Brands In Memoriam 2012

Frequent readers of this blog know that I am obsessed with the concept of creative destruction, the intangible but daunting market force where an invention that is vital takes out that which has become defunct, and the nascent replaces the established. For those of you just stopping by, you will find any number of mentions of creative destruction as you page through my posts on innovation—it represents for me all that is true and real in deploying creativity to survive in business, perhaps best captured in the title of Andy Grove’s definitive book, “Only The Paranoid Survive.”

As a result of creative destruction, every year we add more once significant names to the Dead Brand Graveyard. Recent memory had us bid adieu to such iconic enterprises as Palm, Saab, Lehman Brothers, Zenith, Compaq, Borders, Circuit City, Ritz Camera, CompUSA, Mervyn’s, Friendster, Tower Records, Polaroid, and Kodak. I polled my network on Facebook for suggestions to include this year and got way more than I could include in a single blog post, many of which could be argued are still on the bubble; some have already quietly jumped the shark, others are still operating as near zombie brands, not yet coming to terms with their imminent vaporization. I invite those dear friends who offered their suggestions to include them in the comments below—as well as anyone else who can see what is certain to end badly—as internal politics and stagnating ideas cause those who should know better to obscure the mandate of leadership.

Here then are my top label farewells for the current calendar year:

Continental Airlines Logo Circa 1940sContinental Airlines: As a result of the merger between United and Continental, the marketing folks did the right thing and picked one brand to make it easier to find your tail logo on the runway. Was anything really lost if this was just a merger? Ask the people (like me) still stuck flying United—yeah, the customer experience did the impossible and took another plunge. If you aren’t 1K at this point in your frequent flyer status, melt down your Premier Card, there are so many top dogs in the system the rest of us matter not, kiss upgrades goodbye. Choice on routes? Funny how the routes and times keep getting de-duped. It’s ironic that an industry that flies you around in the sky at 500 mph and largely invented the modern loyalty program today can’t come up with more clever ways to achieve growth than eliminating its own competition—plus five extra inches of leg room, baggage checks, and those yummy inflight box lunches are now upsells. The parade of eliminated airline brands welcomes another, while customers fume with rising prices and deteriorating service. Hard to believe this is a path to long-term health and improved profits in a backbone industry our economy needs to thrive.

Fresh & Easy: This expansion into the USA didn’t go so well for UK grocery titan Tesco. Any ideas why? Been in one? Okay, that’s a good start. Here’s another—where was the segmentation analysis? Same prices and quality as the giant American supermarkets like Safeway, but a smaller footprint and thus fewer shelf offerings. Same footprint and attempted laid back environment as Whole Foods or Trader Joe’s, but no real upscale inventory warranting premium prices or nice people to kibitz with you at checkout. No meaningful differentiation to be found, and small parking lots, too. Ready made portions for young working professionals weren’t a home run in a market with as much choice and variety as ours. Head on competition with Wal-Mart—which can operate at scale near 3% net income while it’s strategically expanding in the grocery category—was a capital-intensive bet inclusive of acquiring real estate and building new stores, a tough play requiring far-ranging commitment and vision to warrant the pain. Without either, Tesco cut its losses and retreated.

Newsweek: This one is spiritually sad for us old school hard news and analysis junkies, except that I cannot remember when I last touched a copy of this magazine, even in a dentist’s office. Bought in 2010 from The Washington Post by audio magnate Sid Harman for $1 and assumption of the losses, ostensibly for sentimental reasons, it was then merged via IAC with The Daily Beast and put under the direction of star editor Tina Brown (there’s a cost saving measure, huh?). Circulation and ad rates for the print version of Newsweek never regained momentum sufficient to cover costs, so this year we heard announcement that the print edition is ceasing. Can Newsweek digital-only survive as a differentiated masthead next to The Daily Beast? Can you imagine a good reason to continue two separate editorial teams? Can you imagine the same editorial team producing two presumably different publications? Have you tried to sell display advertising lately for vertical online editorial products? And just what is a News-Weekly in the age of internet microsecond breaking info copy? At 79 years on the newsstands and in mailboxes, Newsweek had a good run, it just stopped evolving.

Hostess: It seems obvious to many that the sub-brands of 85-year-old Hostess will live on post the uber bankruptcy, and there will be some snack distributor out there continuing to put Twinkies, Ho-Hos, and Ding-Dongs on grocery store shelves everywhere (other than Fresh & Easy, see above). The master brand is likely to die with the corporate entity, as executive management was unable to make a deal with the labor union representing the workers who made the Twinkies, Ho-Hos, and Ding-Dongs. So 18,000 people lost their jobs because no deal could be reached between managers and workers? I don’t think that’s the whole story. Try a balance sheet too weak to support internal investment after emerging from a prior bankruptcy with private equity imposed debt and mounting unfunded pension obligations. The real culprit in my mind—you got it, thinner margins and declining market share due to lack of innovation. Hostess management—now asking for bonuses in liquidation—failed to bring relevant new products to market in a climate where obesity and diabetes became part of the vernacular. Wonder Bread may have been the greatest thing since… whatever came before it, but not in a world of seven grain all natural high fiber baked fresh daily, sliced thick and thin or not at all, your choice.

Blackberry: I am going out on a limb here, calling the magnificent former high-flier from Research in Motion dead even though launch of a new platform has been loaded into the cannons for ignition. Why do I say it’s gone with two new Blackberry’s rolling out as soon as next month? As noted in the Wall Street Journal last week, “Consulting firm IDC recently estimated that RIM’s share of the global smartphone market stands at 4.7%, down from 9.5% at this time last year and from more than 50% in 2009.” Sorry, but when a company has less than 10% of the market share it had three years ago, I am not sure how you could classify a recovery as anything more than a dangling lifeline. What went wrong? Ever try to use the Blackberry browser? There is no word in our language of which I am aware to adequately modify the word slow. With an extremely late to market touchscreen interface, where was the incentive for app developers to develop apps? Those of you who know me know my devotion to the thumb driven analog keyboard, but when I tossed it in for an iPhone 5, I knew the rest of the thumbers were coming too.

There were a number of brands suggested by my colleagues as sighted on death watch, but I’ll let those opinion makers chime in themselves and go out on their own limbs as I did with Blackberry. I have my suspicions about who might be on deck for next year’s list, but I will keep those sealed for now in a paper envelope so as not to publicly curse them or too soon embarrass myself for being wrong. Some in the soon to be gone circle I still like and am hoping for a comeback, though not many.

I think I may make this an annual feature. History would suggest I won’t have much trouble coming up with a list each year. Why chronicle the abdicated? Creative destruction is permanently embedded in our business culture, and even the greatest company can be gone in a single product cycle if customers aren’t understood to be our ultimate boss. With constraints on distribution forever less a moat and abundant technology a ceaseless path to increased consumer choice, business leadership requires nimble execution, unending responsiveness, and gracious humility to constantly win anew customer loyalty. It’s a lesson we all need front and center to do our jobs honestly and well: Innovate quickly or die.

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Dodging The Greatest Hits Graveyard

I’ve kept a frequent presence at rock concerts ever since I was a kid. Back in the day, live rock and roll shows were reasonably affordable—even if you did have to sleep on the street to get tickets—because bands toured in support of the latest record they had produced. Live shows were a catalyst for selling singles and albums, pushed local radio play, sold t-shirts and memorabilia, and paid for the road antics of the bands who could live and party on “permanent vacation.”

The concert world today is obviously different because the ecosystem is so drastically different. There are still monster arena tours like U2, Springsteen, or the Rolling Stones 50th (gasp!) corporate sponsored anniversary. There are small gatherings of devoted fans at venues around 5000 seats for tireless road warriors like Cheap Trick or Chicago. There are nostalgia plays in casino showrooms or destination bars with one or two surviving members of one-hit wonder acts. And there are tremendous new stars like Adele who play the old game a new way and can still fill amphitheaters at top prices, sell plenty of music downloads, and inspire faith that the CD has a tiny bit of life left for the bygone tribe.

What I have noticed over the course of this music evolution is the underlying key to longevity and not moving down the food chain hasn’t much changed—the survivors tend to deliver a healthy balance of old and new material. This is no small problem, as the fans who come out to concerts are no doubt screaming for an artist to play their big hits. It’s natural. It’s satisfying. It’s a trap.

TSO2005A few weeks ago my wife and I went to see one of our favorite groups, the still somewhat niche band Trans-Siberian Orchestra, best known for their annual Christmas shows and the ever-present holiday single, Christmas in Sarajevo. TSO blends heavy metal power chords with classical music and electric violins, usually with an interspersed layer of spoken storytelling. Several years ago they started branching out from Christmas themes, recording and touring a fantasy tale called Beethoven’s Last Night. This was the first time we had seen the show performed live, and while it was familiar to us, it was not well-known to much of the devoted audience. That was pretty brave, I thought, to tour a concept album that was not necessarily top of mind with their audience, but then they did something I found even more courageous. Toward the end of the show, when they had finished playing Beethoven and the audience expected they would play some oldies, they instead played several entirely new songs that had not even been released online. No one had heard these songs except those who had seen the tour, and the applause following was as you might suspect a bit tentative. The nervous quiet during these songs was not because they were bad, it was because they were new. If you are a regular on the live music scene, you know that awkwardness—but without it, there are no new hits.

New music has to be debuted at some point, that’s why it’s called a debut. Audiences can be very tough on new songs, they pay good money to hear hits and the survival of any act is contingent on meeting the expectations of fans. Yet long-term success is equally contingent on innovating, and facing an audience with the unknown or unfamiliar is always a daunting prospect. Who would willingly trade thunderous applause for quiet, polite clapping? The greatest acts know they have no choice.

Most of the hot Top 40 bands in the 1970s and 1980s would periodically release Greatest Hits albums, mechanical collections of their charting singles, usually pushed by their record labels for bankable cash acceleration. Some of these became all time bestsellers, notably The Eagles and Elton John. The question I always used to wonder when I handed over my cash for a dozen song vinyl collection was whether this was the end of the band or the beginning of a new chapter. For too many, we know how that played out, and we know where those bands are playing today, if at all. A Greatest Hits or “Best of…” album was easy money, the equivalent of predictable thunderous applause. Pushing out new work would remain the heart of risk, and the genesis of going to the next level.

Nothing about this cycle is unique to music. Business is the same, especially technology wrapped as consumer products. You need to play to your familiar success, the current incarnation of your brand, but the moment that catalogue is fixed, you’re doing dinner theater rather than headlining at Carnegie Hall. Think RIM with the standing ovation worthy Blackberry, Kodak and Polaroid with endless scrapbooks of silver snapshots, perhaps now Best Buy longing for a different curtain call than their former contender Circuit City. They all climbed the charts, but staying there remains a different story.

Steve Jobs liked to say that he never believed in focus groups, because it was not the job of customers to tell you what they wanted—how could they know what they wanted when it hadn’t yet been invented? No civilian could concretely describe iTunes, the iPod, the iPhone, or the iPad prior to their release. You can only imagine how many pundits prior to the success of these inventions could tell you of their impending doom solely on the basis of unfamiliarity. Of course Apple never stopped marketing its core line of computers during this unbelievable expansion of reach, they were still playing hits while composing new material and seeding it to the faithful, those with whom they had established profound affinity and could ask to trust them further with the unknown.

I also don’t think it is a coincidence that Steve Jobs was a huge fan of The Beatles, who in an active career that spanned all of about eight years never stopped putting out new material, took themselves off the road to focus on composition and the creative process, then reinvented their sound with almost every album, including a few radical pivots like Sgt. Pepper. Is it counter intuitive that the actual career of The Beatles was so short despite all that new material and no Greatest Hits collection until after their break-up? Possibly, but if impact is the name of the game, it is hard to dispute that The Beatles succeeded most of all at avoiding that most dreaded of dead-ends, The Greatest Hits Graveyard. Their incomparable legacy remains vibrant because they pushed themselves so hard to be innovating all the time while crowd pleasing.

Celebrated descriptors like “Built to Last” and “Good to Great” are hard-won praise tied to nimble companies for navigating the same difficult balance for so many years of reinvention. It’s a lesson in courage and vision that is as difficult to learn as it is to replicate, but it is that very bravery that can guide any individual career from ordinary to enviable. Facing the anxious reception of the untried might not be pleasant when a clear alternative is available, but it’s the only trail that bypasses the one-hit wonders.