Jean-Noel Kapferer on the polarization of brands

For the next three days, I will be bringing you interesting bits of insight from the other side of the big pond. Because I want you to be able to read and understand these posts, I will translate everything into English (yes, free of charge.)

How about that!

(If you want to read the meat of this post in its original French, the link go here.)

Jean-Noël Kapferer (HEC).

2007 was characterized by the success of extremes: Low cost and luxury brands in mass market like Apple, H&M or Nespresso. We observed a polarization phenomenon in the market.

On the one hand, certain brands positioned in the value-priced corner further discounted their products, like Ikea and Easyjet for example. The Logan, which was Europe’s cheapest car, will soon be dethroned by a vehicle costing only $2.500 euros born of a partnership between Renault and an Indian manufacturer.

On the other hand, middle-of-the road brands which not so long ago were known for producing mass consumption products are now becoming premium brands.

(…)

Apple isn’t technically a luxury brand but it employs luxury brand strategies. This is the case with iPhone: A single distribution partner, a premium price, an exclusive service package, messaging centered on living an ideal lifestyle… all of this to develop a unique experience aesthetic and a strong sense of community. The process is the same when Nespresso launches a boutique on the Champs Elysées.

Likewise, Air France is bringing back First Class in response to its Tempo Class being challenged by low cost operators. (The advantage of business class resides in that businesses, not individual passengers foot the bill.)

(…)

Sofitel is also following this model by repositioning half of its operations as luxury properties, under its Pullman brand. This tendency by mid-market brands to restructure “up” their existing stores, properties and product lines is important.

Indeed.

While many companies still remain in the soft, mushy center, the ones with a bit more insight into how the world has changed in the last couple of decades are taking steps to a) differentiate themselves from their competitors and b) stand for something. This is driving brand… or rather value proposition polarization.

As a brand manager, you really need to routinely ask yourself two basic questions:

1) Why should anyone do business with you instead of the guy across the street? Name 3 things. You have thirty seconds.

2) What’s your value prop? Are you primarily value (volume) or are you primarily luxury (margin)? (Yes, even if you want to be both, you have to choose one.)

Examples of volume: Ford, Bic, Motorola, Coors, Sears, Magnavox, Sony, rows 10+, Food Lion, Dasani.

Examples of luxury: Jaguar, Mont Blanc, iPhone, Heineken, Polo, Philips, B&O, rows 1-5, Whole Foods, Perrier.

Some brands do manage to cross the volume/margin barrier, but they are few and far between. They are the Starbucks, Nike, Apple and other mass-market relative lovebrands of the world. (I say relative because being a lovebrand is neither here nor there: Nike may not be the lovebrand it once was, and Starbucks’ star may not be shining as brightly a year or two from now as it did three or four years ago. Here today, gone tomorrow… Consumers, after all, are fickle.)

How to build a Lovebrand, in 5 simple (albeit major) steps:

Step 1) Start with a luxury value prop foundation.
Step 2) Develop volume-friendly products.
Step 3) Create a distribution channel that focuses on both breadth and depth.
Step 4) Love your customers even more than they love you.
Step 5) Keep your eye on the ball (Step 1)

Of course, the devil is in the details, but you have to start somewhere. 😉

Is there a future for middle-of-the road brands? Sure. Why not? For companies more concerned about maintaining a certain level of revenue this year – these are generally companies that take a “if it isn’t broken, don’t fix it” approach and don’t put much stake in innovation or growth strategies. I don’t see these types of companies disappearing anytime soon, but they should already be seeing a downturn in their market share, profit margins and new customer acquisitions. At best, they can expect to sustain perhaps up to 6% growth for another year or two – assuming they are already there now – before that growth suddenly slows and becomes negative.

Mark my words: that downturn will not be gradual. It will happen within a quarter or two at the most. Not good.

The soft middle may seem like a safe place to be if you’re either too dumb or too scared to read the writing on the wall… but hey, some execs are happy to just show up and collect a paycheck until it’s time to float their resume to the next flunkie status-quo company. That is the reality of this world. The tendency for proactive brands to clearly and deliberately realign their value propositition along the line of either value/commodity or its polar opposite (luxury/premium products) is as clear an indicator as I’ve ever seen of the impending doom of the soft middle’s “business as usual” model – at least when it comes to mass-market products.

There is simply a) too much information available to consumers and b) there are too many convenient channels through which consumers can purchase products from a variety of pricepoints for middle-of-the-road companies to have a fighting chance against brands with clear and polarized value props.

Have a great Thursday, everyone. We’ll be back with Part 2 tomorrow.

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The Passionate Ones

From this post by Seth Godin:

“The passionate worker doesn’t show up because she’s afraid of getting in trouble, she shows up because it’s a hobby that pays.”

So true.

Since childhood, I have dealt with three distinct types of people:

1. Passionate people: People like me who can put every bit of themselves into their jobs because it is either exciting, fun or rewarding on a visceral level… or all of the above. Entrepreneurial poets living at the intersection of business, culture and design.

2. Jaded passionate people: People who used to be passionate about their work but have been beaten into relative apathy. Generally, the passion in these people can be ignited again with a simple idea or project.

3. Whomever doesn’t fit in either of the previous two categories.

I don’t have to tell you which two categories I always love working with, and which one can make any job a drag.

Not to mention the fact that the first two always find ways to get the impossible done, while the third makes a point to make even the simplest tasks seem impossible.

In an economy so filled with passion, talent and brilliant ideas, give me a single reason why anyone should ever have to settle for either a boss or an employee who fits in category #3. Look to surround yourselves with 1 and 2 as much as possible.

image by intentionalart

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The Crayola Marker Incident

So, this weekend, the family and I decide to have lunch at a local Asian fusion restaurant, and because I have a cold, I order some green tea with my meal.

As the tea arrives, I pour myself a cup and notice that a strange greasy substance is beading all across the surface. A strange… bright yellow greasy substance. Kind of like… chicken grease, only thicker and shinier. Hmmm. Weird.

I lift the filter cap off the tea pot, and notice that the tea inside the pot also has a lot of the weird yellow stuff floating around. Perplexed, I stir the pot a bit, and that’s when I realize what the yellow stuff is. There’s something floating around in the tea. A rectangular piece of paper. No, a YELLOW rectangular piece of paper. No… a yellow rectangular piece of paper with letters printed on it: CRAYOLA.

The waiter brings us our food, and politely I jokingly ask him if he can please bring me a pot of tea without a dissolved Crayola marker inside. At first, he thinks it’s a joke, but he looks inside and starts to freak out. Apologies start flying. He takes the teapot to the kitchen, and the manager gets involved. From what we can hear where our table sits, the teapot incident is now the topic of discussion in the kitchen, and the manager is NOT happy. Minutes later, the waiter emerges with a fresh pot of tea, apologizes a half dozen times, and tells us that our entire meal has been comped.

The poor kid got a good tip, and we’ll be eating there again.

I would tell you what the restaurant is, but I don’t want to give them bad publicity. The Crayola marker in the teapot thing is not the sort of thing that a restaurant wants to be known for. It’s unfortunate, because they responded to the crisis perfectly, and I would love to give them their well-deserved props.

And Crayola markers are non-toxic.

The point of this post is this: Sometimes, businesses make mistakes. How they react when these mistakes pop up is perhaps more telling about them than the fact that someone in their organization made a mistake in the first place.

This business made a mistake, but corrected it immediately. The manager enacted new mandatory tea pot inspections within minutes of the incident. The kitchen was immediately briefed. The restaurant didn’t only apologize, it also paid for our entire meal. We didn’t have to argue. We didn’t have to act angry. We didn’t have to threaten… not that we would have. I wasn’t all that bothered by the Crayola marker. I would have been happy with a fresh pot of tea and an apology. Frankly, the free meal was unnecessary… but not everyone is as laid back as yours truly.

Perhaps out of pure professionalism or out of fear that a customer could sue them or give them the kind of publicity that could gravely damage them, they didn’t try to blow it off. They didn’t try to pass the buck. They didn’t offer us a free dessert. They didn’t give us 25% OFF coupons for our next visit. They took care of the problem right away, and treated us like valued customers.

Well played.

If only more businesses did damage control and customer service as well as this restaurant, the world would be a better place.

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Brand You – The Visual DNA personality test

This is pretty cool. Waste five minutes today playing with it. Why? Because it’s fun, quick, and it’ll tell you a thing or two about brand you.

Could this possibly the shortest brandbuilder post ever?

Maybe.

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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Excessive CEO pay gets visual.

In 1970, the average CEO in the US made 28 times more than the average worker. 35 years later, that number had increased to 465 times. Nice visual/interactive presentation over at Business Interactive.

I haven’t done the math yet, but I suspect there might be a direct correlation between CEO compensation and the increase in CO2 levels in Al Gore’s inconvenient presentation.

465 times the salary of the average worker. Wow. That would buy a lot of $0.99 junior Whoppers.

What does this post have to do with building brands? When the gap between CEO pay and their average workers’ pay gets this wide, people start getting cynical about their company. Especially when benefits get cut every year. Especially when more jobs start getting outsourced. Especially when layoffs become common. Especially when the company’s products, customer service and innovation quotient are suffering. Inequity doesn’t exactly sell brands. Fatcat loser CEOs are seen as merchants of exploitation, and no one wants to be a part of that.

As the asian stock markets start to crash again today (hopefully, things will get back to normal in a day or two), I thought it might be fun to look at who won’t be hitting the bread lines when the fit eventually hits the shan.

Wages 465 times greater than the average worker – in many cases, for playing a lot of golf. Brioches, anyone?

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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The Brandbuilder deflects another bonehead attack

Someone tried to school me in the difference between verbal/written expression and visual expression today, and I feel like I am a much better man for it. Yes, I have grown today, if not professionally or… physiologiclaly, maybe spiritually. It’s good to know that there are still brilliant, polite, thoughtful people out there who value the power of making positive connections and understand the importance of being cordial, positive, and friendly when reaching out to complete strangers.

Ahem.

So I was asked to remove an image from an earlier post this morning. The request came via an email threatening to take legal action against me. Ha.

Yes, good morning to you too. I am doing great, thank you. Would you like some toast with your tea?

Interesting thing, this blogging business. We’re so used to cutting and pasting people’s opinions that borrowing other people’s intellectual property has become almost a non-event: Find a passage you like or think is relevant, copy it, paste it, write a blog post around it, give the author credit and link back to his/her blog/book/website so readers can go there and find more good stuff, and voila. Finito.

If you’re a true web 2.0 rennaissance man, you even send them a note to ask permission to use their words, but that is seldom done these days. Credit given and a link are usually all that is required. (Still, most of us do this with images even when we don’t with text out of some sense of duty or jurisprudence.)

To date, I have not received an angry email from a blogger or author threatening me with a lawsuit because I quoted them on my blog, and for good reason.

As a photographer, I understand the potential cash value of images. You can take a photograph and sell it. you own copyrights to it – or can share it with others at will. It’s a slippery business, but ultimately, someone owns every image that has ever been printed – very much like every written word can become someone’s property.

The reality of it is that both photographs and prose are modes of expression. Both are protected by copyright provisions. Some people use words while others use images to express themselves, but the only difference is in the medium, not in the level of legal protection. Those of us who write for a living value our written work the way a photographer values their visual work. The medium may change, but the principle is the same.

Yet here we are: Someone actually threatened to take legal action against me for having quoted them visually on the Brandbuilder. How sad.

I promptly removed the image (which wasn’t that great to begin with) along with all associated credits and hyperlinks – and will replace it with another when I get a chance. Not because I am afraid of getting dragged into court, but because I have no want to give someone so stupid and arrogant any kind of exposure whatsoever. You don’t want to be featured on this blog, I won’t argue with you. Don’t let the door hit you in the ass on your way out.

What is funny about this whole little tangent is that a simple email politely asking me to remove the image would have sufficed. It would have still been silly, but whatever. At least the author wouldn’t have acted like a rude little child. My email asking for permission to use her image was not rude at all, as I recall.

I have to wonder… would being polite really have killed her?

So anyway, to the young lady who sent me that threatening email this morning, I have this to say: If you don’t want exposure, if you want people to discover your work, fine. Stick to submitting your stuff to any of the dozens of stock photo outfits that might be interested in buying it for mere pennies. (Not that they have, incidentally, since the email didn’t come from them.) Knock yourself out. But then don’t post your images on flickr and make them public. Jackass. And when someone asks for your permission to use an image, reply with a simple “no” if you don’t want them to.

That being said, it is indeed your image, and you have every right to control how it is used and by whom. If you don’t want me to borrow it for a post and direct people to more of your work, that is your right. I won’t stand here and argue with you. It’s your life. Have at it.

One thing you probably should know before I close this little monologue is this: Not only are you a crappy photographer who got lucky with one image, you’re also rude, and a complete moron.

End of post.

As always, go to the home page to leave comments.

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Cloverfield Rocks. Plain and simple.

Three words: Incredible.

Don’t read about this movie. Don’t look for teasers or spoilers. Just go see it.

Does Cloverfield live up to the hype? Let me just say this: I was on the edge of my seat for most of the movie, and some of the scenes just blew me away. As for the monster, you will see it in all its glory many times,so no worries. In many ways, the way that the movie doesn’t focus on the monster the way you would expect a Godzilla movie to… but still allows you to get your fill is one of its greatest achievements.

This is a hundred times better than a Godzilla movie, by the way. Seriously. From the monster to the characters to the way it is filmed to the way the camera seems to shy away from the brilliant special effects, you will feel like you are in the streets of New York City as it is being inexorably taken apart by a giant sea monster and the US military, and yes, your heart will pound pretty fast at times.

Unlike Snakes on a Plane – which was a case of killer marketing tied to a terrible waste of a movie – Cloverfield concludes months of very effective buzz-making by delivering on its promise. It was actually better than I expected.

So put down that old issue of Fast Company, turn off the TV, and check out local times here. Time for a dinner and a date to a good old monster movie. Good to see they still know how to make them. 😉

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Customer Service vs. Customer Experience

Via Jennifer Rice’s What’s Your Brand Mantra, Mark Hurst‘s brilliant little primer on the difference between Customer Service and Customer Experience:

“Customer service is the job of front-line workers, servicing customer requests for help – via an 800 number, e-mail, or a retail desk. It’s important to invest in good customer service, but that’s just the tiniest sliver of the customer experience.

“Customer experience is the job of everyone in the company. My customer experience was bad because the product, and the refund policy, are both broken. Everyone from the CEO and CFO to the product designers and manufacturing facility contributed to this bad customer experience; and as a result, they’ve lost a customer and generated bad word of mouth. The good customer service I received didn’t – and couldn’t possibly – fix the overall experience.”

Go read the rest here and here.

Update: Marc points us to a cool little site called measuredup.com, where you can write and read reviews (positive and negative) about businesses, customer service experiences, etc. Great stuff.

Have a great weekend. 🙂

(As always, to leave a comment, go to the main page.)

Image by The Pack.

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Tom Asacker on Clarity

Here’s another reason why Tom Asacker has been one of my favorite bloggers these last few years:

“I’ve never experienced so much noise and so little signal as I do in the present field of marketing. Marketing is a mess. Marketing is broken! Half of marketers are on autopilot creating award-winning, irrelevant media noise, web nonsense and events. The other half is paralyzed – measuring everything to death and covering their collective butts. Clarity: Marketing’s New Task.”

If the truth hurts, well… sorry.

Click here to read his 2-page mini-manifesto.

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Helvetica: The Movie

Evan mentioned this to me a few weeks ago, and I finally took the time to go check it out. If you’re in the design field (or your work occasionally touches design) I recommend you do the same. You’ll get a kick out of it.

From the official site:

Helvetica is a feature-length independent film about typography, graphic design and global visual culture. It looks at the proliferation of one typeface (which will celebrate its 50th birthday in 2007) as part of a larger conversation about the way type affects our lives. The film is an exploration of urban spaces in major cities and the type that inhabits them, and a fluid discussion with renowned designers about their work, the creative process, and the choices and aesthetics behind their use of type.

Helvetica encompasses the worlds of design, advertising, psychology, and communication, and invites us to take a second look at the thousands of words we see every day.

The film was shot in high-definition on location in the United States, England, the Netherlands, Germany, Switzerland, France and Belgium. It is currently screening at film festivals and special events worldwide.

Interviewees in Helvetica include some of the most illustrious and innovative names in the design world, including Erik Spiekermann, Matthew Carter, Massimo Vignelli, Wim Crouwel, Hermann Zapf, Neville Brody, Stefan Sagmeister, Michael Bierut, David Carson, Paula Scher, Jonathan Hoefler, Tobias Frere-Jones, Experimental Jetset, Michael C. Place, Norm, Alfred Hoffmann, Mike Parker, Bruno Steinert, Otmar Hoefer, Leslie Savan, Rick Poynor, Lars Müller, and many more.

Helvetica was developed by Max Miedinger with Eduard Hoffmann in 1957 for the Haas Type Foundry in Münchenstein, Switzerland. In the late 1950s, the European design world saw a revival of older sans-serif typefaces such as the German face Akzidenz Grotesk. Haas’ director Hoffmann commissioned Miedinger, a former employee and freelance designer, to draw an updated sans-serif typeface to add to their line. The result was called Neue Haas Grotesk, but its name was later changed to Helvetica, derived from Helvetia, the Latin name for Switzerland, when Haas’ German parent companies Stempel and Linotype began marketing the font internationally in 1961.

Introduced amidst a wave of popularity of Swiss design, and fueled by advertising agencies selling this new design style to their clients, Helvetica quickly appeared in corporate logos, signage for transportation systems, fine art prints, and myriad other uses worldwide. Inclusion of the font in home computer systems such as the Apple Macintosh in 1984 only further cemented its ubiquity.

It sounds a bit geeky, but trust me, you’ll love it.

(I’m waiting for the sequel – “Helvetica II: Comic Sans Strikes Back”.)

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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Information Aesthetics: Visual Data Modeling Goodness

If like me, you’re fanatical about a) access to relevant (dare I say actionable) data and b) new ways of communicating or presenting this data, then you will love this site.

I was trying to explain to a few colleagues the other day that I needs tools to visualize data and business processes in 3D. I’ll bet that if I dig deep enough, this site will have what I am looking for. (Please please please?)

Eye candy for data brainiacs everywhere to be sure. Hopefully, you will never look at a lame little black and white line graph the same way again. (Shake things up a little!) Here are some cool examples:

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Managers vs. Leaders

Mike Bawden (who was kind enough to quote me on his blog a while back) once wrote one of the simplest yet most astute observations about leadership that I have ever read:

“Too many times business owners seem to be satisifed spending their careers as managers rather than leaders. When you see real leadership in action, you’re left in awe. Real leaders are active, engaged and motivating. They create an atmosphere that’s electric – both fun and productive.”

Well said.

Management is static. Management fosters a predictable business-as-usual , don’t-rock-the-boat, status-quo, bureaucratic environment.

Leadership is dynamic. It drives a business forward. It is unstoppable. You either commit to it and get on the train, or you get left behind.

Managers can become leaders, but managing and leading are far from the same thing.

There is no middle-ground.

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Embrace your customers’ enthusiasm.

Excellent post by Mack Collier over at Viral Garden (via Customers Rock):

1 – View your customers as a community, and join them. If there is a ‘big secret’ to how musicians create fans, this is it. Let’s go back to the above photo. It was taken at a recent concert by The Donnas. But if you look closer, you’ll notice that the singer on stage is just as excited and a fan of the music she is singing, as the people that are hearing it. Everyone, the audience, and the singer on stage, has their arms up, and they are cheering. Everyone belongs to the same community of fans.

But it’s just as easy to join your community of customers in other industries. Willie Davidson explains that ‘market research’ to Harley-Davidson means spending a weekend on the open road with other Harley owners. Davidson is a fellow Harley owner, and as a result, is part of the same culture as his company’s customers. The line between Harley-Davidson’s customers, and the company itself, is very hazy. Since the company is participating in the customer’s community, they better understand their customers, and as a result market to them more effectively. All of this makes it easier for Harley owners to be excited about the brand and proud to be a member of a very loyal and unique culture.

2 – Make sure you view your company and its products as your customers do. Hugh MacLeod had a great point once about making sure that your company is having the same conversation that your customers are. Apple thinks its products are cool, and so do its customers. Remember when the iPhone was introduced? Remember seeing customers proudly camping out for days outside Apple retail stores prior to the iPhone going on sale? Did you realize that in almost every case, there was a Cingular store close by selling the same iPhone, with no one waiting in line? But it was ‘cool’ to stand in line to wait for an iPhone, at the Apple store. Apple thinks the iPhone is cool, and Apple’s customers agree, AND think that THEY are by extension cool because they have an iPhone!

3 – Empower your existing fans to market for you. Another secret to marketing like a rockstar is this: Evangelist=Fan. If you have evangelists, then you have fans. So obviously, you want to find your existing evangelists, and make it as easy as possible for them to tell others about you. Remember this post from last year about how Maker’s Mark created their Brand Ambassador program? All the distillery did was organize its existing evangelists and empower them to better market for Maker’s Mark. IOW, they made it easier for their evangelists to engage in pre-existing activities. These customers were passionate for the Maker’s Mark brand, so the distillery empowered them to market for them. And remember, customers are far more likely to listen to other customers who endorse a product, than they are the company selling the product!

4 – Give customers input into your marketing. Dell’s Ideastorm is a great example of this. The company has created a place for customers to not only submit their ideas on how Dell’s products can be improved, but they then let other customers vote on which ideas are their favorites. Dell can look and see which ideas are the most popular, and then have a great idea of which improvements/changes customers want to see happen. And when the company acts on the changes that are suggested, it lets Dell’s customers know that their input is valued and appreciated. It lets them know that they have some ownership over Dell’s marketing. So naturally that leads to more customers giving more input and suggestions on what they want to see, which results in even MORE efficient marketing from Dell!

5 – Have FUN with your marketing! So how is Warner Bros. promoting next summer’s hopeful blockbuster movie The Dark Knight? With posters and trailers online, right? Yes they are doing that, but they are also creating websites that must be decoded. If the lucky visitor can do so, they will receive an address of a nearby bakery, where a real cake is awaiting them, with a phone number to call written in icing, and containing a cell phone that receives both calls and text messages from ‘Rent a Clown’. This is supposedly a company set up by one of the movie’s main characters, The Joker! This is marketing, but it’s also a great way to get people talking about, and excited about a movie that won’t come out for seven months.

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iPod finds its way into the world of Haute Couture: Vomit ensues.

Here’s some context for you (and some culture too, while we’re at it):

The Years of Cristobal Balenciaga

1918 saw the founding of Cristobal Balenciaga’s first haute couture house in San Sébastian, Spain. Local admiration for his designs was so strong that a second haute couture house was opened in Madrid and a third in Barcelona. In 1937, 10, Avenue George V became the Parisian home of Cristobal Balenciaga’s creative influence. Balenciaga’s Paris flagship store is still located at this address.

Balenciaga soon came to embody Parisian elegance. Cristobal Balenciaga was hailed as ‘The Couturier of Couturiers’ and ‘The Master of us all’’ by designer Christian Dior.

In 1946, the House of Balenciaga launched its first perfume, ‘Le Dix’, aptly named after its first atelier, 10, Avenue George V. ‘Le Dix’ attracted the same acclaim as the famous Balenciaga couture pieces, and the perfume soon even rivalled that of Coco Chanel herself. In 1968, Balenciaga closed his couture house, to the deep dismay of his favourite clients. Countess Mona Bismarck lamented the event by locking herself indoors for three days.

Transitional Times

Cristobal Balenciaga died in his home country of Spain in 1972. His nephews then took the helm of the business. In 1978, control of the House of Balenciaga, including the important fragrance business, passed to Hoechst and then to Groupe Jacques Bogart in 1986.

In 1995, Nicolas Ghesquière was hired by the House, initially as a designer for the licensed products activity. He became creative director for the House’s own ready-to-wear and accessories collection in 1997.

Balenciaga Today

In 2001, Gucci Group, in partnership with Nicolas Ghesquière as creative director, acquired the House of Balenciaga, now well on its way towards recreating the influence and respect that the house commanded in its former heydays.

Today, the House of Balenciaga creates women’s and men’s ready-to-wear, shoes and accessories, sold worldwide.

Years ago, when famed couturier Yves Saint Laurent was asked how many true Haute Couture houses there were, answered “only two: Balenciaga, and Chanel.”

It’s safe to say that Yves Saint Laurent and Dior have now added to that count. At any rate, it’s pretty much a given that the house that Balenciaga built is still the house of houses when it comes to the world of Haute Couture.

Perhaps Cristobal would scoff at the idea of creating accessories for a techno culture icon like the iPod were he still around today, but… here we are: Balenciaga is now selling iPod cases.

Are we seeing the bastardization of once proud couture houses, (catering to a new breed of customers) or is this simply another illustration of the impact that iPod has had on our culture? I’ll let you decide.

My two cents: Relevance by association may sometimes be a good strategy to attract new clients/customers, but in the case of very high level luxury brands, the trade-off can be dire. A house like Balenciaga was never about attracting the spoiled offspring of the super rich. It was about class and exclusivity, not selling out to a fickle crowd with money to burn.

This is how great brands choke and die.

Balenciaga “execs,” here is my advice to you: More haute couture and less marketing. Your brand is about design and quality, not gimmicks and gateway products.

*sigh*

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Big vs. Small

“So I was wondering, what is that exact point where a company stops caring? Stops paying attention to their customers? Stops with the phenomenal customer service? Is it when they reach a certain sales figure? A certain number of employees?”

These were some of the pertinent questions posed by Brains On Fire’s resident firestarter Spike Jones some time ago.

This is too big a topic to try to cover in only one post, but the least I can do is to try and get the discussion started. Here is a short list of what you might call purple cow killers. These business diseases can strike a perfectly cool little company with quasi-infinite potential, and turn it into a bumbling corporate flunkie faster than you can say “I.P.O.”:

1) Routine

People lose their passion for things they love when those things become routine. Think about it. Your first day at a new job. Your first drive in a new car. The first time you see a good movie. A first kiss. Everything is exciting at first… but then you eventually get jaded. The excitement wanes. You lose some of your passion. Details become someone else’s problem. So do your products. So do your customers. Deny it all you want, it’s true… and it’s inevitable unless you do something about it.

The trick is to keep the fire burning by keeping things fresh. If routine is a passion-killer, then build a corporate ecosystem that actively fights routine. Easier said than done? Nope. Quite the contrary. (But that’s a topic for another day.)

2) Bureaucracy

The bigger you get, the more you start to rely on procedures. The more you start to say things like “no” and “can’t” and “we’ll have to charge you extra for that”. The harder it becomes for the people at the top of your organization to stay in direct contact with their customers. That’s bad. It shouldn’t take thirty minutes for a customer to get a return authorization. It shouldn’t take seven transfers to get a product manager on the phone. Nobody should ever get the runaround. Ever.

Bureaucracies slow things down and build walls between employees and between you and your customers. As you grow, take the time to develop systems that overcome this problem. Again, this isn’t hard, but you can’t let these things fall to chance. You have to be just as proactive in building your company’s structure as you are in building its markets.

Don’t lose sight of the fact that a company isn’t a building or a logo or a set of rules. A company is always, first and foremost, a group of people united to pursue a common interest. And while you may not think of it that way, this applies to your employees as well as your customers. As a business leader, one of your jobs is to make sure these people are all connected. If your organization disconnects them from one another, you are majorly shooting yourself in the foot.

3) Comfort

If you’ve only worked on the agency side of the business, chances are that you’ve never heard these dreaded words: “We’ve been doing things this way for ____ years, and we’ve been successful at it, so there’s no reason to change.”

(Nails on a chalkboard.)

Yeah, well, in the wise words of Jack Spade, “Never believe anything you’ve done is successful.” The minute you do, you’re dead. End of story. In business, getting comfortable = getting lazy.

Reality check: Markets change. Technologies and tastes change. People grow old and younger ones take their place. Renewal = relevance. Even old-school luxury houses like Bentley and Cartier have adapted to new markets. (If you don’t believe me, watch MTV sometime.)

If you don’t constantly question what you could do better or where you might go next, you’re done. Period.

4) Nepotism

It’s natural to want to surround yourself with people you know and trust. It’s another thing altogether to promote buddies and family members to positions they are neither qualified for, nor passionate about.

Furthermore, while surrounding yourself with people who won’t ever challenge you might be a nice ego boost, it is certainly no way to keep your company moving in any kind of direction.

If all your key managers are passionate about are their 401K plans and their annual retreats to Tahiti, then it’s no surprise that your company has lost its focus.

5) Fear

“Show me a guy who’s afraid to look bad, and I’ll show you a guy you can beat every time.” (Lou Brock)

Yep.

The older you get, the less chances you are likely to take with your career. The larger your company is, the less likely you are to risk screwing something up.

Too much to lose, you see.

So you stop taking chances. You start worrying about what your “competitors” are doing. Instead of leading them, you let them lead you. Next thing you know, you’ve exported all of your production power to China, your quality takes a dive, your customer service is anything but, every bit of talent you ever managed to hire has walked out on you, and you find yourself on the losing end of a price war. Other than just plain dishonesty, that’s how great companies fail.

Well, bollocks. Playing it “safe” is the fastest way to screw yourself over. (And your customers.)

If you don’t have the huevos to stretch the boundaries now and again, to be an innovator, a pioneer, and to sometimes be okay with making some people really hate your latest product, then you need to find another occupation. Being a leader isn’t about staying put. It’s about… well, leading.

6) Denial

Most companies who don’t get it think that they do get it. That’s the tragedy. Once your distribution channels are well-developed, once you have thousands of active accounts, once you’ve been a market leader for twenty, thirty, forty years, the sheer momentum of your growth can carry you into another decade or two. As long as your growth closely matches whatever opportune economic indicator you are following, things might look pretty decent.

You might be under the delusion that you have it all figured out.

So what if you haven’t actually spoken to a customer in twenty years? So what if you don’t even bother to use your own products anymore? So what if you’ve chased away companies that could have become your partners in a number of cool ventures, and they went to your competitors instead? So what if your best people are quitting, one after the other? So what if you have absolutely no idea what people are saying about your products, about your customer service, about your company, about your leadership?

No news is good news, right?

Right?

*sigh*

How do we end up in sad little places like this? Really. You’d think that by now, we’d ALL know better. Tsk.

Before I get back to work, I’ll leave you with another Jack Spade favorite:

“The bigger you get, the smaller you should act.”

Every C.E.O. on the planet should be required to recite that line a hundred times every morning before they even get to their desk. (Let me propose a UN resolution. Do I hear a yay?)

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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Excess: Running the numbers

Continuing the discussion from the previous post…

God bless our economy, but this very quick presentation by Chris Jordan (on Business Interactive) will make you wonder just how long we can sustain this kind of nonsense:

People in the US uses 60 thousand plastic bags every five seconds.

The US uses 200,000 plastic bottles every five minutes. (That’s OVER TWO MILLION PLASTIC BOTTLES EVERY HOUR!)

US prisons currently house 2.5 MILLION prisoners. (That’s almost the entire population of Chicago, by the way.)

200,000 Americans die from smoking every six months.

9 MILLION children in the US did not have health insurance in 2007.

The US spends $12.5 Million of taxpayer dollars every hour in Iraq.

I’m not sure what this says about brand “America” but it doesn’t exactly spell two thumbs up.

The presentation is pretty intense as it uses incredibly large images to put these numbers in the proper context/scale.

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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How every US household is liable for $516,000 of America’s spectacular $59.6 trillion debt

For Chris:

Interesting and sobering article published back in May on yournewreality.com. (Yeah, I’m behind in my reading a bit.) We’ll get to it in a minute.

Note: Because I am a worthless echo chamber (isn’t that what we bloggers are?) I won’t bother to fact-check, but feel free to do so at your leisure.

About this article, I will just say this: Alarmist vernacular aside, if you ignore the doomsday predictions and just focus on the numbers, our nation’s current financial situation isn’t good. Worse yet, our nation’s financial future is not looking good at all. There might be a reason why so many CEOs are negotiating ridiculously high compensation packages and bouncing from job to job as often as they possibly can.Maybe they saw the writing on the wall long before the rest of us did.

Okay look, I know we all want to live in big houses, drive cool cars and dress like movie stars without having to work all that hard for it – and worry about the costs later- but there comes a point when you kind of have to wake up and accept that a) credit has its limits and b) financial responsibility isn’t something you can put off. This applies to banks a whole lot more than it applies to consumers, but it does start with individual responsibility when it comes to our attitude towards borrowing. Without debtors’ prisons around anymore to remind us that credit isn’t infinite, we need to start giving some thought to how and why we buy the things we buy.

What does this have to do with branding? Two words: “Brand USA.”

This has to do with future foreign investment in the US economy, in the fate of the US’ workforce, and in the viability of its buying power twenty years from now – as opposed to say, Asia and Europe.

Put yourself in the shoes of an investor with a finite amount of money to invest, and do your homework. Then ask yourself this: Right now, are the US economy and the US Dollar really your best bets for a strong return on investment? Is the dollar doing well? Is the US creating more jobs than it is losing? Are the new jobs being created as good for taxpayers as the ones they are “replacing?”

The rub is that economic pressures tend to work as circular cause-and-effect cycles. Lack of confidence in US markets by foreign-owned banks can trigger the kind of economic downturn that our current overconsumptive lifestyles might not jive well with. Downturns shatter investor confidence. Low investor & consumer confidence means more slowdown.

It isn’t brain surgery.

In the past, a good way to kick the economy into high gear was to get involved in a good war. War always stimulated economies… But in the global marketplace we live in today, we’re more likely to stimulate China’s economy by going to war than our own. What was true of the 1940’s isn’t applicable to the world we live in today.

For all the “reality” TV we consume daily, we’re painfully out of touch with reality.

Brand USA could really use a big boost over the next 6-12 months… and neither the Huckabee-Clinton-Obama-McCain race to the White House nor the current state of things in Iraq nor the endless stream of bonehead “news” stories about Britney, Paris, Lindsay or whatever politician got busted doing something embarrassing in airport bathrooms is really helping.

Now news about the exciting research that American Universities and labs are moving forward with in fields like advanced robotics, superconductors, fuel efficiency, AI, smart materials, etc., about exciting emerging technologies and how they can be incorporated into our everyday lives, and how successful grassroots social programs could be used as templates for large scale federal programs in coming years might serve our interests as a nation a bit better.

As a nation and cluster of business communities, we really need to raise the level of the conversation just a tad.

Read this, and I’ll let you figure out the rest.

Americans, on average, spend more money than they earn. How do they manage to do this? Easy credit, low interest debt.

Thanks to their magnificent consumption, soaking up the goods produced by tens of thousands of Chinese factories, Asia keeps offering Americans easily accessible credit and buys up the monumental debt wracked up daily by the American government in the form of Treasury bonds. Without Asia both offering credit, and buying up debt, the average American lifestyle as they now know it would cease exist.

But even though the US government, and federal reserve, freely admits to shocking levels of debt and losses, the true scale of America’s extremely fragile economic situation is lost behind illusionary accounting practices, the kind that no corporation is allowed to get away with.

The true scale of America’s extremely fragile economic situations has now been exposed :

The federal government recorded a $1.3 trillion loss last year — far more than the official $248 billion deficit — when corporate-style accounting standards are used, a USA TODAY analysis shows.

The loss reflects a continued deterioration in the finances of Social Security and government retirement programs for civil servants and military personnel. The loss — equal to $11,434 per household — is more than Americans paid in income taxes in 2006.

“We’re on an unsustainable path and doing a great disservice to future generations,” says Chris Chocola, a former Republican member of Congress from Indiana and corporate chief executive who is pushing for more accurate federal accounting.

Modern accounting requires that corporations, state governments and local governments count expenses immediately when a transaction occurs, even if the payment will be made later.

The federal government does not follow the rule, so promises for Social Security and Medicare don’t show up when the government reports its financial condition.

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.

Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest.

This hidden debt is the amount taxpayers would have to pay immediately to cover government’s financial obligations. Like a mortgage, it will cost more to repay the debt over time. Every U.S. household would have to pay about $31,000 a year to do so in 75 years.

It would seem almost impossible for the American economy to be facing disaster when the stock market is roaring past 13400 points, but most of this growth comes from the availability of extremely cheap debt. Get a big fat low interest loan and pour the money into stocks and bonds, and watch the stock market climb.

Mike Whitney is not alone in claiming the strength of the American stock mark is but an illusion, a simple con aimed at propping up the American dollar and holding back the financial devastation that will eventually break out across the nation.

The illusion, he claims, is shattered when you take a look at what’s happening to American real estate, and it’s not a pretty picture. When the real estate market completely disintegrates, so will most of the rest of the American economy :

The real estate market is crashing faster than anyone had anticipated. Housing prices have fallen in 17 of 20 of the nation’s largest cities and the trend lines indicate that the worst is yet to come.

March sales of new homes plummeted by a record 23.5% (year over year) removing all hope for a quick rebound. Problems in the subprime and Alt-A loans are mushrooming in previously “hot markets” resulting in an unprecedented number of foreclosures.

The defaults have slowed demand for new homes and increased the glut of houses already on the market. This is putting additional downward pressure on prices and profits. More and more builders are struggling just to keep their heads above water.

This isn’t your typical 1980s-type “correction”; it’s a full-blown real estate cyclone smashing everything in its path.

Tremors from the real estate earthquake won’t be limited to housing–they will rumble through all areas of the economy including the stock market, financial sector and currency trading. There is simply no way to minimize the effects of a bursting $4.5 trillion equity bubble.

The next shoe to drop will be the stock market which is still flying-high from increases in the money supply. The Federal Reserve has printed up enough fiat-cash to keep overpriced equities jumping for joy for a few months longer. But it won’t last.

Wall Street’s credit bubble is even bigger than the housing bubble—a monstrous, lumbering dirigible that’s headed for a crash-landing. The Dow is like a drunk atop a 13,000 ft cliff; inebriated on the Fed’s cheap “low-interest” liquor. One wrong step and he’ll plunge headlong into the ether.

The stock market cheerleaders are ooooing and ahhing the Dow’s climb to 13,000, but it’s all a sham. Wall Street is just enjoying the last wisps of Greenspan’s low interest helium swirling into the largest credit bubble in history. But there are big changes on the way.

In fact, the storm clouds have already formed over the housing market. The subprime albatross has lashed itself to everything in the economy —dragging down consumer confidence, GDP and (eventually) the stock market, too. The real damage is just beginning to materialize.

The entire thing house of cards is propped up by confidence. The confidence that says property prices will recover. The confidence that claims the stock market will stay strong. The confidence wishes, dreams, hopes, that jobs will grow, that exports will rise, that the inevitable crash and burn will never come.

Perhaps spending more state and federal money on education, infrastructure, healthcare networks, and research might yield better ROI than supporting the Halliburtons and Blackwaters of the world. We just can’t keep borrowing trillions of dollars from foreign banks to fund little more than day to day war-driven government services, an ill-managed federal budget and our purchasing power… and expect the bubble to keep growing and growing and growing without ever bursting.

Unlike the other olivier blanchard, I am not an economist, but as a guy who has worked for fifteen long years to finally get out from under a pretty decent amount of debt, this seems pretty obvious: Debt doesn’t just go away when you ignore it. Sooner or later, you have to pay the piper. Yes you, not the next guy.

No one is going to bail us out of this mess. No one is going to come along to magically rebuild confidence in our economy or our government. Democracy only works if people take their civic, financial and professional responsibilities seriously. As a nation, we could be doing a whole lot better.

Also check out this very cool visual tool.

Additional reading:

US Economy Overtaken By EU And Japan

Whitney : Doomsday For The Greenback

Chinese Taking Out Unsecured Loans To Invest In Stock Market

China’s Stock Market Plunges 6.5%, Losses Continue Into Second Day

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

Image source: China Economics Blog.

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The First Promise You Break Is Your Last Chance.

I found this perfectly timed gem over on Buzzoodle today:

When a client, especially a new client, does not get what they are expecting, you are breaking an implied promise. Once you break that first promise, they will be calulating in their head how much more they will take before letting you go.

Here are 10 ways you may have broken a promise to a client.

1. Return a phone call when you said you would.
2. Proposal or contract arrives the day you said it would.
3. Reported back progress when stipulated.
4. Delivered exactly what is expected.
5. Clear pricing that does not go up for this and that.
6. Built an ongoing, valueable relationship
7. Failed to thank client for referral
8. Did not follow up after delivery
9. Miss a scheduled meeting or lunch
10. Back-peddle on promises after sale

You cannot create buzz when you are creating regret.

I love that post.

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Big Ideas, Fear, and The Crazy Ones.

Hop on over to Kathy Sierra‘s blog for her post on bravery, confidence, and getting past the paralysis of uncertainty. Very cool stuff, as always:

“If your new Big Idea doesn’t scare the hell out of you, it’s probably not a new Big Idea. If it doesn’t scare other people, it might be because you allowed the consensus (or what you imagined as the consensus) to smooth the pointy bits, buffing and polishing the idea into a nice safe state that displeases nobody and delights nobody.”
(…)
“But–if we let the critics (or fear of criticism) talk us out of an idea we still believe in, the world will be more homogeneous. Smoother. Less interesting. Imagine where we’d be if people throughout history had always given in to the critics (or fear of critics). Imagine the ideas that would have beenlost if others hadn’t been brave enough to stand up against smart people who disagreed. Nature needs change and diversity, but humans tend to favor the status quo.”

… Well, not all humans. Some of us are wired a little bit differently. It isn’t so much that we’re difficult. We really aren’t. It’s just in our DNA to a) figure out ways to make things better for people around us, and b) to find ways to take these ideas and actually make them happen.

We just want faster wheels. Safer helmets. Sharper pictures. Easier web interfaces. Cleaner fuels. Smarter workspaces. Softer beds. Fun retail spaces. Cheaper orbiters. More powerful telescopes. Tastier drive-thru coffee. Food, clean water and medicine for every human being on the planet. Better advertising. Put simply, we have the skills to make these things happen, and don’t feel like waiting for someone else to get around to it.

Kathy posted a link to the very cool ode to “The Crazy Ones”, from Apple. Remember the ad? If not, maybe this will refresh your memory:

Here’s to the crazy ones.

The misfits.
The rebels.
The troublemakers.
The round pegs in the square holes.

The ones who see things differently.
They’re not fond of rules.
And they have no respect for the status quo.

You can praise them, disagree with them, quote them,
disbelieve them, glorify or vilify them.
About the only thing you can’t do is ignore them.
Because they change things.

They invent. They imagine. They heal.
They explore. They create. They inspire.
They push the human race forward.

Maybe they have to be crazy.
How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?
We make tools for these kinds of people.

While some see them as the crazy ones, we see genius.
Because the people who are crazy enough to think they can change the world, are the ones who do.

Amen.

Related post: Fear Is Irrelevant.

Check this out. 😉

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

Image by Goldmember

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Rethinking the way we use Powerpoint

From infosthetics.com:

Research at the University of NSW, Sydney, Australia, claims the human brain processes & retains more information if it is digested in either its verbal or written form, but not both at the same time. more of the passages would be understood & retained if heard or read separately. “The use of the PowerPoint presentation has been a disaster,” Professor Sweller said. “It should be ditched.”

“It is effective to speak to a diagram, because it presents information in a different form. But it is not effective to speak the same words that are written, because it is putting too much load on the mind & decreases your ability to understand what is being presented.”

This new insight clearly puts the recent report about using Powerpoint in Parliament speeches in a new perspective.

Interesting.

Some of the best powerpoint presentations I’ve seen so far have been extremely simple. They tended to focus on images, words and data so iconic, so clear, so easily understood in seconds that they a) almost required no input from the presenter and b) could have been framed and use as artwork. Slides with ten bullet-points and sub bullet points just put me to sleep. Bleh bleh bleh… bleh… blehhhhhhhhhh…

Do yourselves a favor and go to presentationzen.com. Learn something today… like ways to a) communicate better with ppt. and b) stop boring your audience to death. (Thank you.)

Related reading: The PDF, smh.com

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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