This opinion piece was written by Justinas Pagirys, commercial attaché for the Embassy of Lithuania in Sweden. It also appears in our government innovation newsfeed.

Most countries — and many regions, states and cities — have foreign investment promotion units, tasked with increasing investment and the job creation that comes with it. But the gap in performance is whopping. While Ireland and Singapore have become global magnets for multinational firms (both anchored around 20,000 new jobs in 2017), the majority of other locations barely manage to win investments.

Investment promotion is inherently difficult. These organisations tend to be understaffed, with tight budgets and under pressure to deliver from political leaders. This contradicts operational reality — to engage C-level executives, one needs a large and competent team, the sales cycle takes years, and there are dozens of stakeholders to manage when landing a project.

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Lithuania was not on the foreign investors map when global companies started to expand to new EU members Poland, Hungary or Estonia. But we learned that, with targeted effort, this could be changed. In the last few years, investor projects in Lithuania skyrocketed, as noted by FT’s FDI intelligence and IBM Global Locations Trends. With a 50 person team, last year Invest Lithuania secured 5,000 new jobs, many of them in high value-added category.

Here’s a fast-track strategy on what worked for us.

Simple but robust operating model

When starting a new investment promotion unit (or turning an existing agency around), focus on what creates value. Your value to foreign firms is two-fold. First, they assess the “product” — your country as a location for doing business with multiple attributes. Second, there’s the value of “sales” — how effectively you engage, explain and help executives. Therefore these two teams — product and sales — are essential to achieve anything, and this is where you need to hire your first superior talent. (never compromise on quality).

You will find relentless optimists, motivated by true impact and large responsibility

The sales team will have to stand out with superior customer service. Look at world-leading investment agencies (Singapore Economic Development Board or Ireland Development Agency). You will find relentless optimists, motivated by true impact and large responsibility. Despite the complexity of possible “deals”, they maintain highly productive engagement process and follow a methodical sales funnel.

The product team is an untypical beast and many agencies do not have these capabilities in-house. This is your analytical and policy unit that drives regulatory initiatives to make the “product” better. That includes where you rank in Doing Business, processes to obtain licences, infrastructure readiness, financial incentive and all things education and training. You are looking at rare skillset — public policy masterminds with fast-paced business development drive.

“Sales fix everything” — and get you political credit

The most common mistake I see is newly launched investment units spending most of their time working on strategy. Many focus first on how to make a location better, lobbying for policy and regulatory initiatives — as if no investors will come otherwise. This, however, almost never works in practice — it’s a lengthy process that requires a broad political coalition to support it.

The smart way is to start with sales first

A much smarter way is to start with sales first. The first task is to gather a pipeline of leads from existing investors, who might be able to expand. That is possible to do for any location — get ready to visit up to a hundred companies, both domestically and at their HQs. Learn about their experience, pain points and potential, and find those who have ability to expand.

In Lithuania’s case, I was working with manufacturers — medical devices producer Intersurgical (UK) and electronics provider Kitron (NO) — that had operated here for years already. And even then, we were the first ones from the government to come and check things like “How’s your business here?”, “Would you be willing to expand, and how can we facilitate that?”

Having an initial set of projects, your product team now can engage politicians to push for better business environment — such as red tape reductions or financial support scheme for professional training. This is where momentum will start (you’ll already have some low-hanging fruit around jobs and publicity that will benefit everyone ), and it will be easier to motivate work on some larger policy initiatives.

Build the capacity by increasing control

Control makes a big difference. All the investors know that an investment promotion unit is standing on a shaky ground — dependent on what politicians might decide, the elections or sweeping regulatory changes. While the sales team keeps giving promises, the product team understands that some promises might not be fulfilled due to political process.

Investment agencies with a strong track record seem to able to get destiny in their own hands. They either enjoy strong political support, or take more processes under their direct influence — and sometimes both.

Thus the real capacity building is identifying these points of risk and finding ways to hedge against them. Here are some examples of reducing the most common risks — some of them working well at Invest Lithuania.

  • Challenges to land a large project at small local government
    • Regional representatives that work closely with local government
    • Infrastructure team which can support project implementation
  • Risk of a major legislative overhaul
    • Strong analytical team to support public policy efforts
    • Close cooperation with the government at ministerial level
  • Availability of financial incentives and continuity
    • Internal financial support team
  • Talent availability and training needs
    • Education / training unit within product team
    • Partnership with immigration / talent attraction office

These three steps — establishing the operating model, starting sales and building up the capacity, will allow gradual development of a robust economic development organisation. Once off the ground, get ready to pitch your visionary thinking… — Justinas Pagirys

(Picture credit: Flickr/Mantas Volungevicius)