23/01/2014 08:19 GMT | Updated 25/03/2014 05:59 GMT

Beyond Fluffy Red Dragons

There was a time, not too long ago, when Wales was synonymous with inward investment. The Welsh Development Agency (WDA) was one of the most visible players, both around the UK and in the wider world. Wherever there was a major business conference or an international trade show, you'd usually find fluffy red dragons, the simple but successful, 'freebie' of choice for the WDA. Nowadays, the fluffy dragons are virtually extinct and the WDA is three more letters on the government acronym landfill site.

It may be too simplistic to conclude that Wales ceased to be a successful inward investment location because it scrapped the WDA. However, whilst there are many other contributory factors at play, there is a clear correlation between having proactive agencies, and attracting good levels of new jobs and projects. We must separate the really important bits of WDA work, from the things that didn't add very much value.

The Welsh Conservatives have launched a policy document detailing their proposals for inward investment in Wales. This document provides a thoughtful approach to inward investment; in particular, the focus on investor development (or 'aftercare') offers a potential way forward for the country, without having to resurrect the rather bloated machinery of the WDA.

Changing Landscape of Inward Investment

The inward investment landscape gets more complicated and more competitive by the day. In the first 20 years of the WDA there were only a handful of locations that were actively seeking inward investment - today, virtually every town, county, city and country in the world has an inward investment agency.

Since the WDA's demise, Scottish Development International and Invest Northern Ireland have expanded their teams and extended their global activities. In England, initially through Regional Development Agencies and now Local Enterprise Partnerships, major city-regions such as Manchester, Birmingham, Leeds, Sheffield and Newcastle are becoming more active in their pursuit of inward investment.

No Link Between Fame and Fortune

Locations are very keen to be seeing waving their flag in far-flung exhibition halls and setting up offices from Boston to Bangalore, but does it actually make much difference? After years of studying this, I can conclude that it does no harm; but it's certainly not a priority. When it comes to inward investment, there is simply no correlation between fame and fortune.

Being well-known sounds like a pre-requisite for attracting lots of jobs and projects - in reality it accounts for very little. Take Liverpool, globally famous for decades. The city that produced The Beatles in the sixties to the all-conquering football team of the eighties and nineties. Did that fame translate into inward investment success. No.

On the other side of the coin, take the Thames Valley. Places like Reading, Slough, Maidenhead and Staines. Not exactly what you would call aspirational place brands, but each one an absolute hotbed of inward investment activity. Businesses are attracted there because of business reasons - proximity to London and Heathrow; clusters of technology firms; quality workforce and so on. Cisco and Microsoft executives didn't bang their boardroom tables and shout "We must be in the Thames Valley!" It runs against the grain of logic, but money spent on raising a location's profile does very little to attract inward investment.

Embracing Private Sector Support

The idea that inward investment agencies should be 100% funded by the public sector is an outdated one. Look at the example of Invest in Nottingham and the 250 local businesses that help fund FDI activities. Nottingham is not alone. Similar corporate membership schemes are flourishing in Derby, Hull, Liverpool, Reading and many other cities around the UK. Embracing commercial support not only makes financial sense, but it has a dramatic impact on performance. Inward investment and investor development teams that have private sector support, whether financial or in-kind, tend to deliver more relevant and ultimately more added-value than those that are government-funded.

Making the (Fluffy) Dragon Roar Again

There can be no doubt that Wales has lost its way in inward investment. The country once had a global reputation for business based on the ability of the WDA to seek out ambitious companies around the world and deliver smart solutions that brought thousands of new jobs to Wales. Times have changed and new challenges require new solutions. Wales needs to refocus on its business fundamentals. It needs to develop a clearer proposition to answer the "Why Wales?" question.

A robust examination is required of existing investors and how they relate to each other - understanding and strengthening supply-chains should be at the heart of a new approach. Investor aftercare should be more than just popping in for a coffee once a year it needs to get to the heart of future business needs around suppliers, customers and workforce.

I believe that a new approach that leverages in private sector support, develops the Welsh offer and focuses on growing existing and future businesses is the right way forward.