10 Principles in Economic Development - Customer Orientation
- Have you identified the customers of your
economic development efforts (businesses, communities, citizens,
et cetera)?
- How do you ensure that your programs meet
your customers' needs and expectations?
- How do you use input from your customers
to improve your strategy and programs?
To be successful, an economic development effort
must define and meet the needs of those it is designed to serve.
The quality movement, stimulated by the philosophical and practical
leadership of W. Edwards Deming, is transforming the way in which
a wide range of private and public organizations do business.
During the late 1980s, the U.S. Department of Commerce developed
the Malcolm Baldrige Award to recognize United States companies
that achieved high standards of quality. This award is now being
applied in several states, and governmental and educational organizations
are now using the Baldrige criteria in assessing their performance.
Central to the quality improvement approach advocated by Deming
and contained in the Baldrige criteria is knowing who your customers
are, their expectations, how well you meet those expectations,
and how to use feedback from customers to improve products and
services.
Baldrige award core values and concepts
- CUSTOMER-DRIVEN QUALITY: the organization must develop
and use methods and ideas that contribute to customer satisfaction.
- LEADERSHIP: leaders must play an active role in creating
strategies, systems and methods for achieving excellence and
they must reinforce quality values and communicate high expectations.
- CONTINUOUS IMPROVEMENT: the organization must demonstrate
its commitment ot ongoing improvement by taking such steps
as cutting waste, improving customer responsiveness, increasing
productivity and providing enhanced value through new and
improved goods and services.
- FULL PARTICIPATION: the firm must have reward and recognition
systems that encourage full employee participation in the
total quality management effort. Examples include education
and training programs that impart skills for improving work
quality and solving job-related problems, empowerment, and
on-the-job employee training.
- RAPID RESPONSE: the company must offer examples of response-time
improvement, such as reduced product and service introduction
cycles, faster responses to customer problems and reduction
in cycle time.
- DESIGN, QUALITY, AND PREVENTION: the company must clearly
indicate that quality is being built into its products and
services, as well as into its production processes. This quality
is often reflected in reduced waste and elimination of costs.
- LONG-RANGE OUTLOOK: the company’s strategies, plans
and resource allocations should reflect a forward-thinking
orientation and long-term commitment to customers, employees,
stakeholders and suppliers. Companies must regularly review
and assess their progress in carrying out long-term plans.
- MANAGEMENT BY FACT: the company must use facts and data
to illustrate its progress toward quality and performance
goals. Such facts include information related to customers,
products and services performance records, operation records
and competitive comparison.
- PARTNERSHIP DEVELOPMENT: the firm should promote internal
and external partnerships. For example, it should encourage
labor agreements with unions, cooperate with customers and
suppliers and develop relationships with educational organizations.
- PUBLIC RESPONSIBILITY: the company should address general
business and community concerns. For example, it should share
quality-related information with others, reduce the effect
of product waste on the environment, and plan for adverse
contingencies such as product defects or recalls.
*Richard M. Hodgetts, Blueprints for Continuous
Improvement: Lessons for the Baldrige Winners, AMA Management
Briefing (New York: American Management Association, 1993).
Primary customers of economic development programs
are businesses. It is important for economic development organizations
to have good feedback mechanisms to determine how well economic
development efforts are addressing business problems and improving
economic competitiveness. Customer feedback may be based on regular
surveys, interviews, focus groups, or other approaches. Economic
development agencies may also serve other customers, such as communities
and tourists who visit the area, as well as citizens who derive
the ultimate benefit of economic development programs in terms
of jobs and income. Customer feedback on service quality and program
impacts can also be important in shaping and continually improving
economic development strategies and programs.
In 1988, the Minnesota Department of Trade and Economic
Development initiated a performance monitoring system to obtain
regular customer feedback to improve economic development programs.
The Urban Institute, with funding from the Economic Development
Administration, foundations, and state government, developed the
approach and system for Minnesota. Customer surveys include questions
that cover service quality; intermediate outcomes, such as foreign
trade contacts; and final outcomes, such as jobs created or increased
foreign sales. The performance monitoring approach started with
five department programs serving business and community customers
and since has been expanded to all department programs. The surveys
are now used regularly for gathering customer information on the
performance of the Small Business Development Centers, which are
funded by the Small Business Administration and managed by the
state economic development department.
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