Selling New Orleans
GNO, INC. CEO Michael Hecht is lighting a fire under economic development
Seven years ago when the New Orleans area was still immersed in disaster recovery, Northshore businessman Marty Mayer drew a line in the sand. He had thrown his support behind one rebuilding initiative after another and held leadership roles in multiple business organizations that took considerable time away from his own company, commercial real estate firm Stirling Properties, LLC.
Mayer had just become chairman-elect of Greater New Orleans, Inc., a 10-year-old economic development agency seeking to be the leading jobs developer for a 10-parish region. But the agency at the time had its own leadership challenge: the corner office was vacant.
When Mark Drennen resigned as CEO in the fall of 2007, GNO, Inc. was left without a staff leader at a crucial time for the region. A small group of board members took charge of filling the void, and Mayer stressed to his colleagues the importance of tapping the right person.
“I told them I would go through the year as chair-elect, but if we didn’t get a CEO who I felt would be a good leader for this organization, I would have to resign,” he says.
An executive search firm narrowed dozens of resumes from around the country to five individuals recommended for in-person interviews.
On paper, Michael Hecht’s economic development training and experience looked thinner than that of the four other candidates. But minutes after the search committee began talking with Hecht, they realized their search could be over.
'HE GETS IT'
Hecht's journey to that New Orleans interview was hardly a straight line. He was born in New York City, where his father owned an accounting firm. But he also felt close to New Orleans, where his mother grew up and the family frequently visited. His mother's family had deep roots in Donaldsonville, where for many years they ran the B. Lemann department store.
After attending high school in White Plains, NY, Hecht aimed for an Ivy League degree and in 1992 graduated magna cum laude from Yale University.
"I always thought I'd go into advertising, but I ended up majoring in race relations," he says.
He then headed to Stanford University, where he earned an MBA in public management.
Hecht’s first job out of college was doing financial modeling for a management consulting firm. The work took him to several countries on behalf of some of the world's largest corporations.
Later, he dove into entrepreneurship, co-founding a company in California that would become a restaurant powerhouse with holdings that included San Francisco’s chic Foreign Cinema restaurant.
Eventually drawn back to the East Coast, Hecht landed a job heading business development for the giant nonprofit Food Bank of New York City.
It was while Hecht was working for Mayor Michael Bloomberg, running a post-9/11 small business initiative, that then-Louisiana Economic Development Secretary Mike Olivier came calling to explore the potential of a similar program for Louisiana.
Olivier's visit "started a conversation," Hecht says.
Three months later he stood on the steps of the Louisiana capitol with Olivier and Gov. Kathleen Blanco as they announced a new small business development program for the state.
Hecht continued to work with Olivier, and for a short time his successor, Stephen Moret, before he decided to pursue the opening at Greater New Orleans, Inc. Which is how, one day in 2008, he came to sit down in a room with a handful of business executives who were dying to see one of their CEO candidates soar above the rest.
Hecht quickly won over the room.
"As he started answering our questions we all started glancing at one another … It was like, 'Wow, we weren't expecting this," Mayer says, adding that Hecht articulated an understanding of local business development issues in a way no other candidate had managed.
"He gets it, and we could see that," Mayer says. "It was an easy decision from then on."
RACKING UP WINS
Attorney and current GNO, Inc. Chairwoman Patricia LeBlanc capsulizes what it is about Hecht that made him appear so promising.
“Michael brought a different attitude and skill set, and incredible energy,” she says. “You don’t have to be in a room with him more than 10 minutes before you can sense that this guy’s going to make something happen.”
In taking the helm as the new president and CEO of GNO, Inc. in 2008, Hecht, now 44, inherited a game plan that involved chasing new business in five sectors deemed promising for the region: advanced manufacturing, international trade, energy, digital media and biosciences.
In time the organization added emerging environmental business to the mix, as well as job development related to the U.S. military’s presence in the area.
During the years following Hurricane Katrina, the agency also achieved a high level of cooperation with other business organizations and political leaders throughout the region.
Collaboration with those entities, along with organizations including the Jefferson Parish Economic Development Commission, the Business Council of New Orleans and the River Region, the New Orleans Business Alliance, the St. Tammany Economic Development Foundation, the Baton Rouge Area Chamber and many others, helped produce dozens of economic development “wins.” Among these are:
• GE Capital opening a technology center to provide services back to the financial services company
• Smoothie King’s retention and relocation to Jefferson Parish, where the company’s owner took such a liking to the area that he committed $40 million to put the company’s name on the New Orleans Arena
• Paris-based digital game development company Gameloft S.A. choosing New Orleans as home to one of its first U.S. studios
• Nucor Corp.’s announcement that it would create some 1,200 jobs in St. James Parish with a new iron and steel
• Satellite voice and data services provider Globalstar, Inc.’s relocation to St. Tammany Parish from California
• Chiquita Brands International, Inc. announcing the return of banana imports to the Port of New Orleans
• Investments of tens of billions of dollars into expansions and relocations by major petrochemical companies along the lower Mississippi River corridor.
The importance of financial incentives in attracting such business is undeniable. In an era when states and cities vie for big projects using bait such as tax breaks, loans, grants and a range of other goodies, no one can pretend that dollars don’t matter.
But in the end economic development is also a sales job, and when all other factors are approximately equal, the team that mounts the strongest pitch and shows a unified business front is likely to be the one that snags the prize.
People who have been involved in such efforts say GNO, Inc. has come to excel at packaging a sales pitch and bringing the right business people together to deliver it.
LANDING A BIG ONE
One such pitch came a few years ago as New Orleans neared the final round of the competition to land GE Capital Corp.'s technology center.
The months of discussions, incentive negotiations and site visits included a personal visit by local representatives to General Electric CEO Jeffrey Immelt in Fairfield, Conn., and word was that GE Capital had narrowed its choice to Indianapolis and New Orleans.
Nearly 50 entities – including elected officials, college and university leaders and a host of business organizations and private companies – came together to move the needle in New Orleans' favor.
In February 2012, the company announced its choice, and the city got its wish.
"The state, city, and GNO, Inc. put together a very compelling offer and demonstrated that New Orleans was a good opportunity," says Mike DeBoer, chief information officer for the new GE Capital Technology Center, located in the 201 St. Charles Avenue building downtown.
DeBoer says the center, dedicated in April 2013, is "doing very well," having hired about two-thirds of the 300 workers it projected it would have by 2015.
While the center does not represent the largest economic development prize in the city's modern history, many business people rank it as one of the most important wins because it will help diversify the local economy by raising New Orleans' profile among technology businesses around the country.
"The true significance goes beyond the 300 jobs," Hecht says. "It is that we now have a highly respected global company that chose New Orleans over almost four dozen competitors. It brings us immense validation as a community that can compete on a global scale."
Local businessman and recent GNO, Inc. Chairman Gregory Rusovich says GE Capital's decision also underscores the growing heft of the economic development agency. The tech center "likely would not have happened without GNO, Inc.," he says.
Rusovich, who is also CEO of Transoceanic Trading and Development, LLC, says GNO, Inc. has gained strength and influence with each successful business recruitment effort, but the agency also has shown agility in responding to issues not strictly defined as economic development.
In the past year, Rusovich says the agency "has stepped out of its space a little" to address the threat of drastically increased flood insurance rates stemming from a federal law passed in 2012.
The Biggert-Waters Flood Insurance Reform Act aimed to bolster the financing of the federal flood insurance program by removing taxpayer subsidies. But when homeowners began to realize that the law would increase insurance premiums, in some cases by tens of thousands of dollars, alarms went off.
The real estate industry was just one sector that saw the law could inflict far-reaching damage to the economy. Bankers were worried too, as were state and local governments.
Though south Louisiana initially appeared to be ground zero for the flood insurance crisis, the law actually posed a threat to property owners in flood-prone areas throughout the country. Hecht was among the first to recognize the scope of the problem, and he wasted no time in jumping on it.
Through GNO, Inc., Hecht not only took the lead in shaping a large coalition of Louisiana business and political leaders to lobby for repeal of a portion of the law, but also mobilized hundreds of people around the country to fall in behind Louisiana in the effort to rattle cages in Washington, D.C.
Through one trip after another to Capitol Hill, the New Orleans-led coalition grew to include some 250 political, educational and business entities from 32 states, all focused on giving Congress an earful about flood insurance.
“GNO, Inc. has come to excel at packaging a sales pitch and bringing the right business people together to deliver it.”
The result was passage of the Homeowner Flood Insurance Affordability Act, which turned back part of the existing law, limited federal flood insurance rate increases to 18 percent per year and restored a grandfathering provision that applied to older properties.
Jefferson Parish President John Young, whose constituents would have taken some of the biggest hits from the previous law, says Louisiana's lobbying effort was impressive.
"It's unprecedented," he says. "In an era where it's hard for these guys (in Congress) to agree on a resolution commending Mother Teresa, we got major legislation passed in less than a year."
Young says the lawmakers came to understand that soaring flood insurance rates would wreak havoc across the country, and he makes no bones about who shaped the message.
"We asked GNO, Inc. to get involved, and they took the bull by the horns," he says.
Ask Hecht how economic development is progressing in the local area, and he may tick off the latest in a long list of accolades bestowed by the national business press, such as CEO Magazine ranking Louisiana among the top 10 business-friendly states, or Inc. Magazine ranking New Orleans as the "coolest start-up city."
He may also explain that GNO, Inc. follows a "bifurcated" strategy of business recruitment and "product development," meaning creating better business policies that address tax issues and access to capital.
But Hecht's approach to economic development actually seems a simple matter of recognizing business needs and responding with an appropriate strategy.
"Whether it's bringing 47 different entities to the table to help persuade GE Capital to move here, or coordinating 250 entities across the country to get flood insurance fixed, we found that being a trusted coordinator, intermediary and project manager is a role people want to see filled," Hecht says.
As a further example of its agility, in July the agency began connecting the dots linking job growth to the region's water and erosion issues by launching the Coalition for Coastal Resilience and Economy. The group aims to advocate for the sustainable restoration of Louisiana's wetlands, rivers, deltas and coastline.
"If we don't have the political will to address this, then within 50 years people are going to begin leaving this area," Hecht warns.
In something of a tribute to Hecht's leadership, Mayer, who remained deeply involved in GNO, Inc. after his term as chairman of the board, will head the coalition.
Hecht says evidence of his own commitment to New Orleans is the fact that he, his Danish-born wife Marlene Friis, and their two children, ages 11 and 8, are building their future in the city.
"For me, it's coming home after a generation," he says.
Hecht says he feels "incredibly lucky" to be heading GNO, Inc. "because it’s possibly the only job out there that makes sense with my background." And he says the challenge comes during a particularly exciting time in the city's history.
"The environment of greater New Orleans post-Katrina is so intellectually and emotionally available," he says. "I've never lived in a place where the feedback is so supportive … there's a level of gratitude here which is really humbling, but it makes the job a joy to do."
Hecht says the region's growing economic strength is raising the bar for economic developers, and a crucial challenge now is to ensure that a new crop of business leaders is ready to take over when the current generation decides to hand off the reins.
He is optimistic that those younger leaders will have ample history to examine as they develop a road map for their own economic future.
"One day we're going to look back on these days, and we'll say that they were good days,” he says.