PACA and Strategy
Jörg Meyer-Stamer
[email protected]
Michael Porter,
“What is Strategy?”
Looking at a company:
 Strategy is not operational effectiveness
– “Operational effectiveness (OE) means performing
similar activities better than rivals perform them”
– “The more benchmarking companies do, the more
they look alike”
 Strategy means “choosing to perform activities
differently or to perform different activities than rivals”
 Strategy = creating a unique competitive advantage
What is the meaning of “Strategy”
in territorial development?
 Efforts to
– create a “local enabling
environment”
– perform core LED tasks
(real estate development,
infrastructure, etc.)
are similar to “operational
effectiveness”
 Territorial strategy = a
systematic effort to create a
unique local competitive
advantage
 Porter’s conceptualisation of
“factor conditions”:
Advanced
factors
Basic
factors
Generalized
factors
Specialized
factors
Strategy and territorial
development:
Henry Mintzberg‘s “5 Ps”
 Strategy as plan: consciously intended course of
action
 Strategy as ploy: maneuver intended to outwit an
opponent or competitor
 Strategy as pattern: strategy as consistency of
behavior, whether or not intended
 Strategy as position: strategy is a means of locating
an organization in a competitive market or
environment
 Strategy as perspective: strategy as an ingrained way
of perceiving the world.
Strategy and territorial
development :
Henry Mintzberg‘s “5 Ps”
 Strategy as plan: consciously intended course of
action
 Strategy as ploy: maneuver intended to outwit an
opponent or competitor
 Strategy as pattern: strategy as consistency of
behavior, whether or not intended
 Strategy as position: strategy is a means of locating
an organization in a competitive market or
environment
 Strategy as perspective: strategy as an ingrained way
of perceiving the world.
Strategy and territorial
development :
Henry Mintzberg‘s “5 Ps”
 Strategy as plan: consciously intended course of
action
 Strategy as ploy: maneuver intended to outwit an
opponent or competitor
 Strategy as pattern: strategy as consistency of
behavior, whether or not intended
 Strategy as position: strategy is a means of locating
an organization in a competitive market or
environment
 Strategy as perspective: strategy as an ingrained way
of perceiving the world.
Strategy and territorial
development :
Henry Mintzberg‘s “5 Ps”
 Strategy as plan: consciously intended course of
action
 Strategy as ploy: maneuver intended to outwit an
opponent or competitor
 Strategy as pattern: strategy as consistency of
behavior, whether or not intended
 Strategy as position: strategy is a means of locating
an organization in a competitive market or
environment
 Strategy as perspective: strategy as an ingrained way
of perceiving the world.
Strategy and territorial
development :
Henry Mintzberg‘s “5 Ps”
 Strategy as plan: consciously intended course of
action
 Strategy as ploy: maneuver intended to outwit an
opponent or competitor
 Strategy as pattern: strategy as consistency of
behavior, whether or not intended
 Strategy as position: strategy is a means of locating
an organization in a competitive market or
environment
 Strategy as perspective: strategy as an ingrained way
of perceiving the world.
Territorial Development: Strategy
vs Strategic Planning
Strategic Planning:
 broad effort for stakeholder
mobilisation / participation /
consultation
 comprehensive data
collection and fact finding
effort
result in
 the formulation of an
unspecific “vision”
 the formulation of a huge
planning document with
ambitious goals, but vaguely
defined entry points
Territorial Strategy:
 evolving pattern of behaviour
 evolving shared perspective
– based on practical,
incremental territorial
upgrading activities
result in
 the formulation and
implementation of catalytic
projects
– that address local
upgrading opportunities
– that contribute to a
unique locational profile
How to launch local and regional
economic development
initiatives? The PACA view
 Look at strengths instead of weaknesses
– identify potential for unique advantage
– Porter perspective: how to turn disadvantage into
unique advantage?
• Porter argument: strategy = a unique
advantage that cannot easily be replicated
 Go for activities with a quick, visible impact
– don’t get stuck in endless strategizing
– don’t start by addressing the biggest of all
challenges.
Background of the PACA
approach
(Participatory Appraisal of Competitive Advantage)
 PACA is supposed to kick-off LED activities
– local stakeholders have limited knowledge of LED
concepts and instruments
– the are uncertain what LED/RED actually is
– local stakeholders have no practical experience with
LED
– they are uncertain what they are supposed to do
 In this situation, strategy formulation is pointless
– analogy to Dosi argument on technological
uncertainty = second order uncertainty: decisionmaker doesn’t know which options actually exist.
PACA and strategy:
some considerations
 How are local stakeholders supposed to strategize
about something they do not know?
 How can you plan something you cannot imagine?
 It is crucial to conceptualize LED as a learning
process
 Only as local stakeholders develop an understanding
of LED is it useful to formulate a strategy
 It may be useful to formulate a joint vision and criteria
at the beginning.
Not strategy, but vision:
Criteria for good LED/RED
proposals, 1
 They make local markets work by removing barriers
to entry
– entrepreneurship development
– mentoring, business angels
– organized subcontracting
– targeted business estates
– targeted infrastructure development
– promotion of business development services
– business idea info service, fairs, attract franchises.
Not strategy, but vision:
Criteria for good LED/RED
proposals, 2
 They make local markets work by resolving
information problems
– informal and formal get-togethers
– business networking
– local business directory
– local business fair
– real estate information system
– locational marketing
– labor market information system, matching
schemes, skills fairs.
Not strategy, but vision:
Criteria for good LED/RED
proposals, 3
 They make local markets work better by amplifying
supply or demand
– attracting specialized suppliers and service
providers
– needs- and bottleneck-driven skills development.
Not strategy, but vision:
Criteria for good LED/RED
proposals, 4
 The remove obstacles to doing business
– removal of unnecessary or obsolete regulations
– streamlining of licensing and permit processes
– creation of first-stop or one-stop agency.
Not strategy, but vision:
Criteria for good LED/RED
proposals, 5
 They make improved use of locally available
resources
– skills: business working groups (núcleo),
mentoring
– finance: sponsoring, business angels, credit
cooperatives
– materials: solid waste recycling, biomass
recycling, industrial ecosystems
– innovation: cluster and value chain initiatives.
Summary: Criteria for good
LED/RED proposals
 They make local markets work
– by removing barriers to entry
– by resolving information problems
– by amplifying supply or demand
 The remove bureaucratic obstacles to doing business
 They make improved use of locally available
resources.
Starting an LED initiative:
Strategic Planning
Advantages:
 Result = huge document
– Useful in keeping
supervisory bodies happy
-- if performance is
measured by input, not
outcome
– Useful in dealing with
foreign donors
 Comfortable: you don’t have
to leave your office
– Let consultants and your
junior staff to the legwork
Disadvantages:
 Demotivates -- too complex,
too many and too difficult
proposals
 No action-orientation
 Does not stimulate learningby-doing and adaptation of
approaches.
Starting an LED initiative:
PACA
Advantages:
 Action-orientation
 Motivates stakeholders
 Quick, visible effects
 Learning-by-doing
 Constant adaptation of
planning (revolving planning)
Disadvantages:
 No big document, does not
appear “scientific”
 Possible result of diagnostic:
Better don’t start an LED
initiative
 You have to leave your
office, perhaps to listen to
the complaints of
companies.
Characteristics of different
approaches
Pulverization
Strategic
planning

Planning
Implementation
Evaluation
PACA
Initial diagnostic
Evaluation
Iterative process
Evaluation
Similarities between LED and
business evolution: an analogy to
Griener’s model
Phase
Kick-off
Lasso
Network
Focus
Get LED projects
moving
Get projects under
control
formulate strategy
Segment activities
Delegate responsib.
Pro-forma strategy
Governance
pattern
Informal
M+E
Inexistent
Reward
system
Crisis
Clear distribution of Central information
tasks and responsib. exchange, decentral
Creation of Agency
responsibilities
Informal
Excitement
Discipline + suffering
Personal motivation
Salary
Fragmentation
Lack of co-ordination
Mushrooming coordination and
strategizing effort
De-motivation of
volunteers
Emerging
formalization
Identification with
project objectives
Latitude of decision
Network failure
Options for LED strategies
Generic
locational policy
Reflexive
locational policy
Strategic
locational policy
* Streamlining of
* Organising discussion
* Definition of focal
regulations
and reflection with
areas of local
* Business-friendly
local stakeholders
development
local administration
and external expertise
* Align local stake* One-stop-agencies * No joint definition of
holders for a
* Real estate
problem and shared
shared goal
development
goal
* Selective, targeted
* Real estate
* No joint strategy with
LED activities
information systems
serious co-ordination
* Locational marketing challenges
Conclusion:
What makes LED/RED different
from earlier approaches?
IRDP vs LED/RED
SME promotion vs
LED/RED
 less strategy, less comprehensive planning
 less government, more private sector
 more reliance on markets, more market
creation
 wider approach (public sector reform,
urban/regional planning, skills development,
industrial ecology)
 multi-disciplinary
 successful LED overcomes the problems of
divisionalisation and fragmentation created
in the Fordist age
Thank you for your attention!