Brands, Change & Innovation

The rate of change in our society continues to accelerate. This causes many people quite a bit of anxiety. Emerging technologies have replaced millions of jobs but, so far, they have created more jobs than they have eliminated. 

Consider what digital photography (invented by a Kodak scientist) did to Eastman Kodak company. Consider what Uber is doing to traditional dispatcher-led taxi cab companies. Consider how airbnb.com is impacting the growth rate of hotel chains. What did laptop computers do to desktop computers? How are pad computers and smartphones impacting laptop computer sales? Consider how Hallmark and American Greetings are impacted by digital technology. Consider what CreateSpace and other self-publishing platforms have done to traditional book publishers. What will artificially intelligent medical diagnosis systems do to medical internists? With self-driving automobiles, how will the auto insurance business change? What will Tesla and its battery-driven vehicle revolution do to the oil industry (and the auto industry and gas stations)? Where will drones ultimately take us? What will increasing aerial surveillance do to our ability to capture criminals and prevent wars? Consider that AI experts are exploring how to give computers the capacity to innovate. And this is just the tip of the iceberg.

Consider how Einsteinian physics superseded Newtonian physics and consider how quantum physics recast Einsetinian physics and consider the potential impact of superstring theory and multiverse theory. 

Research universities and company R&D labs are working on these disruptive technologies - energy storage, fuel cells, genomics, advanced materials, autonomous vehicles, renewable energy, advanced robotics, 3D printing, mobile Internet, automation of knowledge work, cloud technology, integrated digital design and photonics.

We were recently approached by a company that is on the verge of commercializing human organ regeneration. And consider the LED revolution. Incandescent and florescent lightbulbs may soon become historical artifacts. And several companies are working on developing direct computer-brain interfaces.

In a rapidly changing world, no business is safe from technology-driven obsolescence. So, what is a brand manager to do? For that matter, what is any business manager to do? Here is what will matter for future survival, and more importantly, to thrive well into the future - higher education, advanced degrees, lifelong learning, a solid understanding of math and science, diverse interests, diverse reading, personal flexibility, ideation skills, courage in the face of uncertainty, the ability to change course at a moment's notice, understanding the intersection of many different scientific disciplines and technologies, an opportunistic attitude, entrepreneurship, the ability to take risks, a penchant for action, an optimistic attitude and the ability to discern patterns and recognize meta-themes.

Innovation & Brand Growth

Much of brand sales growth has resulted from sub-category innovation and innovation that redefines categories. Within alcohol products, consider Fireball Cinnamon Whiskey and all of the other flavored and infused whiskeys, vodkas and other types of alcohol. Consider the explosion of craft beers of every style, variety and flavor. Consider the rise of flavor packets or infusers for water. Consider what smart phone technology has done for the mobile phone category. Consider the series of innovations in television including color television, digital television, cable television, satellite television and smart television.  Consider the product innovations in the Swiffer line of products. The Strong museum elevated itself by becoming the first museum of play (instead of the more traditional children's museum). Consider what the Toyota Prius did to the automobile category or Tesla did to the category. Consider what Google cars will do to the category. What has online learning done for Southern New Hampshire University? Consider what WeatherTech has done to protect vehicle floors from salt damage during the winter. Consider what digital camera technology has done for photography. How about what LED lighting has done for energy conservation and light bulb longevity? Consider what USB flash drives did for computer memory, transferring files and computer backup. Consider what the introduction of ATMs did for banking. I think you get the picture.

A sure way to insure growth for your brand is to continue to innovate within and outside of its product categories. Each useful innovation creates sales surges and produces competitive advantage (at least for a time). If your brand does not innovate, it will experience slower growth and eventually be left behind.

I wish you great success in creating product and category innovations for your brand.

Hollow Claims

Increasingly, I have encountered brands that make the following types of claims:

• We are the quality leader in the X category.
• We are the innovation leader in the Y category.
• We are the service leader in the Z category.
• We are the leader in the XYZ category (which is the worst of all claims).

Is quality important? Yes. Is Innovation important? Absolutely. Is service important? Of course. Is it desirable to be the industry leader? Sure. However, in more and more categories, as I perform brand audits, I find that large numbers of companies in many categories make these claims—so much so that the claims have become hollow. “Leader” means top, number one, not one of many striving to be top and number one. Don’t claim an aspiration unless you can uniquely deliver on that aspiration.

Regarding quality, who is the leader in the hotel industry? Is it the Ritz Carlton with its “Ladies and gentlemen serving ladies and gentlemen” service, or is it the Four Seasons, or Mandarin Oriental, or Peninsula, or Amanresorts, or Shangri-La, or InterContinental? With this list of high-quality hotel chains, should Hyatt or Westin or Marriott or Sheraton or Hilton claim quality leadership? Who makes the highest-quality shoes? Who makes the highest-quality kitchen appliances? How about the highest-quality kitchen knives? Who makes the highest-quality shampoo? Why? Based on what? Is one independent ranking enough to make it so?

Are some companies real innovation leaders? Sure. Who would argue that Apple is not an innovation leader in its category with its introductions of the iPod, iPhone, and iPad? If your company is claiming innovation as its primary point of difference, is it as far ahead of its competition in reality and perception as Apple is in its category? Or is it in a pack of companies, each of which has introduced a comparable number of innovations? In the grocery store business, Wegmans has been widely recognized as the innovation leader time. Trader Joe’s is also innovative, but with a different formula. In the auto industry, which company should claim innovation leadership? Toyota because it was the first with a significant introduction of hybrid cars? GM because of its introduction of OnStar? BMW because of its constant innovations? How about Honda or Porsche?

Do some companies stand out as service leaders? I would contend that Ritz Carlton and Nordstrom would vie for this position in their respective industries. Who is the service leader in banking? In wealth management? How about in insurance? In restaurants? In hospitals? How does service leadership relate to quality leadership? And what does it mean to be the overall leader in a category? What is the metric for leadership? Market share? Distribution? Dollar sales? Unit sales? Customer loyalty? Leadership is a fairly vague term. Leadership, but in what? How important is quality to leadership? Service to leadership? Innovation?

I would contend that quality, service, and innovation are critical to most companies in most industries. Every organization should try to continuously improve its delivery of each of these performance areas. However, unless you are the undisputed leader in one of them, you should not claim it as your primary differentiating benefit. I would never try to claim industry leadership. It is a title that can only be conferred through general consensus by outside observers over time. And I would only claim quality, service, or innovation leadership if the following hurdles were cleared:

• Your brand is the undisputed leader in this area as evidenced by customer research, independent rankings, specific proof points, and truly measurable differences.
• You consistently deliver against this measure across all of your products and services at all of your locations/distribution points.
• You are, at least, perceived/recognized by your primary target audiences as a market leader.

Finally, if I made one of these claims, I would make sure that I had the resources in place to ensure consistent superiority in this area for a very long time. Don’t manage a brand that contributes to the hollow claims of quality, service, or innovation leadership. Rather, manage a brand that claims something truly unique, compelling, and believable to its target audiences. The organizations that can convincingly claim leadership in one of these three areas (quality, service, and innovation) are rare indeed.

© 2015 Brad VanAuken, Reprinted from Brand Aid, second edition, available here or here.

The Importance of Product

In large consumer packaged goods companies (houses of brands), the brand manager often manages product and brand decisions together. In branded houses, the product and brand decisions are often made separately. 

While products and brands are different - brands are the personifications of organizations and their products and services - products, never the less, are very important to the success of the brands whose names they bare. 

Witness the strength of the Apple or Tesla brands. They are based on high quality products with innovation, functionality and aesthetic appeal. Both also command premium prices and are in the luxury category. While a well thought through brand can increase the appeal of a mediocre product, it cannot completely overcome its deficiencies. As the saying goes, "You can put lipstick on a pig. It is still a pig."

Don't overlook the importance of the product or service itself when managing your brand. Deficient or sub-par products and services will tarnish the brand's image, while superior products and services will enhance its image.

Innovation as a Path to Brand Success

I am a huge advocate of innovation. Some of the most successful brands the world has witnessed are the result of innovation. Think Apple iPod or Toyota Prius or eBay or Amazon.com or even my hometown grocery chain, Wegmans. They have all experienced uncommon success based on innovation.

First, let’s define innovation. Innovation is the application of novelty to create value.

What leads to innovation? Here is my short list (based upon several experts’ extensive research in this area):

• A penchant for experimentation and action over analysis

o   Wegmans has succeeded over the years by constantly testing new concepts in a few stores and then, if they are successful, integrating them throughout their other stores.

o   Organizations need to play to win rather than play not to fail.

• The realization that in many industries, approximately 70% of innovations are developed by users, not the firm bringing the product to market (from research done by Professor Eric von Hippel at MIT)

o   Harley-Davidson executives go on HOG Rallies with their customers taking notes and asking questions about accessories, bike modifications and other user-added features. They then debrief and act on what they discovered upon returning to their headquarters.

• The importance of connectivity. An enterprise has a much higher success rate if it is interconnected with the widest variety of potential idea sources, suppliers, business partners, customers, universities, governmental agencies, etc.

o   In their book, Co-Opetition, Adam M. Brandenburger and Barry J. Nalebuff convincingly make the point that enterprises that view other organizations and entities as potential partners rather than potential competitors are more successful in the marketplace.

• Build on your strengths, don’t waste your efforts on hiding or compensating for your weaknesses. Identify your assets and amplify them.

o   Numerous municipalities have ignored their inclement weather (either during the winter or the summer) and built on their unique strengths to attract businesses, residents and tourists

• Envision the positive outcome that you seek.

o   World class athletes make use of creative visualization. In their minds, they relentlessly visualize their ultimate success.

• Be optimistic and constantly work until your optimism is justified.

o   Henry Ford’s first two automobile companies failed.

o   In baseball, a batter doesn’t improve by waiting for the perfect pitch. He improves by hitting -- again and again and again.

Innovation is fun. It is energizing. It makes you want to work harder. It can make the world a better place in which to live. And it can lead to exceptional business results and brand success. I wish you an innovative future.