University of Minnesota
HHH
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The Humphrey School of Public Affairs is the University of
Minnesota's school of policy and planning.


State and Local Policy Program

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.