How can data and analytics initiatives make economic development incentive programs work better?

Here are some takeaways, drawing on research from a series of “From Data to Decisions” reports by the Partnership for Public Service and the IBM Center for the Business of Government.

To get started, create a team with agency experience, analytical skills and subject-matter expertise.  Monitoring incentive compliance and assessing effectiveness are complex tasks that can’t be done by a few people in their spare time.  Create a team with strong economic development knowledge, experience working with businesses, political awareness, analytical skills and information system expertise.  Look beyond your agency if you need to.

Craft questions that will lead to data gathering and improvements by defining the current situation, describing an improved state, focusing on top issues that need to be addressed and agreeing on a desired outcome.  A lack of legislative clarity about the desired outcomes from incentive programs has hindered many evaluation initiatives, as have difficult definition issues (what, exactly, counts as a “new job”?) and data challenges (tax payments and privacy, for example). Crafting the right questions up front to drive the data gathering is probably the hardest part of the endeavor.

Collaborate with other agencies to collect data and share analytics expertise. Development finance entities, tax and revenue departments, and workforce or labor departments are all potential allies for data collection, analysis and verification of incentive use and compliance.

Give agency leaders clear, concise analysis and results they can use to support data-driven programs.  Synopses and data visualizations help tell the story.  Spreadsheets of deal data are fine, but information also has to be synthesized and interpreted before it can drive program or policy change. 

For analytics to become accepted widely, leaders should set expectations and call for accountability. Leadership is absolutely critical to create an atmosphere of accountability and transparency in incentive use. Staff must know that their efforts to track compliance and performance are important to the economic development mission and agency leaders.

For analytics to succeed, employees need a supportive environment, training and encouragement to use the data. Taking this a step further, economic development organizations need resources (funds, training, guidance on best practices, appropriate governance structure) to create the internal tools and processes to manage and monitor incentive programs, not just make awards. 

Nonexperts need data that they can access easily, understand and tailor to their needs. This is especially true for most elected officials and media.

We are committed to greater transparency and accountability in the use of economic development incentives and strongly believe in the benefits they can bring to a community and an economic development organization. We also know implementing data and analytics programs to achieve transparency and accountability is easier said than done. 

Last week's Data Innovation Day 2014 provided an opportunity to learn about the latest innovations in the use of data to create economic value and to see how to put those innovations into practice. Click these links to learn more about the Washington, DC based conference, partner activities, and partner organizations (including Smart Incentives).