Branding Update

March 18, 2013

The Nature of a Compelling Argument

How High Is The Bar? - Most people don’t part with their money easily. So if you want someone to buy your product or invest in your endeavor, you need to make a pretty compelling argument. Often, utility staff members expect policy makers to easily trust that their rate-increase proposals are necessary. This is an unreasonable expectation. When it comes to money, trust never comes easy. Investment proposals must meet a high standard, characterized by extraordinary clarity and highly-relevant information. The foundation for trusting a specific proposal is the utility’s brand (or trust in the organization). No proposal is compelling if it comes from someone you do not trust. But a strong organizational brand must be accompanied by a strong case for investment. For water-utility managers, the bar is especially high because policy makers often feel uneasy about the consequences of supporting a rate increase. Furthermore, they and their constituents typically have preconceived notions about the efficiency of government organizations and government spending. Clearly, a compelling argument needs to be so clear and meaningful that it displaces current thinking and ideologies. This allows policy makers to fully appreciate the logic of the proposed investment.

How Should It Look? - A compelling proposal provides the rationale behind an investment in clear and precise terms, for example by:

·        Describing the fundamental roles and commitments (promises) of the organization

·        Reviewing ongoing efforts to increase operational efficiency

·        Providing meaningful transparency

o   Which means listing the key standards, driving forces, or other motivations for recommending the investment

·        Stating the problem to be solved

o   Which can be a current problem or one that will manifest in the near future if action is not taken

·        Emphasizing and explaining significant financial standards and challenges

·        Justifying the timing of the proposed investment

·        Communicating the ramifications of failing to invest or delaying investment

o   Typically in terms of reduced service reliability, increased risks, or higher costs in the future

What Doesn’t Belong? – Technical, financial, or any other facts that don’t make a relevant point or clarify the argument for investment.

How Should It Feel? - Policy makers should feel “compelled” to support the investment. More specifically, they should get a strong sense that voting no will be difficult to defend. A compelling argument exposes a “no” vote as being motivated by things other than meeting the utility’s operational and financial needs.

What Do The Results Mean? - A vote that tracks political-party lines or ideological beliefs means that the argument was not compelling. Therefore, the standard for a compelling argument is a unanimous decision, despite the fact that this is not always achievable (especially with large governing bodies). However, the unanimous-decision standard is suitable because it encourages the utility’s staff to take responsibility for the result, and continue to improve their planning and investment proposals.

Branding Update

March 5, 2013

Unpacking Planning and Financial Transparency

Previous Branding Updates have introduced the importance of making a compelling argument for investment and rate increases. The foundation for a compelling argument is trust in the person or organization making the argument. For utilities, building this trust (or brand) depends on providing meaningful transparency, especially with respect to planning and finances. In this context, meaningful transparency can be characterized as information that is both understandable by the audience and highly relevant to proposed investments or policy decisions. Sharing technical details with a non-technical audience may seem like transparency, but this doesn’t build trust.

Motivations and Standards are Relevant – This is because motivations and standards are what drive people to take action, make a change, or spend money: for example, a person taking public transportation to work every day because it’s less expensive, less damaging to the environment, and they can work while in transit. We can argue that these motivations relate to the personal standards of being smart with money, having concern for the environment, and being efficient with time. Understanding motivations and standards allows us to fully appreciate a situation or decision. With respect to planning and finances, utility proposals need to highlight the following types of information:

Planning Standards, Motivators

·        Acceptable levels of risk related to water resources and water reliability

·        Infrastructure-replacement and lifecycle-cost standards

·        Both regulatory and internal water-quality and environmental standards

·        Guidelines for addressing anticipated growth in the community

·        Planned increases in operational efficiency

Financial Standards, Motivators

·        Debt ratios (which impact the cost of borrowing money)

·        Liquidity and cash-flow standards

·        Maintaining financial reserves, and the logic behind recommended levels

·        The desired level of debt, and logic behind this standard

·        Costs/financial ramifications of delaying proposed actions or investments

Whatever the motivations and standards, they need to explain why the utility is recommending a specific course of action. Planners and chief financial officers are all too familiar with the issues above, but often the utility fails to provide the needed transparency. Presentations are better received and instill confidence when they begin with the pertinent motivations. And this can be done simply and briefly. Without this clarity and context, even policy makers familiar with the organization are hard-pressed to fully appreciate the utility’s proposal. Often, the unfortunate results are probing questions about why a proposal makes sense, confused enquiries about extraneous technical details, and ultimately erroneous conclusions about the urgency of the proposed investment.

The Bottom Line - The utility’s brand and the quality of the investment proposal have significant impacts on policy decisions, the performance and financial health of the utility, and ultimately quality of life in the community.

From Jan 9, 2013 Branding Update

Resource Trends Branding Brief on City and Community Branding

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When working with water and wastewater departments within a municipality, questions often arise about the department's brand and its relationship to the city's brand. This in turn leads to discussions about effective and ineffective ways to build the brand of a city or community. The following Resource Trends Branding Brief outlines key issues related to developing a city or community brand, and what we can learn from Proctor and Gamble, owner of 300 consumer brands.

Branding Brief - City Branding