“You never want a serious crisis to go to waste”

Rahm Emanuel’s statement about not wasting a serious crisis was music to my ears and anyone committed to real change in their downtowns should keep it always in mind during this very trying recession.

Two of the socio-economic theorists I most admire, the American economist Mancur Olson and the French sociologist MIchel Crozier, forcefully argued that real change in most social, economic and political systems can only occur during a crisis. During the non-crisis periods they’ve become ossified, paralyzed, stalemated and bureaucratized by powerful interest groups. For change to occur the existing system must be severely shaken — and that is exactly what a crisis does. A crisis greases a paralyzed system and enables real, meaningful — not just incremental — change.

Now is the time for downtown leaders to think BIG, to come up with innovative programs, perhaps in areas their organizations have not ventured before. These programs certainly will be of value during the recession, but have even more utility when the economy turns around. For example, I think that the vast majority of downtown organizations now need to get much more involved in helping small businesses find financing. I also think that BID/SID advertising and promotional programs based on the “old media” need to be overhauled. BID expansion is another possibility. I am certain you can come up with your own list of possibilities. Now is the time to undertake such ventures!

Long ago, I was told that in the Chinese language the character that means crisis also means opportunity.

BEING A DOWNTOWN CHANGE AGENT: Facilitating Change for Downtown Business Operators

Small Business Operators Are Slow To Adopt Changes

At conferences and other events where downtown managers congregate, the conversation at some time usually turns into a group therapy session focusing on the seemingly intractable, but certainly dysfunctional attitudes and behaviors of downtown business operators and landlords. Some of the dysfunctional behaviors raised might include deteriorating facades and signs, poor market research, lousy merchandising, “wrong” business hours, inadequate customer service, high rents, poor building conditions, harmful tenant selection, etc. Many readers, I am sure, know the rest of the litany.

Many downtown managers also consider it almost impossible to “re-educate” most downtown business operators and landlords or to otherwise induce them to improve their business behaviors. Years ago, based on my own management experiences and field observations as well as reports from friends managing downtown districts across the country, I came to a kind of Bayesian subjective probability estimate that only about five to seven percent of downtown business operators and landlords can be retrained or otherwise induced to innovate.

However, more recently, based on my program development experiences in the Bayonne Town Center (NJ), I have come to believe that significantly more downtown business operators can be induced to change, if, and this is a critical if, downtown leaders, acting as change agents, can help make it easy for them to change.

How To Get Existing Merchants To Renovate Their Facades?

About four years ago I took on the management of the Bayonne Town Center Special Improvement District. The previous executive director had done a great job of getting a highly respected architect, Walter Chatham, to write design guidelines, which were then adopted by the city as an ordinance. The city was offering then, as it still offers today, strong financial incentives to stimulate façade and storefront renovations in the district: a shop with a frontage of 25 feet can get a grant for as much as $10,000; a corner shop can get up to $15,000. However, while new businesses in the district were improving their facades, none of the existing street-level business operations were doing so, though many storefronts badly needed renovation. Officials in city hall as well as the Town Center board of directors could not understand why the city’s generous financial incentive package was not stimulating more façade improvements in the district.

While I quickly ascribed this situation to the typical change -adverse way I believed small downtown business operators behaved, my intellectual curiosity and feeling of management responsibility led me over the next year to talk informally to many merchants about why they were not improving their facades. Here are the surprising conclusions I reached as a result of those discussions:

  • A lot more merchants than I expected were interested in improving their facades. My rough estimate would be somewhere between 20% to 25%, not my expected 5% to 7%.
  • Merchants who owned their buildings were more apt to be interested in renovation than those who leased their spaces. This was understandable since they had more to gain and one less decision-making gatekeeper to deal with
  • Almost no one had any idea of what kind of new façade they might want!
  • No one felt they had a good idea of how much a façade renovation might cost!
  • Few knew an architect or contractor who might help them! Most small business people will not have architects or contractors in their social networks. They often work long hours and lack the opportunities to establish such contacts on their own
  • There was wide spread concern about getting city approvals for their projects!
  • Almost everyone knew about the city’s façade improvement financial incentives.
  • A minority of those interested in doing a facade improvement felt that even with the city’s financial incentives, they still could not afford to renovate
  • Most of those interested in improving their facades felt that, with the city’s financial assistance, they probably could afford to renovate. They were not moving forward because they did not know how to proceed and lacked the time and energy to remedy this situation!

Facilitating Change

As I mulled about these findings some research I had done in 1989 came to mind. Back then I was trying to find out why manufacturing firms were moving out-of-state from the Bronx, a borough of New York City. My research indicated that:

  • These firms were successful, expanding and needed more space
  • They were too small to have a real estate specialist on staff
  • Management was too busy with their growing business to look for a new location
  • They often need specialized training for their blue collar workforce
  • They had concerns about high crime
  • Recruiters from out-of-state economic development organizations had come in and offered turn-key solutions that included low-cost new space, manpower training, low crime, etc. The recruiters made it very easy for the Bronx firms to move to their states. In other words, the recruiters had facilitated change.

A program that could facilitate change seemed precisely what was needed to unleash façade improvements in the Bayonne Town Center.

The Jump Start Façade Improvement Program

Consequently, I designed the Town Center’s Jump Start Façade Improvement Program sm.

This program provides each participating business operator with the following products and services:

  • A well-known architect in the field, Margaret Westfield of Westfield Architects visits with them to listen to any ideas they might have about their new façades
  • She comes back several weeks later with a rendering of their new façade, cost estimates for the improvement project and samples of the materials that should be used
  • The façade design, because it is done by one of the Town Center’s architect’s in conformance with its design guidelines, has assured acceptance by the city
  • The Town Center’s staff, if necessary, helps participants with the paper work for the city’s incentive program and provides them with contact information about contractors who have done successful façade projects in the district.

Of the five storefronts in the initial round of the program, two renovations have been completed and three are in process, with completions expected by August 2007. The second round of Jump Start has been completed recently. One entire building façade has been renovated; action on six other storefronts is awaited.

The slide show below shows three of the improved building facades, before and after their renovations.


The Kick Start Building Renovation Program

Based on the success of the Jump Start program, the management of the Bayonne Town Center leaped at the opportunity to obtain a technical assistance grant from the Community Preservation Corporation (CPC) to create the Kick Start Building Renovation Program sm. Kick Start is aimed at stimulating district landlords to renovate the upper stories of their buildings and create market-rate residential units.

The CPC is a very large and successful nonprofit that uses CRA funds from over 80 banks and insurance companies to fund housing projects in NY, NJ and CT.

The Kick Start “treatment strategy” is again to facilitate change, this time by having the CPC’s architect-engineer provide each participating Town Center landlord with a feasibility study that describes how many residential units might be built on their property, the types of units that should be created and cost estimates for the project. The CPC also will be ready to finance feasible projects. Furthermore, because of the CPC’s reputation, it is anticipated that the feasibility studies will help ease their associated renovation projects through the city’s permissions and approvals process.

At the time of this blog posting, Kick Start is underway, but none of the three initial feasibility studies have been completed.

Facilitating One Change Can Help Facilitate Other Changes

As consultants have long known, developing a client’s trust and confidence in you and your firm is essential for having your recommendations implemented. Downtown managers, when acting as change agents, face a similar challenge with the business operators and landlords in their district. The Jump Start Program has helped to significantly increase the trust and confidence that district business operators and landlords have in the Town Center’s management team. This is true even among those who have not participated in Jump Start, but knew what happened in it. This has stimulated not only interest in participating in Jump Start and Kick Start, but it has also made some landlords more willing to work with us on business recruitment and redevelopment projects.

Some Additional Observations

My experiences with Jump Start strongly suggest that money, while not a negligible factor, is certainly often not the prime factor that impedes change and innovation among small downtown business operators. Knowing what can be done and easy access to needed professional assistance are also very strong factors.

The city’s permissions and approvals process also can have an enormous impact on downtown change and innovation. The Town Center has city legitimated design guidelines and its architect determines whether or not submitted designs are in accordance with them. The Town Center is thus able to provide designs for renovated facades that are guaranteed to be accepted by the city. This factor alone reduced anxieties about delays and escalating costs among the participating business operators.

BEING A DOWNTOWN CHANGE AGENT: Consensus, Conflict and Crisis

This is the first in a series of postings on being a downtown change agent. It is not a nuts and bolts piece, but rather philosophical in tone. It is, however, a view that has been honed by over 30 years of “working in the trenches.”


A Process of Perpetual Positive Change

One need not be Noah Webster to understand that the term downtown revitalization implicitly means bringing a commercial district from an existing damaged state to one that is significantly improved. In other words, downtown revitalization implicitly means a significant amount of positive change.


It also can be argued that the need of downtowns for positive change is perpetual. The reason is simple: the socially, economically, politically, geographically and technologically defined environments in which they exist are themselves constantly changing, generating new competitive threats and altering consumer desires, expectations and behaviors. Think of how such things as the flight to the suburbs, urban crime, the creation of regional shopping malls, the appearance of big box value retailers, catalog sales and e-retailing have impacted downtowns over the past sixty years. Downtowns languished because they failed to adapt to these changing competitive threats and conditions; they began to succeed when they finally learned how to adapt.

Effective Downtown Leaders Must Be Change Agents

If their environments are in perpetual flux, then downtown leaders must assume the role of “change agent” if they want to be effective. Moreover, the changes that they usually must try to spark are on the order of large systemic changes — e.g., changing the business mix, reducing crime, creating more high quality commercial space, etc.— rather than smaller, incremental changes, such as improving a store facade or putting up Christmas lights. Whether lots of small incremental changes can add up to a significant systemic impact may be debatable, but, personally, I doubt it.

Big Changes Mean Conflicts

Large significant changes require lots of financial, political and organizational resources. They are usually beyond the power of one individual to bring about. Big downtown changes will require the involvement of lots of people, many of whom will be powerful, often egotistical and sometimes downright petty. As organizational theorists, sociologist and political scientists have long recognized, big changes in any social system are likely to arouse strong fears and intense opposition. Just think of the frequent opposition to proposed downtown redevelopment projects and the “not in my backyard” response syndrome. Downtown change agents must expect that they will generate conflicts and be prepared to deal with them.

In my experience, many downtown leaders, unfortunately, are conflict avoiders. I am not suggesting that good leaders should look for fights, just that they should not run from them if an important issue or outcome is at stake.

Downtown Revitalization Means Politics

The local political process is just one available structure for conflict resolution, but it is the most important. Unfortunately, I can’t count the number of times I’ve heard, over the past 30+ years, about significant proposals for downtown improvements being sidetracked because of fears that they might cause a “political problem.” Far too many downtown managers do not understand that their important programs and projects will generate conflicts that become political issues and that they will not only have to become involved in the local political process, but be very adroit at doing it.


Generating Broad Consensus Versus 50% +1
Many of the downtown leaders who are conflict adverse have strong needs to be liked and admired. When conflicts emerge they often seek solutions that can garner a broad consensus of support. They are often inclined to support planning efforts that have large public participation components.

While I certainly see how public input into the downtown revitalization policy/planning process can be valuable, I strongly dispute that the objective should be the creation of a consensus — the correct objective should be to garner enough support so an effective policy decision can be made and meaningful change can happen. In other words, you do not need to get 70% or 90% (or whatever the percentage that for you defines the existence of a consensus) of those involved to agree, just 50% +1. Everyone does not have to love you or your policy or your program — just your 50% + 1 supporters.

A broad consensus is much harder to create and to maintain than a smaller 50% +1 coalition. One of the other negative consequences, in my opinion, is that policy and planning processes that seek a broad consensus usually produce dumbed down policies, plans, strategies, etc., because so many competing interests and views have to be accommodated. Ironically, while the public input can really help inform the policy process about community needs and conditions and increase policy options, the consensus driven policy process then gives veto power to every small group and makes decision-making possible only on a few dumbed down points.

As may be obvious by now, my views about democracy are closer to those of Madison and Hamilton than Jefferson and Jackson.

Crisis Can Be Downtown Revitalization’s Friend
We use the term bureaucratic in a very derogatory way to describe a situation full of paralysis, inaction, system drift, numerous insufferable rules, and a stalemated decision-making process. Bureaucratic organizations and systems are the antithesis of change; instead they freeze and defend the status quo.

How many of us are in or have been in downtowns that are in a bureaucratic situation? How many of us have said to ourselves about our downtown, “Gee, we need a bomb to go off to make anything happen in this place?”

Downtowns in such a situation often can only be loosened from their inertia and power stalemate by encountering a crisis that shatters the existing decision-making structure and brings in new leadership having the desire for — and power to– bring about change.

For many downtowns, crisis can present enormous opportunities as well as enormous challenges.

Good downtown leaders shine during a crisis.

Some downtown leaders may even try to cause something of a crisis in order to bring about change. For example, I know one downtown district manager who was hired by a board that had no landlords or business operators from the district on it. (You read right.) The latter, because of their exclusion and the imposed district assessment resented and ignored the district organization. The district manager, after attempts at wooing failed, adopted a strategy of intentional antagonism and confrontation, hoping to thus stimulate the district’s business operators to become actively engaged and organized against him, when he hopefully would co-opt them into the downtown organization. This was exactly what happened.

The Often Meandering Path of Downtown Innovation

Change Agents. Good downtown managers assume the role of “change agents.” After all, revitalization is a process that results in positive changes and downtown managers are charged with stimulating, cultivating and guiding the revitalization process. Very frequently, the downtown change agent role is seen as involving the linear implementation of a sound plan or strategy. However, in my experience, successful downtown innovations very often follow a path that meanders a fair amount from the original plan with the results, though very acceptable, emerging in a form that is not exactly what was initially intended.

The relatively simple addition of slot cars to the Bayonne Town Center’s Car Show clearly demonstrates this point. When a new hobby shop presented the Bayonne Town Center Management Corporation (BTCMC) with an idea for a model train exhibition, the BTCMC worked with the shop and ultimately was sufficiently flexible and patient to find that a slot car exhibition promoted through an existing car show event was a more viable plan. Persistence and an open-minded and flexible approach led to a successful downtown innovation.

The Initial Plan. When Pastime Hobbies opened in Bayonne, NJ about two and a half years ago, the BTCMC, a special improvement district, was very pleased. Hobby shops have very large market areas and their customers often make large dollar purchases. The BTCMC’s district could benefit from this drawing power.Furthermore, the BTCMC’s revitalization strategy called for establishing the district as the community’s central social district and envisioned the development of an entertainment niche as an important means of achieving that objective. The district currently has a number of strong restaurants and popular fast food operations. Unfortunately, it is without a movie theater, legitimate theater or concert hall , though redevelopment plans call for the eventual construction of such venues. In the interim, the BTCMC’s management is using events such as a film festival, car show, poetry contest and various Christmas activities to grow the entertainment niche. It is always looking to strengthen this niche, especially with activities where visitors can be both participants and observers, e.g. playing chess, riding a carousel, sailing a model boat, playing bocce, etc.

The BTCMC’s staff and Vinny Margiotta, the owner of Pastime Hobbies, began talking about a very large and sophisticated model train layout in Carlstadt, NJ, which regularly attracts lots of visitors. The initial plan was for the BTCMC and Pastime to work together to create a similar attraction in the Town Center. Pastime had helped form an embryonic model railroad club that would operate the venture, while the BTCMC would help find a location for it as well as lending a hand with promotions and marketing.

A field visit to the Carlstadt model railroad operation provided a reality check. It occupied a large amount of space — far more than the 450 SF to 1,000 SF that might be made available for the Bayonne model railroaders at the marginal amount they would have at hand for rent. In addition, the Carlstadt setup had taken years to build and was run by a strong club of avid adult model railroaders. Young people were mostly visitors.

While many toddlers are heavily into train sets by such manufacturers as Thomas, Whittle Shortline and Maple Landmark, interest in model railroading seems to diminish as children pass through their preteen years. Adult men have the greatest interest in electrified model trains.

Adaptation 1. With space being a constraining variable, Vinny came up with the idea of slot car racing, which would require a much smaller setup board than the model railroad. The model racetrack board also could be put together and then taken down with comparative ease. Depending on the gauge of the cars, a good racing board can vary in size from 4’ by 8’ to 7’ by 12’. The costs are also reasonable, ranging from $400 to $800.

From the BTCMC’s standpoint the slot cars offered several advantages over the model trains. It would attract pre-teen youngsters and teenagers as well as adults, which would reinforce the district’s Kids Row niche. It also would be easier to find venues for the slot car setup board.

The BTCMC suggested “a test of concept” — the BTCMC would arrange for a community center located in the district to provide space for the slot car racing on a Sunday afternoon and promote the event through newspaper ads and fliers. Pastime Hobbies would form a slot car racing club that would put together the racing board and manage its use at the event.

This event had mixed outcomes. It did not attract as large a crowd as hoped. But, those who did attend really enjoyed it. In addition, the racetrack board worked and it was put up and taken down with comparative ease. The overall assessment was that the “product” was good, but a way had to be found to tap a bigger audience for it.

Adaptation 2. Rich Martin, a BTCMC board member, attended the event. He remembered fondly that when he was younger there was Dobbs, a store in Bayonne where kids and adults raced slot cars. He also was motivated to build his own slot car racetrack in his basement. He became very committed to creating a successful BTCMC event around the slot cars.

Then, talking to the BTCMC’s staff about how to find this wider audience for the slot cars, he stimulated Cathy Jakubowski, the BTCMC’s executive director, to come up with what turned out to be a very viable idea — Rich and Vinny would setup their slot car racetracks at the four old car shows the BTCMC runs over the summer. As can be seen in the photos , the slot cars attracted lots of people, including both kids and adults. Many of the adults also remembered Dobbs.

The BTCMC is considering looking for a location for a more permanent installation of these slot car racetracks. However, their ease of installation and consequent mobility suggests that plugging them into other events held in the district may be more cost effective.

Some Observations.

  1. The BTCMC was persistent in trying to leverage the potential assets provided by Pastime Hobbies to achieve its strategic objectives.
  2. The BTCMC’s staff did not quit: it continued to provide motivational and advertising support even when plans fell apart or appeared somewhat disappointing. It played a catalytic role in this process. It also was flexible and not committed to just one idea, e.g. a permanent model railroad setup.
  3. The innovative ideas did not come just from the BTCMC’s staff, but also from other key players the staff involved into the process. The staff’s prime role was to keep “stirring the pot” until something viable happened.
  4. Using the BTCMC’s car shows as a venue for the slot car racing strengthened both
  5. In this innovation process the adaptations were made to fit with the district’s characteristics (the unavailability of large spaces) and to take advantage of one of its assets ( the car shows).
  6. This approach is reminiscent of the way great chefs behave. They prefer to use the best possible ingredients and base their recipes on them. When some ingredients are unavailable they do not leave the kitchen, but adapt their recipes to take advantage of those that are on hand. This is precisely what Vinny Margiotta, Rich Martin, Cathy Jakubowski and the rest of the BTCMC’s staff did in this case study.
  7. The BTCMC has not given up on the idea of creating a model railroading setup and continues to look for a venue where such an installation would be possible, afforable and visitor friendly.