacuum. Hard investments need to be coordinated; otherwise, inefficiencies will occur which devalue its positive impacts.
The chain of events – available funds – existence somewhere else – Illusion of need – feasibility study – application – allocation – building is not a healthy one. The more logical chain is – we have an ambition – we realize we have a problem – here are ways to address it – an industrial park / science and technology park may be a platform for a solution – Identification of stakeholders – demand scan – project team – conceptualization – demand analysis – design – elaboration – feasibility study – financing – Implementation – marketing / operations – monitoring / evaluation.
Berman Group will not build your industrial / business park or science and technology park. But we will make sure that the process in which you design it makes sense, both economically and strategically. We will save you money and increase the chances of success / impact. Because innovation infrastructure is not the objective, it’s an enabling framework for achieving something else: a pro-active upgrade of the regional environment for a knowledge-based economy. If this is what you want to achieve, talk to us. If you need to quickly generate a project that will be financed from structural funds, please find someone else.
Human resources, skills and labor market
Some call it social capital, some call it the X-factor, but there’s something about people that makes a difference to the places they inhabit. People and their relationships are the most critical competitive asset today. What do you know about the people in your region besides educational and unemployment data? How do you measure the quality of their skills and their suitability to the current and future needs of your regional innovation system, to its current and future industrial structure?
People form the mortar of the Triple Helix system. They flow in and out of your regional economy freely, they also flow among your Triple Helix subsystems. They represent different roles: users, creators, opinion leaders, policy and decision-makers, followers, implementors, learners, teachers, employers and employees. Their skills and their relationships, their attitudes toward the region, their external relationships, opportunities to study and work etc. are essential to regional economic development.
Human resources / skills for the new economy are the critical components of the strategies that we develop for our clients. We have experience with qualitative approaches to skill assessments and skill development strategic planning.
Ivana Sládková, Project Manager, National Training Fund
Business Improvement Districts
If you’ve never heard of Business Improvement Districts, perhaps you should Google it before you read further. If you know what they are and you’re interested in testing this downtown development management system in your city, please talk to us because we’re the only consulting firm in Central and Eastern Europe (as far as we know) which has actually assisted in their development.
Business Improvement Districts might not seem to fit well here with the other solutions we provide because they may be considered less strategic with more local and less general economic impact. We disagree. We consider Business Improvement Districts to be among the essential local business infrastructures that can produce community-wide benefits and impacts. They’re a demonstration of entrepreneurial culture, they form attitudes in local communities, create the new smiling faces of cities, enforce a positive image, creative atmosphere and successfully resist suburbanization.
In many ways, BIDs can give birth to innovation in social issues, downtown revitalization, local public services delivery, etc. They can become central parts of internal marketing campaigns and a source of a considerable locally generated positive atmosphere. In fact, BID projects / initiatives have a greater chance of gaining political support because they are so visible.
Berman Group has developed and piloted a methodology for creating a successful Business Improvement District and establishing and running its management organization, including self-assessment-based financing and start-up marketing plans. If we’ve sparked your interest, come talk to us.
Regional marketing and internationalization
Countries, regions and cities compete for attention. They want investors, visitors, events, people and business partners to believe that they’re the best place in the world. They invest a lot of money and (sometimes) brain power in trying to achieve this goal. The external and internal image of a location (the perception of its features by different target groups) is an intangible asset the value of which needs to be measured, understood and managed.
The imprint of location value directly impacts the market value of the products and services associated with these locations. Customers believe that Swiss knives or watches are the best in the world. Are they? And does it matter? Perceptions are the result of successful marketing. Markets will pay a premium for products or services the value of which has been augmented by smart marketing techniques.
The reason we talk about regional marketing and internationalization in the same service line is because these are connected jars. Our potential business, research and institutional partners internationally need to be subjected to sophisticated marketing activities (we’re not selling chewing gum here) and as a result they’ll create demand for co-operation that will meet our internationalization ambitions. As the world specializes, we need to be connected with places that can complement / increase competitiveness of the value chains in which our economies participate (or have a logical position to be able to participate). If we don’t do this, others will and we’ll just watch from the sidelines.
In marketing, the task is to convince potential customers to make choices in favor of our products and services. Economic progress leaves us with no choice but to trade fewer tangible and more intangible goods, such as knowledge or unique specialist capabilities. The products we trade are our regionally embedded economic and innovation systems with which other firms and networks elsewhere can connect. If we’re ready, these new connections will co-develop new unique solutions to global challenges that will become the next blockbusters and will translate into socio-economic benefits locally.
This new approach to marketing places goes beyond brochures and websites featuring smiling people. At the same time, it poses more questions for which many regions have yet to find answers. What are the key value chains (mega-sectors) that match our current knowledge capabilities? What are the key trends that these value chains are subject to? Where are the hot spots with critical mass and strategic specialization relevant to “our” value chains? What is it that we can offer to partners in these locations? How can we perform integrated policy (national – regional – company level) to leverage our limited resources / maximize impact? Is our society attuned to internationalization / will it be open to new entrants, new people, new cultural mixes? What internal marketing measures will we need to take in order to increase our chances of success? Are our companies, researchers and government officials ready to work together to make this happen?
Berman Group assists agencies that have long-term ambitions in designing and implementing modern smart regional marketing systems that support internationalization and maximize long-term socio-economic impact.
EU policy, international development
We have devoted a lot of our time and energy in trying to understand the practice of EU development policy: we studied it, we analyzed it, we even taught it. We have good friends who still do. We know more details about it than most people. But it still makes little sense to us. Sorry. It is very costly and it does create some benefits. At the same time Europe is losing its competitiveness. It reminds us of a situation on Titanic when a captain teaches the crew how to salute correctly when they meet on the deck. Because discipline is the cornerstone of progress. The iceberg will be hit soon. And the passengers are very comfortable. Why shouldn’t they? They are still among the richest people in the world.
We are aware that these words are in fact a political position and we realize it may disqualify us from working with many of you. But life is too short for us to compromise what we believe in. We refuse to learn how to dance on a ship that is sinking. We suggest we all learn how to swim or maneuver to avoid hitting icebergs.
Globalization accelerated growth in many countries outside EU. We can no longer afford to regulate ourselves in the way we do because it reduces our competitiveness. When we have to spend 1 EURO in order to reallocate 1 EUR we need to be twice more productive than our competitors just to keep pace. And we are not twice more productive. In fact our costs are among highest in the world. We no longer have the bonus of the rest of the world being underdeveloped because this has been dramatically changing. This controversial text is a test for us if there is indeed anyone who reads text on websites that goes beyond the length of tweets. If you get here, you will likely write us an email, write on our Facebook wall some words of support or disagreement.
If you support us it will be very brave. We know many of you will be afraid to do it publicly because your existence depends on EU. Feel free to tell us in person. Central and Eastern Europeans are silent about this because we are net consumers. We do not want to be told that if these are our opinions, they would withdraw the money.
We decided we do not want to participate in this. Therefore, if you need help with EU lobbying or need more EU money please contact any of the one billion consultants who make their living on it. We are here not to help you spend other people’s money. We are here to help you develop your own competitive sources. It is harder work. So, our services are not for easy riders.
International development aid, on the other hand, is a totally different story. Do you realize that US foreign aid in Eastern Europe and Western Asia is buying security, economic stability and growth opportunity for Central Europe? Success or failure of these efforts can have far greater impact on our lives than Structural Funds. Democratization, upgrade of institutions, fight with corruption, normalizing of business environment, foreign direct investments and rising quality of life in countries of former CIS and Western Asia mean economic development for the Czech Republic, Slovakia, Hungary, Poland, Austria, Germany, .... for the whole EU. It has also far greater impact on competitiveness of EU in the long run than any of the Lisbon agenda attempts. What have they achieved? Certainly not their own objectives.
You do not have to agree with us. Just think for a while! And tell us about it!