Global competition for capital investment is increasing at an accelerated rate. States and municipalities are frequently finding they need to differentiate their location from foreign countries, not simply neighboring states, as an ideal location for capital investment. This new level of competition requires increased insight into how capital investment decisions are made in order to be successful in generating job and ultimately economic growth.
Ultimately, the difference between success and failure will be in the ability of economic development professionals to consistently win the three critical moments of truth that define the capital investment decision process.
The first moment of truth is winning the right to compete. A strong place brand helps create an emotional connection with capital investment decision makers and eliminates misconceptions about what it is like to work and live there. When companies are looking to narrow the set of viable options to a manageable few, a strong place brand will help ensure the location is on the short list under consideration for even more capital investment opportunities. Winning the first moment of truth is absolutely critical, but it is just the first important step.
The second moment of truth is winning the competition. Sub-Regional and local brands are important to help explain to potential capital investors how the Place Promise is actually realized. Each Region and local market offers a unique set of business assets and life experiences. This is the moment when a request for proposal is issued and a complete data set including financial incentives is created for consideration. Collaboration is key to putting your best foot forward and making it to the final few options for a CEO to select from. This is not a closed bid process. Typically the qualifying finalists will all have essentially the same financial value to the Company. That means there is no longer a rationale basis to select one over another. At that moment, a strong place brand can provide the emotional advantage necessary for the CEO to pick your place as the final location decision.
The third moment of truth is winning the repeat investment. Winning this moment is all about creating a positive experience for the executives, employees and their families. You must deliver against expectations and eliminate any reason for considering another location for future expansion or possible relocation. National research suggests 80% of new job growth will come from companies already located in a given geography. Failure to win this moment of truth is extremely difficult to offset through new capital attraction. As a consequence, it is best to take the attitude that failure is simply not an option. And yet, often there is insufficient funding allocated at the local level to win this moment of truth.
The real power of focusing on the Three Moments of Truth is to bucket economic development investment under each Moment and then assess the overall competitiveness of the plan. Most locations will find a disproportionate level of marketing/sales dollar investment against the First Moment of Truth and an insufficient level of investment against winning the Third Moment of Truth. Unfortunately, the Third Moment of Truth is where the greatest leverage exists for stimulating job growth and subsequently wealth creation.
Another area of opportunity is for States, regions and Municipalities to better align their respective economic development marketing/sales budgets to achieve synergy. States can take a lead in winning the First Moment of Truth supported by sub-Regions and municipalities; while sub-Regions can lead winning the Second Moment, and municipalities the Third Moment of Truth. In this way, every level is leveraging the investment of every other level as the capital investor marches through the process. It also allows for an appropriate level of mastery of the specific skills and systems to successfully compete at each Moment of Truth.
Adopting the paradigm of “Winning the Moments of Truth” will focus the economic development community marketing and sales efforts against the highest leverage opportunities. In a time where it is difficult to secure sufficient public and private sector dollars to invest in place branding, focusing on the right priorities is often the difference between success and failure.