Friday, October 5, 2012

Momentum versus inertia

If your company has been around for a while, you feel it. The tug of history. It shows up in meetings with phrases like,

"We've always done it this way."

"Yeah, we tried that. It didn't work."

"Hang around long enough and you'll get it."

Every company has its "way" which served a purpose on the rise to success. The problem is markets change, consumer attitudes change, new competitors enter, technology improves and the "way" that once led you to market leadership is now pulling you forward while the road turns to the left.

Success creates momentum. But when momentum becomes inertia, failure is soon to follow.

Just ask General Motors, Dell, and NBC. 

The trick is not to forget your company's history, but understand when it's no longer relevant, otherwise your brand will become just that, history.

Thursday, October 4, 2012

The power of pressure

I read this quotation by Kia's marketing director, Michael Sprague in today's New York Times and was not in the least bit surprised.
“Our agency does best when they’re put under an incredible deadline pressure,” he said. “Great ideas bubble up under stress.”
I could go into all kinds of stale metaphors here, but what it really boils down to is something I've known my whole career:

Without a deadline there is no creativity.

I'm not arguing that clients should set artificially tight deadlines just to watch the writers and art directors squirm. But if you're going to start planning your next Super Bowl campaign in March, you should set a number of checkpoints along the way that force your agency to bring you concrete ideas early and often.

Unlike we're lead to believe in the movies, generating ideas is not all freewheeling and game playing waiting for the "aha" moment. It takes focus and discipline to generate the hundreds of ideas necessary to get to the one that will work best.

That doesn't mean the process can't be fun. But it is rarely easy.

Deadlines are what push us past the expected solutions, past the half-baked ideas to something different, unique and relevant.

Wednesday, October 3, 2012

What's your promise?

Businesses that last are businesses that stand for something.

Something that connects with their customers.

Something that directs their employees.

Something that separates them from the competition.

Some people call this branding. Others call it strategy. Either way, it's simply a promise you make to everyone who comes into contact with your company and sets an expectation of delivery.

Nike's promise is, "Authentic athletic performance."
Ritz Carlton's is, "Ladies and gentlemen serving ladies and gentlemen."
Hallmark's is "Caring shared."

What promise is your business making to your customers and employees that makes it different from anyone else in your category?

Answer that question correctly and you're on the road for the long haul.

Tuesday, October 2, 2012

The perils of borrowing on brand equity

This story about the trials and tribulations of Fender in the New York Times illustrates the delicate balance between brand equity and real equity.

Hot brands create a feeding frenzy. Facebook, Groupon, and many others have suffered from a business that's worth less than the money its brand is capable of attracting.

Fender has hit upon hard times. Not because the brand isn't respected. Not because their products are inferior. Not because the competition is eating its proverbial lunch.

Fender is in trouble because in a tough economy they can't grow fast enough to satisfy the needs of those who have invested in it.

Growing margin is a challenge given the economy, competition and volatility of the high-end guitar market. 

Growing share is tough since about 65% of all guitars sold around the world are priced at $350 or less and Fender already competes in this space with guitars produced in Asia and Mexico. 

Growing the category is difficult because a new generation of musicians seem to prefer programming music instead of playing it.

Fender has worked hard to maintain an almost mystical brand image by promoting their relationships with rock's pioneers, legends and current stars. Go into any club on a Friday or Saturday night that features live music and the odds are better than 50/50 the guitar player will be wielding a Fender. From a brand standpoint they've done just about everything right since freeing themselves from CBS.

But now with the musical instrument market down 13% from its 2005 high, the venture capital company that bought nearly 50% of the company in 2001 and accrued additional debt to acquire other brands in an attempt to stimulate top-line growth, wants out and nobody thinks the company is worth the $396 million asking price.

Fender is in a box.

Worst case scenario: the company gets broken up and its pieces are sold to maximize their value. The other option is to develop growth platforms that take the company's focus off its core business in guitars, amps and other musical accessories.

Either way Fender will become something significantly different from what it has always been.

As a Fender player, owner and fan, it's frustrating to see a brand I love destroyed by its debt.