As promised, here is some additional learning on the role of emotion in decision-making. My last post on this subject shared what I learned about the science behind emotion in decision-making. This post focuses on how economic development professionals might use emotion to ensure full consideration for their community as a location option for capital investment.
The Role Of Emotion In Decision-Making
Maia Honan, Director at the Positive Thinking Agency was quoted in one paper I read as saying – “The trick for B2B marketers is to be able to address both the emotional and rational triggers, and create a campaign that sets both of them off in tandem. By appealing to both the emotions and the logic of your buyer, your brand is immediately more attractive and memorable. Hard numbers and facts appeal to the rational brain. The abstract brain responds to more abstract concepts such as safety and trust.”
I think that is indeed the challenge in economic development. The RFP process ensures the hard numbers and facts are communicated. But, how can you create an emotional connection with the team making the location recommendation and the CEO making the final decision? On one level, it is by getting conversations past the “what” a community can promise and “how” it can deliver against that promise, to a conversation about “why” it matters to the company. As I have written previously, “features tell, but benefits sell”.
Mark Rae, Business Development Director at the Brandhouse Agency says – “Although some say B2B and B2C purchasers are very different, they’re in fact the same. We are all people connecting with bands at an emotional level, regardless of whether we are buying those products in a personal or professional capacity. We connect with those brands that have a clear story and are differentiated over the competition.”
Mark’s bottom line is that business is about people and CEOs do not leave their feelings at the door of their office. This makes a lot of sense to me. I have met hundreds of CEOs throughout my career. Each has had a unique personality, and each has had a set of biases that colored her/his judgment when making decisions.
I read a paper from Ana Lapter that shed additional light on this. Ana wrote about 4 factors that influence business decisions.
- Perception of consequence. What is the reward/risk profile of the decision for the CEO? Does a wrong decision put her/his career at risk? Will a wrong decision jeopardize the CEO’s internal and/or external credibility?
- Risk aversion. There are studies that show the greater the perceived risk of a wrong decision; the more likely decision makers will seek additional information. That is why a small company CEO looking to expand and literally putting her/his company viability at risk as a consequence may demand more information than a huge corporation.
- Degree of personal influence. A lot of times, the location decision isn’t made by the CEO alone. It may need to be taken to a Board of Directors. Whenever you are dealing with a person (people) that is not the final decision maker, your job becomes to help provide enough information to make that person a strong advocate of recommending your community as the ideal location. This may require you to provide significantly more information and to deliver it in an easy to understand format.
- Friendships. Personal relationships matter. It could be a prior relationship with your community, or a friendship with an executive doing business your community. What these key influencers say about your community is important to the final decision outcome. Few things exert a stronger positive or negative influence than comments from a trusted peer.
Simon Sinek authored the book entitled – “Start With Why?” [http://www.amazon.com/Start-Why-Leaders-Inspire-Everyone/dp/1591846447]. He also gave a TED Talk in which he suggests that people don’t buy what you do; they buy why you do it and then justify their belief with all the rational information you give them. He shared an understanding model that begins with what you do, then how you do it to why you do it. The key is to communicate inside out. Thinking about this from the world of economic development, and the conversation flow should look like this – 1) you need to explain why your community is interested in helping the company succeed (think community vision), then 2) explain how your community can help the company succeed (think assets, infrastructure, public policies), and finally 3) what your community is prepared to do to help the company succeed (think deal structure). As Simon would likely observe, we tend to skip over the why too often. This is unfortunate, because it is the why that will best differentiate your community from the competition.
Echoing Simon Sinek’s counsel to start with why, in Annette Simmon’s book entitled “Whoever Tells The Best Story Wins”, she says “People don’t want information. They are up to their eyeballs in information. They want faith – falth in you, your goals, your success, in the story you tell.”
Colin Coulson-Thomas says there are 4 questions a capital investment decision maker seeks to answer (remember, modified by me for economic development).
- What is your community’s vision.
- Is it right for me and my company to be part of it?
- Do I understand how my company will directly benefit from your community achieving its vision?
- Do I trust you?
I am still researching the literature, so I will have more learning on the subject of emotion in decision-making to share going forward, so stay tuned. In this post, hopefully the importance of having a community vision is clear. It sets the framework for a productive conversation. I had an opportunity to debrief with a CEO of a Fortune 1000 Company that recently went through a site selection process. I asked him what was the most important difference between the city he selected to move his Company HQ to versus the other locations his team considered (including where his HQ was now). His answer was that the city he chose painted a compelling vision of the future that showed the critical role his Company would play and how his business would benefit from success. He talked about that vision with me for 30-minutes, and he was passionate when doing so. Obviously the economic development organization in that city did many things right in the RFP response process.
Do you have stories that illustrate the role of emotion in site location decision-making? Have you ever won or lost a deal for non-data driven reasons? Please share your stories so we can all learn from our experience.
Look for the next installment on emotion in decision-making. I have a number of papers still to read and extract learning from.
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