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Saturday, October 29, 2011

Q&A : More About Bike Town




Statement of Independent Opinion
I wish to point out that this article is of my own creation.  I am merely exercising my right to freedom of speech such as would be the right of any Canadian Citizen.  While it is true I am a Councillor, the viewpoints, thoughts, and information provided herein are of my own creation with no intention of representing the thoughts, wishes, feelings, or policies of either the Council or Administration; nor should it be construed to be provided under the approbation of the aforementioned entities.


Statement of  Bias
I'll attempt to answer the common body of questions to the best of my ability.  Since I am a member of Council and have participated in developing the policy guidance for Administration regarding Bike Town, the reader should be advised of this influence upon objectivity.  I am also not a professional brand development expert, and while I will attempt to explain the academic underpinnings of brand development, I necessarily draw upon the expertise of others to frame some of the responses.


What is the process used to arrive at the Bike Town brand?
A business case was developed by municipal staff in coordination with marketing leaders of regional organizations with international reach.  The decision matrix was supported with quantitative and qualitative data from multiple sources and supplemented with longitudinal data from the Board of Economic Development and Tourism.

One of the commonly used theories centers on a the concept of a brand value chain, you can find a primer here.  A brand value chain offers a holistic, integrated approach to understanding the value created by brands. According to the model, brand value creation begins with the town's marketing activities and capacity. Marketing reach then influences customers who, in turn, affect how the brand performs in the marketplace and is ultimately valued by the consumer. Three important multipliers moderate the extent of transfer between these value stages: the program quality multiplier, the marketplace conditions multiplier, and the consumer sentiment multiplier.  This concept is leveraged from financial brand theory and is obviously adjusted for tourism.

There is a large literature base surrounding brands.  Some practices have an anatomy consisting of general procedural understandings and rules that speak to explicit or discursive knowledge.  The skills, abilities, and culturally appropriate consumption projects (tacit, embedded knowledge or how-to) also form a pillar of the knowledge base.  There are emotional commitments expressed through actions and representations relative to the brand, and there are usually common practices across brand communities that may be compiled into thematic aggregates to track how consumers realize extended value beyond the value the brand is designed to create. 

Research also illuminates practices that seem to have a physiology that interact with one another and function like apprenticeships by endowing brand participants with cultural capital.  This is a catalyst to produce a repertoire for insider sharing and it generates consumption opportunities.  Theoretical and managerial implications may offer avenues for building and nurturing brand community and enhancing collaborative value creation between and among consumers and the organizational brand.  Ultimately, these concepts in modified forms combine in a brand matrix that is leveraged by the brand leadership team and the municipal staff who work with the Bike Town brand.

There is no lack of science involved, although it is rarely presented in such terms.  The vast majority of theory generated by branding research may be accessed from peer reviewed resources openly accessible via various academic online resource search engines such as EBSCO.  These resources are available to the public at the Devon Public Library.  While the study of branding is worthy of a dissertation or a thesis for graduate business students, such levels of academe are not typically central to municipal decision making.  This is especially true in smaller municipalities where fiscal constraints compress the ability to maintain staff with these particular skill sets as full time employees.  

Instead, experts such as Roger Brooks of Destination Development International, who have already accumulated the academic knowledge and practical experience are consulted.  This is done to maximize municipal benefit with minimal cost.  Essentially, it may be thought of as a form of outsourcing the overhead required to establish advanced academic knowledge and experience relative to the science of branding.  The municipality is able to advance the brand cause, wrap decisions in advanced theory, and shine it up with practical branding experience.  In Devon's case, that experience, notably, was with other municipalities such as St. Albert, and numerous cities throughout North America.  You can review the Destination Development International Case Histories by clicking here.

Who was involved?  
Municipal staff, members of the public, and key stakeholder group representatives were involved.  More details and a presentation about Bike Town are available online at the Town of Devon website.


Did the Council issue an invitation to the public to participate in the branding exercise?
Council provides policy decisions and authorizes specific actions for the Administration to undertake.  Issuing invitations, coordinating meetings, and handling specific event planning activities, such as coordinating an exercise, would fall under the purview of Corporate Services.  Operational activities such as these constitute prohibited activities for Council under the provisions of the Municipal Government Act (MGA).  Parts 5, 6, and 7 of the MGA are most relevant to understanding the roles of Council and Administration and may be consulted online via the Queen's Printer.  Nevertheless, Council may direct administration to carry out policy, which may obviously include the nature of communication between the municipality and the residents.

What other options were considered as a brand?
Over twenty options were considered.  Bike Town was selected based on a scientifically constructed brand decision matrix.  After rising to the top in the brand decision matrix, supplemental information was considered.  Some of the supplemental data includes information from the Government of Canada, for example, tourism.  Tourism is an activity that generated over $74.7 billion (2008 data), some 2% of Canada's GDP as reported by Industry Canada.  Tourism employed over 660,000 Canadians and supports restaurants, hotels, cultural events, sporting events, and a variety of small businesses.  Sports tourism is the fastest growing segment in the tourism category.  Bicycling is the fastest growing channel in the sports tourism segment. 


How is branding funded without taxpayer dollars?
Corporate sponsors typically fund various events that lead to increased brand awareness, as was the case with Kraft and TSN.  People may voluntarily contribute time, which may be considered "in kind" contributions.  Brand awareness is accelerated via media interest and can be captured through activity in various outlets such as traditional print media, radio, TV, the internet, and strong results in the social media space.   The Cyber-Journal of Sports Marketing has a primer that explains why corporations engage in sports marketing and provides peer reviewed sources that may be consulted by the reader, including Canadian studies.

What measurement tools and/or methodologies are being utilized to determine the financial benefits of each event?
Software for economic modeling, such as IMPLAN, is available at a significant cost.  Devon does not currently own this software.  Accordingly, we reached out to regional partners and the City of Leduc provided Devon with access to their economic modeling hardware and software.  Interviews were conducted by members of Devon's Economic Development and Tourism Board during Nationals.  The report is available to the public and was part of the supporting quantitative data set used in the Bike Town decision matrix.  I will point out that this report is not easily accessible online... I threw a few queries into the Town of Devon website search box and couldn't find the document.  To address this, I will be introducing a notice of motion called 'Public Board Documents' to be filed as notice of motion 11-14-11.3 at the proximal Council meeting.  The Public Board Documents motion may be viewed by clicking here.  The Public Board Documents motion, if passed by Council, will direct administration to add links to these documents in order to enhance transparency and, frankly, to make it easier to find these important documents on the Town of Devon website.


Determining the economic impact of events is a function of an Economic Impact Assessment (EIA) study.  While I noted that economic modeling software can be used to generate very granular assessments of the economic impact of events and/or activities, I recognize that citizens want to know more information about the financial benefits derived from events like bike races.  To that end, I have conducted my own research in order to determine what that entails.  I have learned that there is a standard formula commonly used in EIA's.  The formula is comprised of four data points, two of which are subjective and require further investigation, two of which are empirical and require data collection without special resources outside of manpower.  The formula is as follows;


EIA Multiplier x Number of Tourists x Number of Event Days x Average Spend = Benefit


There is substantial literature regarding this and I will forward some key documents and resources to our staff so they can begin the process of determining the best number for the two subjective data points, namely, the EIA multiplier and the average spend.  Average spend is lower for Devon because we don't have a suitable quantity of hotel rooms to capture stays, a situation we hope to rectify soon.  Our multiplier will necessarily be lower than Leduc or Edmonton due to limited ability to capture room nights and certain limitations regarding non event consumption activities like dining or movies.  Our task is to find the best number possible to use in our calculations.  As you can see, using this formula, an event such as the Provincial Bike Races probably had about 100 tourists (this includes entrants).  Using a conservative number for the EIA multiplier (1.5) and assuming 100 tourists, a 2 day stay, and estimating an average spend of 50 dollars per day, the economic impact would then be as follows: 1.5 x 100 x 2 x 50 = 15,000 of direct economic impact to the community.  


I suspect the numbers are much higher, but I used these as an attempt to offer a very conservative estimate.  For example, the average spend for a municipality like Leduc or Edmonton would probably fall into the 175-225 range due to their ability to capture the totality of room nights.  As such, assuming a mid point of 200, my estimation of 50 slices off 150 per day to adjust for zero room capture within the daily spend estimate.   That said, we do know some people stay in our hotels.  Accordingly, the estimate of 50 can easily be argued as falling on the conservative side of the estimating range.  


Looking at the same formula using the input of 200 as an average spend would result in a substantially larger economic benefit.  That formula would be... 1.5 x 100 x 2 x 200 = 60,000  Suffice it to say, the room night value on the average spend is tremendously important.  On the other subjective side of the equation, the economic multiplier of 1.5, was once again, taken at the low range of estimates.  This multiplier, for many municipalities, is set in a range much higher... from 1.7 to 3.0 and, again, I have used a low estimation as an attempt to overcompensate on the side of fiscal conservatism.  That said, it's interesting to note that if we use an estimate of 2.25 and examine the calculation, the economic benefit jumps from 60,000 to 90,000 - for one event.  Arguably, an overcompensated formula (to the downside) places the case for cost recovery for the total sum of investment to date... at one event.  This is why it's important to measure these economic benefits, with consistency and accuracy, so they may be articulated in a logical, open, and transparent manner, to the residents of Devon.  


In order to understand, with greater precision, the economic benefit of our events in Devon, I have crafted a notice of motion as part of our ongoing process improvement strategy entitled 'Economic Impact Assessment Metrics' to be filed as number 11-21-11.5 and am planning to introduce it at the next meeting of Council for debate at the subsequent Council meeting.  You can read the EIA motion by clicking here.


Data used to arrive at this formula were taken from numerous resources, but the key resources are: 


The United States Sports Academy: A Review of Economic Impact Studies on Sporting Events
LINK

Economic Impacts of Tourism: A Handbook for Tourism Professionals
Illinois Bureau of Tourism

LINK

Once the appropriate formula inputs are determined, it would be logical to place a simple interface on the municipal website under the Economic Development and Tourism heading so that groups or organizations planning events may use the tool to determine the potential economic impact of their events upon the community and to increase transparency into the value of the events this municipality works so hard to deliver.  I believe the numbers will be both realistic and valuable to our community.

How is Bike Town encouraging residents and tourists to shop locally?
Event participants, support staff, family, and spectators purchase goods and services in close proximity to their events; bike races are no exception.  The prestige of the event directly correlates to non-participant visitors.  Larger events like Canadian Nationals or Provincials typically involve more teams, numerous support personnel, additional organizers, more volunteers, as well as family and fans.  The local economic activity is supplemented by regional economic impact such as hotel room nights captured by regional partners in Leduc and the greater Edmonton region.  Since many Devon residents work in the region, an acceleration in regional economic activity benefits the Devon workforce, in turn, creating more economic resources for Devon residents to use locally, thereby creating additional economic capacity to support shop local initiatives.

Shop Local     

An interesting study relative to the economic impact of bicycle races can be found at the League of American Bicyclists.  This study has a substantive bibliography consisting of a an extensive list of resources that speak to everything from municipal benefits to health benefits and environmental benefits of bicycling.  A Google search of the 'economic impact of bicycle races' returns about 116 million hits, so it's safe to say this is a topic that has widespread global interest.


How many tourists have attended the bike races?
Since bike races are not ticketed events and do not have points of entry to provide gate metrics, exact numbers are difficult to quantify.  This is a great question, and I will ask the Council representative and the Chairman of the Economic Development and Tourism Board to raise this at their proximal meeting to explore options to quantify this.  This information is also a critical data point for conducting an economic impact assessment.  This is another great question and it requires a solid answer if we are going to have reliable data sets to calculate the economic impact of these or any events.

What is the total revenue the Town of Devon has generated from entry fees, sale of promotional material, corporate sponsorship not including the $25,000 from Kraft that is dedicated to the Mountain Bike Skills Park, or anything else I may have missed?
Entry fees are typically part of the revenue stream of the organizations that host the event; they are typically used to offset their organizational costs.  Promotional materials are usually entered in the chart of accounts as marketing, advertising, or promotional expenses.  Corporate sponsorship investments are typically directed to event sponsorships or teams.

Total Costs (this was a very lengthy question, but I'll address it as a question that is essentially a total cost of ownership (TCO) question.
Resources used for TCO were drawn from within the existing departments and budgets without creating remarkable budget variance.  Onetime extraordinary charges were associated with intellectual property management.  Remarkable a.k.a. 'material' impact on the Town of Devon's amalgamated fiscal budget is roughly considered to be approximately $50,000 dollars.  In this case, the overall expenses were substantially less even when considering all associated expenses including labor, promotional material, multi-use event equipment, and so forth.  Many of the items that people may associate with the Bike Town brand are deployed for many other events and serve multiple-use roles in keeping with widely accepted tenets of fiscal responsibility and organizational efficiency.


Whenever items of a material level arise in the day to day operations of any corporation or organization, the top level leadership is informed of these impacts.  When various actions of an administration fall within the operating budgets of various departments and do not impact approved budgets negatively, they are deemed to be within the purview of day to day operations of those departments.  Such is the case with smaller items such as the purchase of a couple dozen t-shirts or similar items used for promotional purposes.  In the case of the Bike Town brand, virtually all the expenses fall into this category and would not be of substantial impact such as to warrant the direct consideration of Council, the same would apply in any corporate structure or organization.  


To increase the transparency of budget versus actual expenses, I have introduced a motion to increase visibility by formalizing a quarterly budget vs. actual report that indicates variances in the municipal financial budgets.  The motion is designed to generate quarterly reports that will be formally submitted to Council.  The intention is to provide Council and the public with a better sense of the fiscal condition of the municipality on a quarterly basis.  Since the budget of the municipality is a matter of public record, these reports along with the annual report belong online so as to be easily accessible to the public.  This motion is known as the 'Quarterly Reporting Motion' 11-7-11.1 submitted at the most recent Council under Notice of Motions for consideration at the proximal Council meeting.  You can review that motion here.


Finally, since items purchased in support of Bike Town have been captured as expense entries in our accounting software, these ledger entries may be reported.  I do not know if all the expenses can be captured with a single report, that would be a function of how it was entered.  In other words, if somebody bought a dozen t-shirts for Bike Town, and on the same bill, they purchased promotional items for, say, the hockey arena or the swimming pool, it is likely that would have been entered as one item and posted to promotion expenses.  It would be difficult to report these out of the software with accuracy.  Once we have to send people back into cardboard boxes to audit individual paper receipts, track all the minutiae, and then create a report for it, we have to call into question the concept of activity based costing.  In other words, are we going to spend 2,000 dollars in manpower hours to report on 500 dollars of expenses.  In the oil patch we call that a hundred dollars waiting on a dime.  It just doesn't make sense to do it, but the point is well taken.


That said, I'll inquire to see if we might be able to generate an accurate report that contains the hard costs expended for the Bike Town initiative.  Soft costs, like labor hours, would probably be more difficult to ascertain as I am fairly confident the accounting methods used, while in compliance with generally accepted accounting practices, are probably not set up with a "job costing" feature.  I don't work in the accounting department for the Town of Devon, but I do know accounting software inside and out.  In other words, it is unlikely that the finance department tracks employee hours in this manner.  To do that, employees would need to either make a hard copy record of time they allocated to each task or element of work, which would then have to be entered and a ledger entry created to post these expenses against specific jobs.  They could also employ a bar code scanner and "swipe" in to each job with a portable IR bar code scanner and a notepad.  I am familiar with this because it is quite common in the manufacturing industry and I am deploying this technology in my factory.  This kind of accounting practice, however, would be extraordinarily uncommon in a service related industry like municipal government.


A Few Personal Thoughts on Democratic Values
I have read words that imply or create what seems like innuendo that Council has acted in an undemocratic manner where Bike Town is concerned.  Like any Veteran, I am deeply committed to the virtues of democracy, and like any Veteran, I swore to fight for democratic principles and to pay any price for it, up to and including my life if necessary.  I'm not going to back down from that core value because it defines who I am as a person.  I can assure you that I have no intentions of ever engaging in undemocratic actions or undertaking any work or project for purposes that would undermine the foundations of our democratic form of government.  


On this Remembrance Day, we will dedicate the new Veterans Way, a project I helped facilitate.  I'm very proud of this new honor for our Veterans and I want to salute all our Veterans and their families.  Borrowing words from history, I am able to convey my sentiments by telling you that in war there are no unwounded soldiers.  And as we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.  


Some of our citizens have set down the challenge to answer the questions they have.  I believe it's a matter of honor and respect that I should pay, in full, my diligent and honest effort to reply to their questions and craft it with respect and care for the great people of Devon, all of whom I am enormously proud to represent.  


I have thought a great deal about these questions since I read them in the paper.  I'm happy these questions were asked because I have now gained a substantially greater appreciation for the tremendous amount of work it takes to answer what might seem like a short question. These questions were not short, they were substantive.  And once I started peeling the layers of the onion back and became introspective... I considered the questions with the utmost care.  


I have a great deal of respect for people who are willing to challenge things, to ask the tough questions, and to demand answers.  I believe they are the very backbone of our democracy and they cause all of us to continually seek to raise the bar.  


Bravo!  Thank you to everybody who asks the questions and challenges the policy.  This is the very foundation of what makes democratic government great.  Out of these questions, I have so far crafted two notices of motion for Council consideration to improve the way we do business.  


Everybody has the right to be heard... and they should be listened to.  


Respectfully,


Gord Groat

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