Three-fourths of British medium-sized organisations are not aware of their regional development agency, or RDA. Who cares, asks Jyoti Banerjee? Well, the RDAs should, and the government should, and - surprisingly - so should mid-sized companies.
We think of the Chinese as growing unbelievably fast. India is no slouch either. Nor is Ireland. But looking at growth stats for a country as a whole is misleading. It's not countries that grow fast - it is individual regions that grow.
All over the world, we see certain regions performing so spectacularly that the entire country seems to be glowing green with growth. But other regions in the same country lag behind. China is a case in point. In China's coastal regions, such as Dalian, Beijing, Shanghai and Zhejiang, per capita income is around $5000 per year, a figure already surpassed by Guangzhou. But in the hinterland, incomes fall away to between $2000 and $1000, and lower. If we treat regions as countries, then nine of the top fifteen Asian countries are actually Chinese regions.
It is the power of the regional economy which is the reason why the World Competitiveness Centre at IMD now includes 8 regional economies, such as Zhejiang, Maharashtra and Sao Paulo, in its benchmarking of 61 countries for competitiveness.
The zing in competitiveness studies comes from figuring out what makes each region fly. In Zhejiang, it is the clustering of electronic components supply chain participants and PC makers. In southern India, it is IT services. In Ireland, it is customer relationship management. The fuel for growth is usually inward investment into these regions, and (unsurprisingly) the money follows expertise and execution capability. While the inward investment is often done by large companies, the companies that benefit from such investment are the local medium-sized organisations that provide the skills, resources and energy to deliver on the demands of the companies making the inward investments.
It is in this context that the role of regional authorities is so important. The fastest way to find a regional authority is to read an executive in-flight magazine. I have never seen one that does not feature an eye-candy advertisement from a regional authority extolling the scenery and peacefulness of their region. As if inward investors make their choice of location based on what the region looks like.
Regional authorities have to learn to be distinctive - they cannot be jacks-of-all-trades. This does not mean that every company wanting to succeed in Guangzhou needs to be an electronic component manufacturer. But it helps to have a strategy in components that companies in the region can fit their offerings into.
So what are the distinctives on offer from Britain's regional authorities, the RDAs? After all, these strategies can be really beneficial for Britain's mid-sized organisations to plug into, if they want to build their own growth strategies around the inward investment these strategies attract.
Well, here's the problem. In an ongoing study I am involved in with M Institute, in partnership with the Institute of Chartered Accountants in England and Wales (ICAEW) and Microsoft, we have found that three-fourths of British mid-sized organisations have not heard of the RDA operating in their region.
How can you plug into a regional strategy from an RDA you have never come across?
The ironic thing is that RDAs can be very useful to mid-sized organisations. South East of England Development Agency (SEEDA) runs a manufacturing advisory service that has so far provided free assistance to over 500 companies in the region on lean manufacturing strategies. SEEDA tells me that an independent study by a London academic institution found that the advice service added £14m annual value add to the companies. Now the scheme is being extended to cover innovation and design services as well.
Let's be clear about the particular virtuous circle we seek. We need growth. We need it to pay for the pension schemes and health services we collectively wish for, but which will never materialise without serious wealth creation. And our best opportunities for growth come from the country's mid-sized organisations. It is these organisations we need to connect to the fuel that is driving growth all over the world: inward investment in regions of choice.
Somebody please tell the RDAs.
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