Match Demand With Your Region

The point of building ongoing relationships with demand is to continually spot market opportunities that have good potential for your region. In WealthWorks, to narrow your selection further, it is important to consider which market opportunities are best suited for your region—meaning they will harness the most local energy, solid wealth-building potential, and capacity to scale into bigger and better results later.

Those three factors can frame how you explore your initial market opportunity options, so that you can move toward selecting one for your WealthWorks value chain. (See Module 3: Construct a WealthWorks Value Chain.)

It is important to consider which market opportunities are best suited for your region—meaning they will harness the most local energy, solid wealth-building potential, and capacity to scale into bigger and better results later.

Harness local energy

The first factor is simple. Think about it this way: If you collected a big set of regional and community stakeholders and laid your two or three best market opportunities in the middle of a table, which one would generate the most excitement in the room? Successful economic development initiatives are frequently driven by a sense of energy, excitement, and can-do attitude. Selecting the market opportunity best suited to your region right now rightly includes finding one that springs local energy.

Why is energy important? If people are intrigued and enthusiastic about something, they are more likely to participate. Not only can that help you get started, it can keep you driving forward, especially when challenges surface. Perhaps most important, energy stimulates investment.

In WealthWorks, energy is generated by and centered around the interest of residents, businesses and organizations in a region. Interest encompasses everything an individual or business cares about—and that’s critical because interests motivate action. Interest includes but is not limited to a financial stake. WealthWorks thinks about interest in three different, but connected ways:

Self-interest: Self-interest is the strongest energy motivator. For actors in your region, it answers the question: What’s in it for me? That answer is the core of the value proposition that makes it “worth their while” for any person, business or group to engage.
Shared interest: What’s in it for us? Shared interest is a happy conclusion by two or more players exploring a market opportunity that there is something in pursuing it that they all value. For example: “If we start producing Product or Service X this way, it will lower costs for both of us.” Or “If we join together to brand our region for tourism, even though we compete as tourist attractions, it will likely help both of our businesses do better.”
Common interest: What’s in it for everyone—the entire region, or even the world? Common interest recognizes that what we do together in this market opportunity might produce something that is good, accidentally or intentionally, for the larger community or the world. Achieving (or appealing to) common interests can sometimes stimulate outside investment and effective marketing messages.

Sometimes the interest is already there—people care about advancing a certain sector, about the situations of certain people or places, or about emerging trends or ideas, and want to find a way to address it. Or they value something about their community and want to strengthen it. In other cases, especially when you want to explore a market opportunity for something relatively new or strange to your region, you might have to engage local stakeholders in various ways before you can gauge interests—because it may take more time for them to understand the opportunity.

Tapping into these interests is the key to building and sustaining energy around a market opportunity. But not everyone who is interested in a market opportunity has to have the same interests—one interest may motivate some, but not others, and that’s fine. For example, in producing a new biofuel in the region, some might recognize and value the common interest that it will emit less carbon into the atmosphere than other fuel options, while others might be more self-interested in its relative cost and reliable supply, and care little about the carbon factor. WealthWorks succeeds by weaving and balancing the interests of multiple partners, not by requiring partners to share or even acknowledge the same interests.

How can you gauge energy around a potential market opportunity? You often know it when you see it. In one case, you know it because people just show up for conversations or meetings. And they come back a second and a third time because they make it a priority, not because you have to push and pull them. They raise possibilities more than obstacles. They start calling you instead of you having to call them. The market opportunity starts getting mentioned in situations that you didn’t organize.

Energy is the starting point for individuals, businesses, non-profits and others to invest in your economic development activities. Individuals or groups that stand to benefit are willing to pay, invest time, sustain relationships or incur other costs to realize those benefits. See “Market opportunities: Harnessing local energy” below for one example of how different market opportunities can motivate individuals and business, based on self- or shared or common interest.

As you consider market opportunities, it can be useful to draw up a list (like the one in the table) of local parties that could be energized as a result. This is a first step in helping you assess the potential feasibility and sustainability of any market opportunity.

In Module 3, you will discover how community and economic development practitioners can leverage this energy and turn it into strategic investments that help deliver products and services to the market and build wealth in a region. For now, it is important to understand that your chosen market opportunity must tap into existing energy or galvanize new energy—based on the WealthWorks concept of interest. Selecting a market opportunity that has energy will make looking for investments much easier.

Harnessing Local Energy: An Energy Retrofits Example

Households

Self-interest

Energy retrofits reduce energy use—and thus energy bills—for households.

Shared interest

When electricity rates gradually increase with the cost of production, retrofits help keep utility bills affordable. This makes customers happy which means less grief for the utility companies from bill payers and regulatory agencies.

Common interest

Energy retrofits increase home values in the region, making it attractive for families to stay in or move to the area, purchase homes and send their kids to local schools.

The retrofits become a selling point for the City’s “Green Community” campaign, helping it attract funding for other green initiatives.

And, the retrofits reduce energy usage in the community, lowering carbon emissions locally and for the world.

Local School District

Self-interest

Energy retrofits reduce energy bills for the school district, making it easier to balance the budget.

Shared interest

Common interest

Energy retrofits increase home values in the region, making it attractive for families to stay in or move to the area, purchase homes and send their kids to local schools.

The retrofits become a selling point for the City’s “Green Community” campaign, helping it attract funding for other green initiatives.

And, the retrofits reduce energy usage in the community, lowering carbon emissions locally and for the world.

Utility Companies

Self-interest

Energy retrofits lower operating costs for individual companies since peaks in energy usage are expensive (they require bringing extra power plants online or purchasing electricity at a premium from neighboring utilities). It also allows companies to sell any excess energy production to other regions.

Shared interest

Common interest

Energy retrofits increase home values in the region, making it attractive for families to stay in or move to the area, purchase homes and send their kids to local schools.

The retrofits become a selling point for the City’s “Green Community” campaign, helping it attract funding for other green initiatives.

And, the retrofits reduce energy usage in the community, lowering carbon emissions locally and for the world.

Local Building Contractors

Self-interest

Energy retrofits are an emerging market that offer local building contractors the potential for a new product line and new revenue.

Common interest

Energy retrofits increase home values in the region, making it attractive for families to stay in or move to the area, purchase homes and send their kids to local schools.

The retrofits become a selling point for the City’s “Green Community” campaign, helping it attract funding for other green initiatives.

And, the retrofits reduce energy usage in the community, lowering carbon emissions locally and for the world.

Maximize Wealth Building

As noted earlier, successful economic development initiatives require an approach that is right for the market and right for the region. So far, we’ve highlighted how a good market opportunity must meet clear market demand for products and services, and how choosing one that generates local energy can spur investment in that opportunity. The question now, if you weigh several promising market opportunities, is: Which of them is likely to produce the most wealth-building results in your region?

A market opportunity has wealth-building potential, the more it:

Attracts investment (time, skills, partners, financing) that will increase your region’s stock of eight capitals—individual, intellectual, social, built, natural, political, cultural, financial.
Increases local ownership and control of that capital by people, places, organizations and firms that live and work in the region.
Draws people, places and firms on the economic margins into the action—and produces benefits that improve their upward mobility, resilience and future prospects. (See Module 1: Explore Wealth Building.)

Wealth: The eight capitals. A good market opportunity will spur investment in and mobilize activity in many (if not all) of the eight capitals. If you are going to develop a regional economic or community effort around a market opportunity, it is important to gauge how it would likely increase the quantity and strengthen the quality of those capitals, producing more benefit for the region. The more capitals it touches and the more they are increased or improved, the better the market opportunity. For example, when the Lower Rio Grande Valley selected green housing as a market opportunity, they knew it would bring greater expertise in green practices into their region of Texas (intellectual capital), create new or redesigned jobs for home builders and retrofitters (individual capital), expand investment in ailing housing stock (built capital)—and more.

The Eight Capitals

Individual

Skills, understanding, physical health and mental wellness in a region’s people

Intellectual

Knowledge, resourcefulness, creativity and innovation in a region’s people, institutions, organizations and sector

Social

Trust, relationships and networks in a region’s population

Cultural

Traditions, customs, ways of doing, and world views in a region’s population

Natural

Natural resources—e.g., water, land, air, plants and animals—in a region’s places

Built

Constructed infrastructure—e.g., buildings, sewer systems, broadband, roads—in a region’s places

Political

Goodwill, influence and power that people, organizations and institutions in the region can exercise in decision-making

Financial

Monetary resources available in the region for investment in the region

Ownership and control. A good market opportunity also increases local ownership of the eight capitals in the region, as well as control or influence over decisions about their uses in the future. Ownership might come in the form of opportunities to start and own new businesses, buy land or buildings or a home, or increase individual or shared equity in them. Or it can mean owning new knowledge, like a patent, or a skill that is yours and yours alone that can carry you further in a career. Control means you can exercise influence over decisions that you could not in the past. For example, a new conservation easement might control the use of land in ways the community desires, or a new business collaborative formed around a market opportunity might exert more influence over the state legislature than each firm had managed individually.

Lasting livelihoods. Finally, a good market opportunity deploys local capital in ways that shape, improve and sustain livelihoods, with an intentional focus on ensuring that those on the economic margins both participate in the action and benefit from it. The best way to appraise this potential is to directly engage low-income people, places and firms in the process of identifying and pursuing market opportunities. For example, in Arkansas, when a regional collaborative was weighing market opportunities in the alternative energy sector, they looked at several types of alternative energy. When their choice came down to pursuing solar or biofuels, they chose the latter. Much of their decision was based on including local farmers in their discussions, and surfacing interest from a group of low-income farmers to grow a biofuel crop that would increase their income and use their fields in an underutilized, off-season growing period. The collaborative saw no such clear opportunity to increase low-income livelihoods if they pursued solar energy, so they went for the biofuel market opportunity.

As you explore various market opportunities, it is important to think through the ways in which each could advance—or detract from—these three aspects of wealth building in your region. Through the process, you can get a sense of which opportunities might build capitals you most want to focus on or will have significant positive impact on low-income people in your region. At the same time, you can also get a sense of which opportunities could be damaging to the region, whether by depleting capitals, letting benefits flow to others outside the region, or providing limited opportunities to benefit those on the economic margins. By exploring wealth-building potential, you will filter through to a market opportunity that is right for your region.

Can it scale?

Of the many market opportunities available in your region, the ones with the most promise of building lasting wealth are those with potential for scale. Scale is important in the fields of both economic development and community development. Economic development in a region is more effective when businesses have more customers, and community development strategies are more effective when they reach more residents. Embedded in the fields of community and economic development are four dimensions of scale, all of which should be considered when selecting market opportunities.

Scale of demand. Products and services, if they are to scale, must increase sales to reach market efficiency. Increased sales might mean more buyers, bigger buyers, or greater diversity of buyers. It might mean a modifiable product and service that can be adapted to new markets and new buying partners. A market opportunity might start as a niche product, but the vision and design of your effort—if meaningful change is to happen in the region—must go beyond niche markets. A market opportunity shows “scale of demand” potential if you can identify future potential buyers and build relationships with them.
Scale of production. To act on a market opportunity, it’s critical that you begin with a relatively small network of producers, partners and investors to deliver your product or service to your initial buyers. WealthWorks calls this the “proof of concept” stage. Once you’ve proved the concept, however, it’s important to gauge and be sure that the region is able to move to larger-scale production. This likely means working with more partners and increasing production and delivery capacity. The right market opportunity will have a clear path to greater scale: strategies or partners than can help increase capacity, and candidates for new producers or service providers.
Scale of investment. Energy is clearly a key element of success for any wealth-building effort. The ability to capitalize on that energy and to continue growing local energy requires that the market opportunity provides different ways for entrepreneurial residents, businesses, and organizations to make investments of time, money or other assets. That means that you continue to find ways for people to invest in and participate in the success of your wealth building effort. Market opportunities have scale of investment if you can foresee future investment opportunities and you can start partnering with people, businesses and organizations who see those investment opportunities as well.
Scale of wealth-building impact. WealthWorks practitioners seek to grow stocks of capital, increase ownership and control, and improve livelihoods especially for those at the economic margins. At the beginning, the wealth-building effects may be small. However, the right market opportunities will offer paths to increasing the breadth and depth of your wealth-building efforts over time. Using the biofuel market opportunity example, locals started with a few farmers, some of them small and limited resource producers, growing the seed crop used to produce the biofuel. But organizers of the effort, by talking to state farmer associations and doing other research, had a clear knowledge of many more farmers, including limited resource farmers, who would be interested and willing to add the bioseed to their crop rotation—ensuring that there was potential to more fully utilize available land during a fallow crop period, and increase livelihoods for hundreds of farmers (or more) as demand for biofuel expands.

Using scale as a screen to identify a good market opportunity is fundamentally about wanting to maximize your wealth-building results. You seek scale of demand, and production and investment specifically to improve livelihoods and upward mobility for more people, places and firms in your region—and beyond. Once you choose a market opportunity and start thinking about constructing a WealthWorks value chain around it (see Module 3), you’ll look for design options with leverage to change systems so that more can benefit from your economic and community development effort.