The Case For Place Branding

In my current role, I am often asked why I believe place branding is a right strategy for accelerating the economic growth of a location.

Global competition for capital investment in increasing, driven in part by companies deciding to increase their capability and capacity to service emerging markets in Asia. This puts pressure on the amount of practically available capital for investing in developed markets. Additionally, advances in telecommunications are making it possible for companies to service developed markets from virtually any location that can provide a high-speed internet connection. Limited dollars and increased choice are the classic conditions that demand effective place branding to attract capital investment and drive accelerated economic growth.

Place branding is a strategy being used by an increasing number of locations around the world to effectively compete for an increased share of foreign direct investment dollars and capital expansion of resident companies. However, too often place branding initiatives are little more than sales campaigns with limited sustainable impact.

I think the work supported by Cincinnati USA to communicate the region's promise and the purposeful integration with the Ohio branding work to ensure delivery of a consistent and persuasive message, is among the best in class examples. The Dayton, Columbus and Cleveland business communities are supporting similar initiatives. From my vantage point, this is a very positive development that will make Ohio even more competitive for capital investment. However, other locations like St. Louis, Pittsburg, Philadelphia, Chicago, New York City, Triangle Park, and so on, are strengthening their investment and capabilities in place branding as well. We need to continue to focus efforts on improving our state and local business environment, and on effectively communicating our Ohio and Regional brand promises to potential capital investors.

I thought you might find it interesting to read the following 7 tips I provide to economic development professionals to help ensure maximum return on investment from place branding efforts. The greater Cincinnati region does a good job across all seven. Continuing to keep these in mind will help ensure long-term success.

TIP #1 – Create a team of trusted advisors.
It is important you seek the guidance of marketing professionals to cut through the jargon used by advertising agencies and place branding consultants. They can help ensure the process being recommended will deliver the results you expect, and the price is reasonable. These experts can easily be found in private industry companies. Your board of directors is a good place to start looking for a marketing professional resource to provide you guidance. Often, just a couple of meetings with professional marketers during the strategic phase of your place branding initiative can make a huge difference in ensuring a positive outcome.

TIP #2 – Enroll your business community thought leaders as ambassadors.
One sure way to cripple a place branding initiative is to involve too many opinions and not enough data. Thought leaders can be key in helping you enroll local private and public sector managers to the design and output of your place branding initiative. Defining the right brand promise without having broad based buy-in will cause you to fail. Thought leaders can often help ensure your vocal influencers are part of the solution and not part of the problem.

TIP #3 – Focus on a few industries and do the job well.
No industry or company wants to be left out of a place branding effort. However, in the short term it is often better to limit the playing field to gain a competitive share of promotional voice. Spreading limited resources across multiple fronts increases the risk of failure. Begin with your driving industries first. These are the industries representing the majority of your location’s gross domestic product. A good resource to help define driving industries is Moody’s economy.com database. These industries have experienced success in your area and their vitality is critical to economic growth. Build from strength. To ensure a balanced approach, select one or two emerging industries to add to your focused portfolio. This conscious and controlled speculation is often prudent to managing your economic portfolio. Your budget and internal resources will guide your decision on how many industries is too many to focus on.

TIP #4 – Get to know industry experts in your business community.
Once you’ve selected industries to focus your place branding efforts against, you need to generate insights into which assets in your area are key points of competitive difference. Industry experts can keep you current on emerging trends that will affect profitability and global competitiveness. They are outstanding sounding boards to evaluate campaign concepts proposed by your agencies. They help keep your communication focused and relevant.

TIP #5 – Translate your location assets into business benefits.
There is an old saying in business circles … features tell, but benefits sell. An excellent university is a wonderful feature. The benefit is a sustainable pipeline of qualified labor. You need to connect the dots for the capital investor and explain the business value of your location assets. Great branding copy states the benefit and uses features as reasons to believe the benefit can be realized. Your industry experts are an effective resource to help you understand why an asset is important to their business performance. It is often easiest to brainstorm the most important assets in your area and then use your industry experts to ladder the assets up into benefits.

TIP #6 – Partner with other communities in your region to be more competitive.
Economic clusters are not limited by geographic boundaries. Often a manufacturers supply chain will include multiple communities and regions. When communities have an interdependent economy, then the assets of the broader geography are important to consider. These assets can be leveraged to make a more compelling case than could be made by focusing on your community alone. And, if there is true interdependence, a capital investment made anywhere within the economic cluster benefits everybody connected to it.

Capital Investment Decisions are Based on Emotion

In my last post, I made a promise to deliver on my personal brand equity of "provocative professor". I am hoping you find the title of this blog starts to payoff on the provocative component of my equity. To understand why I believe that in the end capital investment decisions are based on emotion rather than hard, cold, rational facts, I need to share what I have learned about the process.

There are three Moments of Truth in the capital investment decision process. The First Moment is about winning the right to compete. This is when the capital investor (or consultant) is seeking to converge on a few locations for due diligence. These locations receive a request for proposal. In this phase, any misperception may be sufficient to eliminate a location from receiving an RFP. The elimination choice is typically emotionally based versus rationally based.

The Second Moment of Truth is winning the competition. This is the Moment where the capital investor "kicks the tires" and seeks to understand what the risks and benefits are to building a business in each location. A detailed set of questions and data requirements are provided, and a project net present value is calculated over the project’s planning horizon. This is not a closed bid process, so most of the time the CEO is faced with 2 – 3 projects that have essentially equivalent NPV valuations and meet the minimum criteria for selection. There is no longer a rational basis to differentiate one choice from the others. The CEO then is forced to decide based on perception. This perception is formed over time and either reinforced or reprogrammed during the evaluation process. But it is the emotional perception of the CEO that drives the final location choice decision.

The Third Moment of Truth is all about winning the repeat investment. This Moment is won or lost based on the actual day-to-day experience the executive and employees have while working and living in the location. The interaction creates a perception that makes the location feel like either the ideal choice to grow a business, or a wrong choice to continue investing capital in. This is the Moment where you hope to create passion for and loyalty to the location that can be leveraged when the opportunity for expansion arises. And, when that Moment arrives, the decision to go or stay will be fundamentally emotional, albeit rationalized with a financial argument.

In each Moment, there is a choice that is underpinned by both rational and emotional considerations. But, the final choice in each Moment requires the CEO to assume risk and is ultimately made based on emotional considerations supported by a rational argument.

The implication of this insight is the critical importance of positively influencing perception in each Moment of Truth. The best location that "feels" wrong will rarely, if ever, be selected for capital investment. Making a competitive rational argument is, more often than not, the "ticket to entry" versus the reason for selection. The question this begs is "Are economic development professionals investing sufficient time, energy and money in creating a strong, heart opening emotional connection with capital investors?". My observation is that the answer is no. More attention should be invested in addressing the needs of Companies currently working to build a successful business in a location. For perspective, the national data argue that roughly 80% of new job growth will come from Companies already in a given location like a Region or state. Consequently, delivering against the needs of existing Companies helps create a collaborative partnership relationship that builds passion for a location and makes it "feel" like home. This passion becomes a powerful barrier to relocation and helps retain and expand jobs in an area.

Because successful collaboration is such an important driver to winning the Third Moment of Truth, I thought it might be helpful to share 9 keys to success I have compiled from research, the wisdom of others, and personal experience.

1. Senior leadership involvement. It is important to establish a single point of accountability within each partnering group (or geography) who is committed to the success of the collaboration. This person must have decision-making authority and the ability to bring additional resources to the alliance on an as needed basis in order to overcome inevitable obstacles. Without senior leadership commitment, collaborations are at risk of failing the first time there is a difference of opinion in direction or a perceived unequal benefit. It is important that all appropriate levels of government are represented.

2. Adequate resources to get the job done. This includes having the right people/organizations involved and sufficient funding to achieve the objective. Many collaborations fall apart because the resources were never put in place to permit success, or funds were anticipated and never materialized.

3. Clear objectives. Collaborations are an organizational choice to more efficiently or effectively achieve a specific objective. The objective needs to be transparently defined, time bound and understood by everybody involved.

4. Clear roles and responsibilities. It is extremely important each member of the collaboration understands what is expected of him or her and how their contribution helps deliver the overall objective. A set of aligned guiding principles helps ensure collaborative behavior and conflict resolution.

5. Frequent, respectful communication. The leaders at all levels must be routinely and fully informed to ensure the best decisions are being made and appropriate progress is being delivered. This is often facilitated through face-to-face meetings and written updates. Key is objectivity and candor.

6. Formal decision structure. Unilateral decision-making creates distrust and is the surest path to failure of the collaboration. A defined process helps the operating Team by establishing decision rights between the Team and Leadership levels. One of the more effective decision processes is the RACI model. A description of the model can be found at the following website -http://finance.isixsigma.com/library/content/c040211a.asp

7. Measurement of progress. Collaborations need to have a measurement system in place to provide all members with feedback on progress. This helps to establish realistic expectations and forces data driven decisions.

8. Integrated work systems. It is important that partners bring their unique resources to the collaboration and that common work is done in a consistent way. For example, leads generated for economic development need to be managed in a consistent manner by all members of the collaboration.

9. Aligned conflict resolution process. It is important that decisions are made that focus on delivering the objective and managed constructively. Partners must keep common interests in mind. They need to clarify the issue, seek to understand the partner’s point-of-view, present their own point-of-view, discuss the differences and resolve to solve the problem together. How collaborations manage through conflict has a large effect on overall success or failure.