By Peter Lindfield, published in the Telegraph-Journal 25th September 2012
New Brunswick’s economy is growing slowly. The province hasn’t yet recovered from the downturn in the forestry industry, and other sectors haven’t grown enough to compensate.
In the face of large fiscal deficits and a still-growing government debt, it’s understandable that many New Brunswickers are eager to see the results of Invest New Brunswick’s (Invest NB) drive to getting business to locate and expand in this province.
Invest NB was officially launched one year ago. Some are asking why the organization has not started to generate visible results. A number of business people have commented that not only are these results overdue but the private sector would have had sales wins and would be driving revenues by now.
But do comparisons with the private sector provide an accurate assessment of Invest NB’s performance to date? Where would private sector firms be in the sales cycle by comparison, and why does it take so long to make these sales?
Early criticism of Invest NB’s performance may speak more to how little is known about complex sales. An expenditure of one year may represent only an initial investment.
In industries such as IT, telecommunications and financial services, companies can spend five years or more on finalizing a complex sale, and for good reason. A major procurement of software, for example, can commit a firm to a strategic and tactical direction out of proportion to its dollar value or infrastructure implications. Enterprise resource planning software, intended to increase the efficiencies of firms’ operations, frequently require the engineering of corporate policies, programs and processes to suit. These purchasing decisions are not made lightly.
Similarly, relocation and expansion decisions can make or break companies seeking to make investments to increase their competitiveness. There is no question that New Brunswick will be the location of choice for some firms, but the competition for these firms is fierce. And the sales teams that anchor Invest NB’s efforts to persuade these firms to make their investments in this province will be faced with many of the same challenges facing their private sector counterparts.
These challenges include initial evaluations of the opportunities on the horizon. New Brunswick possesses areas of expertise, such as forestry, logistics and information technology that increase the attractiveness of the province not only to potential new firms but also to companies already located here that wish to expand.
The provincial government has also committed to supporting six strategic industries. New Brunswick is home to excellent universities and research centres. These features of the provincial economy help leverage opportunities for the Invest NB teams to get potential investors to look at New Brunswick closely and provide parameters for their search for prospective clients.
Even so, working with prospective clients is time-consuming and attention to detail is critical. Leading private sector sales organizations know that even in advance they need to understand the prospect’s industry’s key drivers, the prospect’s competitive position in the industry and the functional levers affecting the prospect’s performance.
To understand the potential for risk in an account, private sector background work includes the comprehensive analysis of a prospect’s performance. This undertaking is time-consuming and necessary. It extends to such information as company history, organizational structure, equity, holdings, earnings per share, subsidiaries and annual reports and includes Management Discussion and Analysis (MD&A) documents, a wide range of Internet information and analysis by market specialists and ratings agencies.
There is simply no substitute for this analysis, and Invest NB requires as much time and effort to develop this critical knowledge base as the private sector.
In fact, the complexity associated with Invest NB’s task of selling the province parallels that of large deals in many industries. With this complexity comes the longer time frames necessary to close the deal. Rather than castigating Invest NB’s management for not announcing wins that may yet be in the pipeline, we should remember that the private sector would be not performing any better at this point.