Invest Toronto is dead. Long live Invest Toronto!
A new government agency called Toronto Global is being formed to replace Invest Toronto – Toronto’s failed economic development agency. Funded by the federal and provincial governments,
Here’s some purely unsolicited advice for founding CEO Toby Lennox.
2. Don’t be a pamphlet and trade show agency. Invest Toronto spent millions sending executives to stand behind tables at tourism and travel related trade shows around the world, handing out "Toronto is beautiful" pamphlets and accomplishing absolutely nothing. Why didn’t it work? Two main reasons:
- They were in the wrong places. They were promoting Toronto to people whose business it is to promote other cities, regions and economies around the world. They should have been at conferences attended by decision makers of young, growing companies hungry for the type of advantages that Toronto provides. Fish where the fish are hungry, not where the fishermen eat.
- They were passive, not active. Instead of hunting for companies that needed to be in Toronto (but just didn't know it yet) Invest Toronto largely waited for companies who'd already decided they were interested in the Toronto region to knock on their door. Not enough of them did. And those did were already likely to have settled in Toronto anyway, so Invest Toronto's added value was moot.
"Toronto's new economic development agency needs to be more 'Moneyball' and less 'Showgirls' than its predecessor"
2. Use a sniper rifle, not a shotgun. Invest Toronto took a shotgun approach to sales, when it should have used a sniper rifle. Instead of hiring graphic designers to create and hand out beautiful pamphlets to everyone attending a convention, an unfocused approach netted few results, the new Toronto Global needs to be strategically active: more “Moneyball” less “Showgirls.”
Hire business analysts, competitive intelligence masters, and high-value relationship sales veterans.
- Business Analysts to identify individual target companies that will most benefit from the advantages Toronto has to offer. Understand what makes these companies profitable, how they make money, and build a compelling “no-brainer” business case that makes it impossible not to invest in Toronto.
- Competitive Intelligence Masters to break down how the target company makes decisions, who’s in charge, where the sleep, what they eat, which arts and sports they patronize, who is their favourite author, actor, politician, comedian, stripper and prostitute. Build a plan to attract their attention, command their interest and compel them to invest in Toronto.
- High-value Relationship Sales Veterans who know how to use the intelligence and business case already developed to build a relationship with the decision makers and close the deal.
3. Show me the Money. The federal and provincial government will invest in Toronto Global because it's very easy to make a business case that makes sense for them. Every dollar paid to a new employee, every dollar earned in revenue from a new business venture, pays income tax and/or sales tax directly into government treasuries. A $1 million investment in Toronto Global makes sense to government if the agency can show how it directly contributed to new tax revenues whose present value is more than $1 million. Easy peasy.
Less easy, is building a business case for municipal investment. Ontario cities and towns make money from property tax only. They don't get a slice of the lucrative income and sales taxes. Further more, municipalities like Toronto don't actually make money on new residential property tax revenues because the services that new resident consume (roads, sewers, police, fire, ambulance, recreation, etc.) typically cost more than the property taxes those residents will pay. That means what matters to municipalities is where these new people will work.
A new manufacturing facility, office building or retail store will pay commercial property taxes to its host community – and commercial properties are cash cows for cities. They pay much more than residences and they consume far less value in services. They're profitable properties.
So, a $1 million investment in Toronto Global only makes sense to Toronto if it results in net new commercial/industrial property taxes to Toronto. If Toronto's investment helps attract a business from Asia to locate on the north side of Steeles Avenue, however, Toronto gets nothing. Where the business lands matters and Toronto Global needs to understand the calculus of how municipalities make money in order to create and sustain a winning business case for its municipal partners.
It's an achievable goal – though not as easy as it may seem. I wish Toby and his team at Toronto Global the best of luck. Done right, it will be a thrilling challenge for them.