14 Jul 2012

Best Places for Business Lists are Absurd and Undeniably Successful

Anatalio Ubalde is an economic developer, entrepreneur, and inventor. He works with organizations throughout the nation to foster enhanced economic development strategies using Internet technology. His work in geographic information systems, economic development and the Internet has been featured in The Wall Street Journal, Bloomberg BusinessWeek, Forbes, Fortune, The New York Times, TechCrunch, and Inc. In 2009 he was named a Fellow Member of the International Economic Development Council for achieving exceptional stature in the field of economic development.

The success of best places for business top ten lists is compelling. I’ll prove it to you. Have you ever read one? As an economic developer, have you ever promoted a list your community was on? If the answer to either was “yes,” then you’ve bought into the model at some level.

The success of top ten lists for the best places for business is absurd. I’ll prove it to you. Have you seen businesses that are really successful in cities and states that are not on these “best places for business” lists? If your answer was “yes,” then you realize that the best place for a business may not be found in a list of best places for business.

For years we publicly spoke out against these lists that magazines published. But those magazines kept putting them out. When I asked a writer from Forbes magazine about this, he explained why they do it: more people read articles with lists than those that don’t have lists.

The world is complex and lists are simple. We deal with mind-numbing complexity and frustration all the time. A top 10 list of anything, including the best places for business, is so simple to understand it makes all that complexity go away and just ranks the good and the bad. Someone smart must have analyzed the data and now you only have to read 10 things. People love this. So no matter how much people say these lists are bad, they are not going away. Writers will write them, publishers will publish them, and communities will promote them when they make the list.

It’s easy to argue that these lists are subjective and inaccurate. There are so many lists and the rankings are all different. Great cities for business get excluded all the time.

There is a fascinating recent history of social media and rankings working together to connect groups of like-minded people to work together for a common cause, and the Twitter Battle is just one example. In the spring of 2010, the competition for which city Google would choose to install its ultra-high-speed broadband network prompted many clever web video projects, where groups of citizens thought creatively about the essence of their communities, as well as some odd publicity stunts from local officials who were even willing to swim with sharks to snag the Google project. In February 2011, Forbes magazine named Stockton its most miserable city, which prompted a strong reaction from residents, who argued against the metrics used and proclaimed their city's high quality of life. One resident's video response received over 50,000 views on Youtube, and about a thousand people attended a "Stockton is Magnificent" rally organized by a downtown business association through its Facebook Page. The Forbes example demonstrates how social media can mobilize citizens to support their community, which is certainly a lesson worth revisiting.

Of course there must be a good side to these best places for business lists, and there is. It makes people happy when they get on the list. Politicians, businesses, residents, and visitors all get great pleasure from being told that they are in the best place. And even if they aren’t the best, they’ll promote that they moved up the list, were near the top of the list, or were on the top half of the list. There are so many ways to slice-and-dice to promote “bestness”.

Recently, CNBC and Twitter teamed up on a contest to determine the top states for business in 2012. The winner was decided by the number of tweets containing the contest hashtag, which users included to vote for their particular state such as #TopStatesCA or #TopStatesNY. Twelve Governors made short videos explaining why their state was the best for businesses, which were posted on CNBC’s YouTube channel. This helped create interest and engagement with the voters on Twitter and other social media platforms. When the tweets were tabulated the winner was Iowa.

Is this way of ranking states for business any more or less accurate than any of the other lists? The answer is “yes”. (If you don’t get that joke now, read on).

It would be difficult to argue that Iowa's winning Tweet count necessarily corresponds to the best business climate in the nation. However, what it does indicate is that there is a passionate community in Iowa that is supportive of its businesses, and they are making their voices heard through Twitter to show that they care about Iowa's economy. My colleagues at DCI would call these people community ambassadors. And an army of community ambassadors marketing your state is a very good thing to have.

A member of our company promoted this interesting use of social media for marketing places on a social media group, to which an economic development colleague asked a logical question, “Is success defined as winning the contest or influencing capital investment decisions?” The answer, again, is “yes”.

The value of winning the competition could be the joy of winning, and maybe it will lead to capital investment. Maybe it will result in some outcomes and not others. I don’t think that the people who come up with these best places lists think much about these types of questions or results. And this is an important point: the value of these rankings to economic developers is not the driving motivation for the people who created the rankings.

Economic developers use these lists to promote that they are a great place so companies will know about and invest in their communities. But the publications that create the lists create them so that they will get more readers, which foster more advertisers, which foster more revenue. The economic growth the publications are focused on is their own. However, for both EDOs and the magazines, it’s a mutually beneficial situation. EDpros will use the list as an opportunity to engage people in the local community, as well as to validate their work to their bosses (who might appear in the magazine holding a trophy or are quoted saying why their community is so great). The magazines benefit financially because some of these communities advertise in them because they made their list.

I’m very serious about the value of marketing and the ROI you get from it. But I look at these “Best Places for Business Lists” and have to see them for the marketing they are. They are kind of fun, very simple to understand, popular, and bunk. If you make a business location decision based on a top 10 list you’re probably not going to be in business very long.

“Shortest commute time to work” is an objective measurement. “Best” is usually a subjective measurement. And what’s best, even for many, may not be best for you. I said it before and I’ll say it again: There is no such thing as “best cities for business” because there are businesses all over the country that are performing their best because they are in a city that fits their unique needs, not the needs of all businesses in general. If all the businesses move to only the cities that make the best cities lists, a lot of exceptional businesses would go out of business.

These lists are silly and a little irresponsible. However, they can be a jumping off point for a dialogue that goes beyond the sound bite. In order to truly engage the masses over an issue, the idea you present must be pretty simple, and hardly anything’s simpler than a Top 10 Cities list.

Anatalio Ubalde is CEO of GIS Planning. He lives in the “best city in the world” based on a comprehensive survey of all people living in his house. Professionally he came around to the concept of Best Places lists and his company has since assisted in data analysis to create these lists for Bloomberg BusinessWeek, Forbes, and Fortune.

Read more on this topic in an article from Dean Barber.


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