Three Moments of Truth

In 1986 Jan Carlzon, the former President of Scandinavian Airlines, wrote a book titled Moments of Truth.  The core principle presented in the book was that every decision is a process.  A process made up of many moments where your product must be judged as a better option than the competition.  But, Jan also noted that not all moments are created equal.  There are a few moments you absolutely need to win or your product will be eliminated from consideration.  These are the moments you must identify and focus on winning.

While I was at P&G, A.G. Lafley applied Jan’s model with great success.  A.G. concentrated the P&G Marketing Organization’s focus on winning two mission critical Moments of Truth.  A.G. defined the First Moment of Truth as the moment when the consumer is looking at the store shelf and trying to decide which product to purchase.  He concluded the Second Moment of Truth occurred when the product was used at home.  By simplifying a highly complex decision process, and focusing our attention on winning the most critical moments of the consumer purchase decision, A.G. was able to lead P&G into a period of accelerated business growth.

I find a lot of similarities between my experience at P&G and the challenges we face in economic development.  The capital investment decision is certainly no less complex than the consumer purchase decision.  In fact, you might argue it is even more complex.  To help me better understand and simplify the decision process for my own use, I turned to the lessons I learned from A.G., and developed the Three Moments of Truth Model. This model is designed to help you assess the sufficiency of your community’s marketing planning and to drive the kind of operational focus that will transform your economic development organization’s ability to attract capital the same way it did for P&G’s ability to deliver enhanced shareholder value.

There has never been a more urgent need for a model like this.  Limited budgets are making it very difficult to create promotional plans sufficient to achieve place branding objectives. In economic development, communication plans are typically under funded and, as a consequence, unable to achieve adequate reach and frequency to deliver the desired message.  This is particularly problematic when you consider global competition for capital investment in increasing.  Every day we are competing more and more often with other countries rather than other states.  And, it isn’t likely we will get relief from the budget pressure any time soon.  Most states are facing significant budget gaps.  The national projected 2012 state budget gap is a mind blowing $125B. That means we absolutely must find a way to ensure the investments we do make with our limited promotional budget are highly focused so we have a fighting chance.

The Three Moments of Truth Model can help you ensure the right level of simplicity and tactical focus for your communication plans.  The challenge will be making time to understand and leverage the Model.

If you are a Stephen Covey fan, you’ll recall that in his book The Seven Habits of Highly Successful People, he calls this Quadrant II work – Important but Not Urgent.  It is the kind of work Stephen argues you simply must make time for if you want to succeed.

Let’s take a look at the Three Moments of Truth Model.

MODEL

Moments of Truth image

THE FIRST MOMENT OF TRUTH – Winning the Opportunity to Compete

This Moment is all about managing your community’s image.  A 2008 national study by DCI suggests that 71% of the time a short list of location options for due diligence is created without the Company speaking to an economic development professional.  That means 71% of the time your community’s image will be the difference between being on or off the list. Your on-line presence can have a significant effect on your image. If you lose this moment, your community doesn’t even have a chance to put a proposal forward for consideration. As Phil Keoghan, host of The Amazing Race, a popular television show, would say “I am sorry to tell you, but you’ve been eliminated from the race.”

THE SECOND MOMENT OF TRUTH – Winning the Competition

This Moment is all about listening to the capital investor’s real needs and creating both a positive experience and compelling proposal that meets/exceeds those needs.  It is important to think out of the box and not view winning this Moment as simply putting the biggest incentive package on the table.  Capital investors will gravitate to the proposal that delivers the best value.   It is important to appreciate that the capital investor, not you, defines value.  That is why it is so important to listen carefully.  The more you learn about what is really driving the decision on each project, the better prepared you’ll be to offer something the competition will not be able to trump.

THE THIRD MOMENT OF TRUTH – Winning the Repeat Investment

This Moment is all about proactively managing your community’s identity.  It is important to appreciate the difference between image and identity.  Your image is how your target audience perceives your location.  Your identity is what your community actually is.  Identity includes assets, infrastructure, business climate and culture.  The key to consistently winning the Third Moment of Truth is to have a plan that ensures your community promise remains relevant, competitive and authentic.  Doing so will help you exceed the expectations of executives in your community and over time build loyalty that reduces the risk of company relocation and job losses.

ACTION STEPS

To apply the model, create a table with three columns (one for each moment).  Take your tactical plan and assign each tactic to one of the columns.  If you believe a given tactic affects multiple moments, then proportionate it across the columns assigning X% to one moment and Y% to another.  When you have completed the table, take a look at the aggregate amount of investment you are making for each moment and ask yourself if it is sufficient to give you confidence that your community will win more often than lose.  If you are not confident your community is investing enough to win, then you will need to start thinking out of the box to find ways to bring more effort to bear on winning each moment.

Every time I have completed this exercise, I have been amazed by the results and the clarity it brings to what is required to win.  I have confidence it will do the same for you.

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10 Comments so far

  1. Bob Miller

    March 1, 2011

    Great piece. This clearly lays out the three defining moments for success in economic development. I believe it’s highly likely that most effort is spent by communities on the second moment, however more effort should probably be given to getting communities “on the map” (moment 1) as well as providing a great “post purchase” (moment 3) experience for the investment. The latter frequently appears to be significantly under-appreciated by communities.

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    March 5, 2011

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  3. Emery Graham

    July 27, 2011

    Sounds a lot like Kolter’s competitive advantage analysis, only in a very abrreviated form. Most locations are suffering financial problems and have long standing cultural and social burdens that make the quality of life less than steller. China, India, South Korea, and soon Indonesia and Malaysia will offer much more attractive locations, educated employees, lower wage structures, and a growing consumer class to world corporations. America is still bottoming in its wage structure, education systems, and physical infrastructure. When you take these highly publicized facts into account, you’re talking about recovery in the next century. America’s, and American cities recovery strategy is bound up with the immigrants coming from around the world who are seeking the American experience of upward mobility for the lower classes. What America has to sell is a social mobility experience and environment. High tech and manufactured products can’t be produced in America at prices competitive to production costs elsewhere. Also, there’s a lot of foreign competitors reading this blog. They were trained in America and will probably implement the ideas in this article sooner than folks in America.

  4. admin

    July 27, 2011

    @Bob – In my experience EDOs tend to shift funding from the 2nd Moment to support attraction initiatives in the 1st Moment (including FDI), and way under invest in the 3rd Moment. When you evaluate the resultant investment by Moment and ask if there is a sufficient effort to win, it becomes obvious that by spreading a limited budget across the three Moments each Moment is actually under powered. The challenge is to be innovative and find solutions to become competitive.

  5. […] on that short list of locations is the outcome measure for the First Moment of Truth. If your community fails to make the short list, it can be considered a “game, set, match” […]

  6. […] Broaden your attraction search. Increase efforts to attract FDI. Expand your outreach to include more countries with business concentration in your key industry clusters. The barrier to implementing this strategic approach is the resources required. It is a perfect opportunity for your community to collaborate with regional and statewide outreach efforts to help amortize the costs. There is a time to compete for local benefit, and there is a time to collaborate for the common good. Understand and appreciate the difference. […]

  7. […] the opportunity to compete First Moment of Truth may be one of the most important, but difficult, challenges facing any economic development […]

  8. […] Wall Street Journal 2005 Procter & Gamble’s approach to consumer experience Google’s 2012 ebook ZMOT: Winning the Zero Moment of Truth. http://strengtheningbrandamerica.com/blog/2011/02/three-moments-of-truth/ […]

  9. Edward

    March 6, 2016

    In the world of economic development, the less than zero moment is when the company is ready to expand, but has not yet approved the capital investment in their 10-year plan. There have been a number of third party attempts at using public data and heuristic formulas to recognize the less than zero moment, but all have fallen short. Consequently, until somebody solves the forecasting challenge, the best economic development professionals can hope for is to recognize when the zero moment occurs (also typically not publicly available), or to react as quickly as possible to win the first moment of truth. My counsel is to do a great job winning the three moments of truth identified in my model and don’t waste time chasing fools gold to uncover the zero moment or the less than zero moment since your EDO likely doesn’t have adequate budget to risk.

  10. […] Wall Street Journal 2005 Proctor & Gamble’s approach to consumer experience Google’s 2012 ebook ZMOT: Winning the Zero Moment of Truth. http://strengtheningbrandamerica.com/blog/2011/02/three-moments-of-truth/ […]

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