December 18, 2012 by Ken Goldstein - 10 Comments

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: 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.

March 29, 2011 by Ken Goldstein - 0 comments

Welcome to a New Kind of Tension

From Newsweek — August 24, 2010:

“Silly Things We Believe About Witches, Obama, and More” by David A. Graham

Orwell taught us that freedom is the freedom to say that two plus two make four. How much simpler and profound does it get than that? Depends on how deeply you value your belief set.

There are a few ways to cause people to deny that two plus two make four. The most basic of course is to cause them to suffer so much physical or psychological pain that they will say anything to make the pain stop. In Orwell’s anti-Utopian 1984, that was the most expedient, effective, and predictable approach. With power-based fear as a means of control and the ability to inflict pain, an autocratic society can not only write its own rules, it can divine its own science and history. We know the parable of 1984 is extreme, but we also know the context and landscape from which it emerged. Thus far, our core values have largely prevailed, at least within most of our own sphere of influence. The fact that I can freely type these words and publish them globally without restriction or anticipated retribution suggests we have collectively heeded the warning and fought reasonably successfully against the absurd.

Yet there is a more subtle and gnawing mode of drowning in Orwell’s soup without tangible restraint or any violence. It’s called repetition. If enough people say enough times that our President was not born of Constitutional privilege to hold his office — and that his true religion is something other than what he does choose to practice — the echoes will resonate, first slowly with skepticism, then with snowballing strength, and soon enough with mystical authority. Can the untrue be perceived as true without fundamental questioning? Why certainly, if there is no agenda to question the rhetoric which most suits a listener’s taste. When we test the waters for the tides, we refer to the methodology as opinion polling. Opinions are entirely products of freedom, they are shared freely without legislative filter, and they contain the power to be as impactful if not more so than facts. Is this a game? Indeed, it is a well-played game where the stakes transcend all that we hold to be sacred.

We teach our children not to gossip. Why? Because gossip is hurtful, it is beneath us as educated, civilized, felicitous members of intersecting communities. So how do we get the strange beliefs assembled in the August 19, 2010 Pew Poll cited in Graham’s Newsweek story? It’s not conspiracy, that requires sophisticated orchestration well beyond the bounds of random lunacy. We get there because people “pass it on” in ways that suit their tastes, it’s just that simple. Without respect for the truth, opinions can too easily become shared and replace truth with equal detriment.

This is a very simple corollary that precedes the more recent Newsweek story on why 38% of Americans can’t pass a citizenship test. They can’t pass it because they don’t find it important enough to be able to pass it. Likewise, any number of individuals don’t find it important enough to validate their opinions by referencing a fact base before they pass them on; it’s inconvenient to fact check, and may not align with deeply held biases that will always be more resonant than facts.

Integrity is the only path beyond the metaphorical Orwell. We can abolish torture by law, then practice and praise ourselves for preserving freedom, but if freedom is the freedom to teach and evangelize that two plus two make five, have we really come as far as we should expect of ourselves? Education must be at the core of our debate and discussion, allowing us always to differ on opinion, but when we entrench the unreal in a parade of support, we do no one any favors. Instead we betray the trust of the very freedom that allows us to say what we will, and we exploit the gift of open exchange by blowing wind rather filling the air with choice words.

March 27, 2011 by Ken Goldstein - 0 comments

A Civil Right and a Civil Responsibility

From Newsweek — March 21, 2011:

“How Dumb Are We?” by Andrew Romano

Tina Brown of New Yorker and Daily Beast editorial fame is now making her provocative imprint felt on the “new” Newsweek, evidenced here by summary findings in asking our fellow citizens no more than what we ask aspiring citizens. Since my wife helps prepare many of these aspiring citizens for the same test where the stakes are slightly higher, I have some modest insight into the scope and depth of empathy here. In the Newsweek test given to 1000 already-Americans, apparently 38% failed.

Click through and take a look at the test before you jump to the conclusion that it is just a dose of unimportant trivial pursuit. We have to take a basic written test to get a driver’s license, but our sacred one-person one-vote widely evangelized model for democracy comes with only an age restriction. If you can buy a six-pack of beer at the corner grocery store, even if you can’t calculate the tax in your head, you can vote.

Does this matter? Methinks it does. Putting aside the issue of education’s role in bettering newly arrived and long-term citizen’s quality of life as it can apply to the job force, what about the quality of the dialogue (and yes, argument) we need to share with each other to assign executive, legislative, and judicial power to individuals to collectively make the decisions on our behalf that position our nation for solving its current problems, preventing its future conflicts, and making us proud on the world stage. How can we possibly do our civic duty of discussion and debate if we don’t have any sort of level playing field of knowledge? We all have to somehow evidence we know the rules of the road to shift out of reverse, at least most of them, but we don’t have to evidence anything to have an opinion on public policy, it shall remain in perpetuity by our Constitution an inalienable right.

So why one set of rules for those already in the club and one for those who so desperately want to join the club? Are we perhaps asking too much of the newbies, is the test somehow a set of trick questions meant to create a litmus test of seriousness of intent or a number controlling hurdle? Is it perfunctory? Or is there wisdom in making people proud of achieving a shared platform of understanding before we welcome them to the permanent pride of this fragile experiment we call democracy?

If the conclusion one draws from my commentary here is that already-Americans should have to pass the same test to vote, that would hardly be my thinking, that is settled law. Equally I would not want to eliminate the test for new citizens, because I have personally observed their joy in passing this test and their newfound hope and faith in a future that begins with the reward.

What I am suggesting is that if we don’t start demanding broad, honest, serious, fact-based and critical thinking models of education for every single human being as an absolute, then we’ll get what we’ll get. We’ll keep fighting with each other, we’ll let Congress keep fighting with each other (the wrestlers change costumes but the steel cage death match remains Groundhog Day), and we’ll keep making mistakes until one day we make one that is just too serious, and our relevancy on the planet will be reversed.

We need to get very, very pissed off. Each of our votes is one, it counts the same. We have to have faith that everyone around us has some shared basis of decision-making or our own contribution no longer works. One generation ago our public education was the envy of the world, we were #1 because we made it a national priority. Today depending on you who you ask, we are #17. Is that okay for a nation that by decree gives all power to the people?

Education is not a luxury item, it is not an option, it comes with the territory of democracy. Without education, we will destroy the environment, the whole landscape be it cash green or forest green, literally and spiritually, and there won’t be a subsequent generation with the resources to fix it.

If we can afford doctors and lawyers and bankers and movie stars, we can afford teachers and schools and educational tools provided in a setting of peace and safety. If we don’t think that’s important and want to leave anecdotes about ignorance to the late night comedians and midday pundits, we get what we get. I just can’t believe on a scale of goals and priorities that an uneducated populous is what any already educated individual would find acceptable and sustainable.