For economic and community developers, a new “best of” and “top places” ranking season is underway. While it may not be as popular as basketball’s March Madness, there is no doubt that economic and community performance rankings attract a lot of attention. They are of great interest to the media, elected officials, the business community and residents at-large.
But rankings are only one part of a very complex economic performance story. Compounding their use and reliability is the fact that not all adopt the most rigorous, relevant or transparent methods. And positive or negative scores do not impact all business investment decision-making in the same way.
The challenge is to find the most valid and relevant rankings. With that goal in mind, it is critical to examine the data points that make up the rankings and how they may align with an overall economic development strategy discussion. Four key cautionary points should be considered when.
1. Bundled Thinking
Rankings too often view all places as equal. While they may adjust for population or other normalizing methods, they cannot easily reflect or adjust for region’s culture, history, diversity, unique assets or strategic goals. Some industry sectors for instance are highly cost driven or demand interstate access while others value research, talent and access to venture capital. And rankings that do dig deeper into sector performance or asset analysis assume that those sectors or assets are valued equally for all states or regions. Obviously neither is always the case.
2. Media Outlets
Ranking and “best places” reports produced by media outlets and travel publications are very popular but also need to be considered within the context of their central business mission. While some media organizations may have the resources to conduct rigorous ranking analyses, in the end they are reliant on advertisers and readership. While this fact may not directly influence the analysis, it is a consideration when comparing those efforts with other more independent research and ranking organizations.
3. Self-Reporting and Surveys
Rankings developed through self-reporting and surveys may provide a snapshot of business climate or performance through a narrow point of view. CEO surveys and expansion project competitions are examples of how some of these rankings are developed. The approach can raise questions on the quality and validity of the survey tool, marketing efforts and response rates. Again, while they may be useful in the context of a single performance metric or area, they may not offer an accurate reflection of a states broader economic performance, value or capacity to perform.
4. Ability to Affect Ranking Performance
Place based factors such as climate, neighboring metros, and natural assets such as lakes, mountains and beaches are all subject to personal preferences and experiences. While these factors are beyond the control of any policy maker, they still influence and are part of many best place rankings. It is critical to determine to what degree a ranking and the measures within those rankings can actually be influenced or changed and in what time frame. Understanding the methods and reasoning behind rankings can greatly enhance a state’s ability to plan strategically and address key performance measures.
While it is likely that rankings will always be part of the overall performance or competitive evaluation and landscape, no two states or communities are identical. The very nature of rankings presents a linear type of thinking that does not necessarily reflect the dynamic condition, assets and opportunities that lie within each unique location. So as the new ranking season gets underway, remember to dig a bit deeper into specific measures that make up those rankings to determine what is most relevant to your strategic planning.