How Fragile Is a Brand?

Philip W. Schiller, Senior Vice President of worldwide marketing at Apple Inc introduces the new iPads in San FranciscoApple unveiled a bunch of new products last week, including numerous options in shape, size, and price point for a fuller line of iPads.  Many of these products are desirable and will make great holiday gifts, but none comes close to pioneering a new category of experience.  These are known as brand extensions, variations on a theme for already desirable existing successes.  It’s good stuff, and good business, but not much to get excited about — nothing like the first Mac, the first iPod, the first iPhone, and the first iPad, all of which constituted innovations that created category-defining icons.

Steve Jobs used to talk a lot about brand deposits and brand withdrawals.  A brand deposit takes place when a company invests heavily in making an indelible mark with customers, akin to their very first experience with a point-and-click computer, or a sleek digital music player, or an easy-to-use smart phone, or an intuitive tablet.  Brand withdrawals are usually harvesting activities, like brand extensions, where a company takes some money off the table without over-investing to get it.  Extremely short upgrade cycles for modest improvements in a device or high margin accessories like a carrying case are notable examples of brand withdrawals.  Steve would say you have to maintain a balancing act to infuse a brand with life and a company with cash.  I don’t think I ever met anyone better at this balancing act than he was.

That’s why I am starting to feel some heartache for Apple.  I am seeing a lot of withdrawals and not a lot of deposits.  I am also starting to see sloppiness as an acceptable norm, rocky roads that get paved over later without heavily pushing the envelope to warrant the annoyance.

Recently I posed the following question on my Facebook page regarding Apple’s release of the highly touted iOS7:

Is it just me or is iOS7 woefully slow, bloated, and unstable on older devices, particularly on the iPad2? My hour-to-hour experience on my beloved tablet has gone from impossibly perfect to mediocre. Is this the same Apple?

The response was mind-blowing.  Here’s an extract from the thread, names removed to protect the honest:

  • I’m not having any problem with it except for user error with new features. I do see some slowness trying to connect to the internet but I assumed it was my wi-fi.
  • ME: I don’t think so because I am having the problem with wi-fi wherever I log in, it’s just sluggish, and apps that worked fine before crash at least once a day, and gasp, I have to reboot!
  • That’s not good. Wifi is definitely a problem. Apps don’t usually crash unless I stress them by doing things too fast. You have to reboot the device as opposed to relaunching the app?
  • ME: After a few apps crash it freezes, just like MSFT.
  • Ken, I am having the same problem on my iPhone 4S and MacBook. I regularly close apps on my phone, but that just saves battery life. It doesn’t help with speed.
  • Yep apple has confirmed with me that new software doesn’t perform well on old devices. Happen to me when I owned the iPhone 4.
  • It’s also bloated and annoying on newer devices as well.
  • 4S is now super unstable.
  • ME: Yep, no question that the loss of Steve Jobs is hardly being felt in Cupertino. Brand is in hunky-dory hands.
  • My wife hates it… I won’t upgrade….
  • try running it on an iPhone 4. I hate it.
  • Slow and crashes. I’m running it on an iPhone 4S and an IPad 2. Shame. Shame.
  • ME: Wow, I don’t think I’ve seen this much negative love toward Apple other than at a MSFT conference. I wonder if they know. Maybe I should extract these comments into a blog post to help them understand. But would they care? That’s the real question. If they did, they probably already would have done something about it.

Brands are not invincible.  They don’t fly with a safety net.  Customer loyalty has to be won anew at every touchpoint.  No company is safe from creative destruction, not even Apple.  That is why the average life of an enterprise company today is about half as long as a human life, around 40 years.

And you thought your own 40th birthday guiding you into middle age was scary, huh?

In my view, Apple remains a legendary company with three key competitive advantages at the moment:

  1. Brand: One of the most magnificent consumer brands of our time, expertly polished and full of lustre.
  2. People: An almost incomparable assembly of talent in its employment to create, innovate, Think Different, and change the world
  3. Cash: An unfathomable amount of reserves to invest as it deems wise and appropriate.

If they don’t protect the brand, the other two won’t matter in the long run.  While historic odds of longevity are no more on Apple’s side than any other modern corporation, the good news is that Apple has built up tremendous goodwill with customers and shareholders to ignite the future, and I would venture to guess they will protect their brand, but not without a lot of pain in the reinvention.  That’s perhaps the biggest problem of being at the top of the top, and why it is so easy to fall.  When customer expectations are at the level where Apple sets the bar, you have no choice but to outperform yourself time and again.  That’s an outrageous challenge.

Brands seldom shatter all at once.  It’s the little hairline fractures that get you.  Those are waved off as no big deal, normal ebb and flow in business.  Then a hairline fracture becomes a crack, and the crack ripples outward like a spider web, and then the ceramic whole flies apart.  Andy Grove calls it the Strategic Inflection Point, the change in market forces that happens and you miss it, and then it’s too late to course correct.  You can remainder, but you seldom get back to the top of the heap.

That’s because a brand is not a logo, it’s a promise.  And just like when a friend breaks a promise to you, you seldom fully forgive that person or fully trust them again.  Apple has always promised us humanity above technology, so when they even mildly violate that promise we feel it, because we have come to trust them so much. When a promise goes undelivered or long delayed, like a next-generation product leaked to the public zeitgeist, word of mouth can be savage.  Will we give them another chance on a bad release of iTunes or a map app?  On a rough system upgrade?  Of course we will.  Until the promise is broken one time too many, and then we won’t.

Business leadership is managing part for today, part for tomorrow.  It’s a plate spinning combination of the big picture and the small details.  Mostly it’s about listening to customers and loving your brand more than they do, protecting that promise with every resource at your command.  It’s very, very hard to do consistently, which is why the financial rewards are so immense when you get it right.

Curiously, the Facebook thread I extracted above went on a bit longer, and eventually someone pointed me to an online forum where I was directed to adjust a network setting and reboot.  From there things got a little better, but not entirely.  It was then suggested that I do a clean firmware install, which was way beyond my alloted time block for bettering the tool I needed to do my work — remember, these devices aren’t your work, they are the means to do your work.  We migrated to Apple devices precisely because competitors put us through the ropes with reinstalls, adjustments, and tip on settings that experts could swap.  Apple won the last few rounds because you didn’t have to be an expert at anything, you just opened the box and it worked.  That was a wow, and it was always worth the premium price to those who wished to pay it.  There were a lot of us!

Don’t break your promise.  Sweat the small stuff.  Love your brand.  Love your customers.

Help, You Need Someone

“Hope you are well.”

We are all guilty of typing those words. It’s the email equivalent of “Have a nice day,” though usually as a salutation. It means that in a few sentences someone is going to ask you for a favor. In customary parlance, it’s someone you haven’t heard from in quite some time. It’s also likely someone who doesn’t much care if you are well.

Help2In the very early days of this blog, I wrote a piece of advice about networking. I thought about that a lot these past few weeks with the release of my novel. Launching a first book at mid-life is a somewhat absurd task. The odds of commercial success are so tiny, you almost can’t calculate them. When countless people in my network—from high school through college through each phase of my career—rallied to my support across the board, I was literally breathless. There is nothing I wouldn’t do for these people: job referral, job reference, resume review, preparation for a pitch, media training, media intervention, hospital visit, you name it! I am there for them in perpetuity, and they are here for me now.

Don’t take this for granted. It does not happen by accident, nor does it happen as the norm. If you haven’t yet been crushed by that discovery, you will soon enough. Don’t be dismayed. Only you can fix the problem, and it’s a problem worth fixing. But it’s not a sticky patch on a leaky roof.

Networking is still so bizarrely misunderstood, it boggles my mind. It is not a system of stored and replaced favors. It is the building of bonding relationships where people want and choose to help each other. Pay It Forward is about as constructive a strategy for longevity as I’ve experienced. Relentless excellence and indefatigable commitment aren’t bad either.

If you want to have a robust network that might help you someday when you truly need the help, build it now; you’re already behind. If you think you can pull off a big-time favor swap real-time, you’re almost certainly deluding yourself. Build your network for the future by offering to do things for others, even if it’s an inconvenience. If you do it enough, some of that work will create powerful memories of connection, even more than appreciation. That’s a well filled with sweet water when you are someday thirsty.

At the very least, if you have nothing to offer someone, show a keen interest in what they do. A few weeks ago I gave a talk about my book at Stanford. I did it because a friend who loved the book asked me. My friend showed enthusiasm, her friend (the teacher) showed enthusiasm, I responded with enthusiasm. No tangible value was created, no business leads exchanged; it was all just goodwill. Yet that wasn’t what won in the networking. One of the students reached out to me after the class with a well-composed email discussing an enigma surrounding one of the characters in the book. The student asked me how that applied to a real-world work situation. It took me a while but I responded, which opened the door for the student to ask some more heartfelt questions. I liked the heartfelt part, that’s just me, but that student has now bridged access to what was once a total stranger’s network. To me, that’s good business practice. We’ll see how he works it over the next decade. I’ll bet he handles it well.

Here’s another example: A few years ago I was in a weekend workshop, not as instructor but participant. I saw promise in the material and was there for the learning. There were people at all levels of their careers and personal development; ages spanned four decades. One individual was quite young and struggling, fresh from college outside the United States, but passionate and curious about everyone’s life path. I asked her after the workshop to email me once or twice a year to let me know how her career was going. Strangely enough, she has. I’ve received about a half-dozen updates, not too many but enough that I remember her name and long-term goals. I’ve given her some advice, but nothing of real value yet. I’m guessing at some point I will. Maybe she’s banking on it, or maybe she’s just sincere. English is not her first language, but she has not as yet typed the words “Hope you are well.”

Staying in touch is not a onetime event. It takes work to be connected, give and take, sharing ideas and information, not just asking for something. If you don’t want to do the work, don’t bother extending the outreach. You would be shocked at how many people I’ve suggested stay in touch with me after an initial meeting and never do. They forget, or they don’t care, or they don’t see value in it, or they are disheartened by the lack of immediate gratification. I am grateful to them. It helps me manage my workload—one less rising star I might someday champion.

Watching new grads bang their heads against the job market is terribly frustrating, because they haven’t had the experience to know how they could approach it better, with fortitude and resilience. Watching later career professionals suffer the same resistance is even more frustrating, because by now they should have powerful networks of their own, but if they didn’t invest along the way in others, that network today is likely too thin. Remember that LinkedIn and Facebook are tools, but networks are between people. The glue that bonds networks is history, and history comes from doing things, often and selflessly, for and with each other. When it comes to bolstering a platform of human support for your unlikely and unexpected needs, you’ll need to make that brand deposit now for future withdrawal. No surprise, you have to Think Different. It’s not a quid pro quo, you don’t get a favor for giving a favor (not a good one, anyway), but if you authentically invest in goodwill, you’ll enjoy a deep reserve of goodwill. When it’s time to dip your ladle, you want it to be an underground lake.

Networking is not what you can do for me. Networking is what I can do for you. Before you ask.

A Little More, A Little Less

To help bring in the New Year, here is a quick punch list of what I would like to see a little more of and a little less of in 2012.  These are not meant to be far-reaching or prophetic ideals, just small steps we can choose to make concrete in and out of business to “advance the brand” ever so slightly each day.  Please feel free to stretch the list and add your “asks” in the comments section.

For starters…

A little more focus on sustainable job creation with decent paying gigs for those who want to work; a little less badgering of the unemployed who are nobly trying to spring themselves back into action.

A little more attention to world-class customer service that shows true respect for those who pay the bills; a little less maneuvering in the shadows to squeeze unwarranted improvements in margin by taking advantage of customer patience and goodwill with hidden garbage.

A little more good theater onstage; a little less awful theater everywhere else.

A little more listening to creative thinking before blurting out that it won’t work; a little less condemnation of those who are carrying the bag before questioning their character.

A little more pay down of available credit by all borrowers; a little less concern with things we don’t have and might like, but can live without no problem.

A little more conservation of the Earth’s precious and limited resources; a little less right to entitlement via purchase power.

A little more earnings from growth and investment in the enterprise; a little less cap on hiring while stockpiling cash reserves.

A little more commitment to making broad education a national priority; a little less earthquake type each time a professional athlete signs a seven-figure contract.

And then…

A little less spotlight on celebrities and their personal dramas; a little more celebration of everyday unsung heroes who quietly make our world better just doing what they do.

A little less fireworks around award shows for mediocre creative work; a little more visionary creative work worth celebrating.

A little less self-aggrandized noise and plotted invective in media placement; a little more interesting dialogue and engaging discussion in the public square.

A little less “them” where rhetoric is an intentional tactic of divisiveness; a little more “us” where national pride and humility are shared values.

A little less last-minute antics in Congress where critical deadlines loom; a little more thoughtful strategic planning around long-term solutions demanded by voters.

A little less concern around titles and press releases; a little more measurable goal achievement and personal job satisfaction.

A little less built to flip and business as usual; a little more built to last and Think Different.

A little less criticism of people who look, talk, and behave differently from our routine; a little more tolerance of diversity that opens the door to understanding — on that last one, maybe a lot more.

Okay, that’s my zapping of the spark plugs.  What’s yours?

Thank you for welcoming Corporate Intelligence Radio in its first year and all your great comments (private as well as public) in our shared exploration of how to make work matter more.  Together we can make 2012 a turning point.  Why not?

Brand vs. Direct: Must We Choose?

My distinguished colleague Gene Del Vecchio sent me some insightful follow-up thoughts to my post last week on advertising. Gene’s credentials in this area are much deeper than my own, with more than thirty years of advertising experiencing rising to the level of SVP at the renowned agency Ogilvy & Mather. He is an award-winning expert on advertising research, and also a successful author of non-fiction and fiction books, including the data-driven breakthrough Creating Blockbusters!

Gene’s point was that the distinction between brand and direct response advertising is a label, sometimes artificial and not necessarily useful except by executives managing ad budgets, often on the agency side. As simply stated as possible as handed down by legends like David Ogilvy and Leo Burnett—the individuals, not the agencies—all advertising has a single purpose: to sell products. Image is nice, awards are nice, clever memories are nice—but if the shirt doesn’t sell, it’s a cruddy shirt ad.

Gene summarized his point of view as follows:

The distinction between “branded” and “direct” is a red herring. If I advertise a movie on Thursday, I expect people in seats on Friday. Isn’t that direct? Sure it is. Simply because the time delay was 24 hours instead of 12 seconds, people are likely to say otherwise. These two disciplines need desperately to merge into ONE that both brands and sells. They are kept apart because many clients view them as silos. Adding to this is that agencies often hold these disciplines in two different groups with separate profit & loss responsibilities. Brand account managers at agencies don’t want to give up money to their counterparts in direct, and vice versa. Agencies also tend to have their highest profit margins in television ads, more than direct response campaigns, thus the agency business model with its higher overhead tends to favor the bucket called brand advertising. This is a battle on three fronts: 1) a philosophical battle of what is brand vs. direct; 2) a mechanical tracking battle regarding how to measure the effect of each; and 3) a business model battle regarding how agencies make their money.

Creating BlockbustersGene is a wise and honest fellow. I admire his candor which is firmly grounded in extensive experience. Surely an account executive would argue his or her job is always to do what is in the client’s best interest, but if they are doing what they believe is in the client’s best interest and it happens to be on the more profitable side of the agency’s business, one would have a hard time criticizing that as anything but a win-win. Rather than argue the potential conflict in an agency’s interest vs. that of the client, I find it more interesting to consider whether Gene’s suggestion that the distinction between brand and direct marketing has become anachronistic, and that this is yet another topic where we ought best to Think Different.

Few who have survived long careers in media would argue that brand advertising is meant to do anything other than sell products, and in that respect it has the same intention as direct response advertising. Long before the internet or digital platforms were available, long before the 1000 television channel universe, marketing budgets were allocated by clients as an acceptable percentage of total sales volume, invested in multi-platform campaigns that included TV, Print, Radio, and Outdoor. Sales expectations were set to evaluate Return on Ad Spend (ROAS). The concept of buying a carefully constructed and flexible campaign was investment driven, leading some forward-thinking corporate heads of marketing like Sergio Zyman at Coca-Cola to begin thinking of themselves as CMOs, or Chief Marketing Officers. If funds were invested and returns did not appear, they were accountable, and yes, these jobs have always been volatile. When CMOs turn over, ad agency accounts often come up for review, also a very volatile affair. While some agencies like Ogilvy and Burnett were well-known for keeping clients for ten, twenty, even thirty years, it was not because of Clio Awards, it was because of sales results. Anything less than accountability and ad business would be in jeopardy.

As more technologies became more available to CMOs and award-winning TV commercial directors found paths to becoming movie directors, a notion of image advertising entered the equation—as if to suggest that some advertising was meant to sell and some advertising was meant to make you feel good about a brand. Gene’s argument, with which I concur, is that makes no sense at all. If the advertising does not result in sales growth relatively soon—the car ad putting a perspective buyer in the showroom, a movie ad putting weekend butts in seats— it really doesn’t much matter how people feel about the Chevy brand or the Indiana Jones brand.

The job of an ad is to create action. A nice step in that direction might be a feel-good moment, but without action, no one paying for an ad cares a hoot about ” feel good.” Clients pay for an ad for a reason, and they don’t much care about trophies or “best-of round ups.” If the stuff they advertise is stuck in the warehouse, they are out of business. There are no more ads to buy next year, just burned creditors seeking liquidation crumbs.

At the same time advertising options became more creatively interesting and diverse, direct response mail and television infomercials touted their accountability. You mailed this many pieces, it cost you this much, you got this many orders, your cost per acquisition was at your target, live long and prosper. All of that may have been true, but with response rates worth celebrating at well under 5%, it was hard to argue the same kind of waste identified in TV epic brand spots wasn’t to be found in direct marketing initiatives—if you can get a 5% response rate, why can’t you get 10%, or 50%, or 100%? Why do we have to accept the old adage that in any campaign 50% of your ad dollars are always wasted, you just don’t know which 50% went up in smoke? And why can’t your direct response campaign have a residual brand effect, so that even if you don’t buy now, you might buy later, and if you do buy now, you might remember to buy again later? How do these urban legends become generally accepted principles, simply because they produce positive return on investment, however marginal?

Along comes perhaps the most important advancement in advertising since the thirty-second TV spot—the internet keyword ad generated by search engine marketing—and suddenly we begin touting 100% accountability in advertising. You pick the words you want to buy, you set your parameters for the auction, you pay your bill, and you get your orders. Perfect, right? Well, not exactly. You still pay for a lot of clicks that produce no value, factoring these as negative offsets to the profitable transactions of the campaign, and you feel a little better because you only pay for the clicks, not the impressions. The question is, can you or should you be getting residual brand or feel-good value for these unprofitable clicks, and if you aren’t, can you at least get some residual or byproduct brand value from the impressions that people are seeing even though the are costing you nothing? If you can, you have discovered advertising nirvana, which is precisely Gene’s point on bridging the applied and artificial distinction between brand and direct response marketing. Gene calls this finding the Golden Goose:

The key for both brand and direct response marketing has always been this: SELL IN A BRANDED WAY. TV, radio, print, and outdoor should create an image that sells. Internet clicks should create an image as they sell. That has been a rallying cry at agencies for years. Have they attained it? Sometimes yes and most times no. These two tools should also work in concert, together, as part of an overall strategy, and not thought of as mutually exclusive. The trick is to find the right balance of each, given each brand’s strategic objectives and its consumer’s decision-making process. The blend creates a consumer driven contact strategy, where you cannot tell where brand leaves off and direct begins, because they are part of the same whole.

I like the way Gene is thinking here. I find his approach to be liberating and aspirational. Will it be easy? No, but why should anyone in media get paid for what is easy? Can we get better at what we do and make our tools and platforms work harder for the people paying the bills? We better, or we ought not expect our invoices to continue getting paid. As the world becomes more flat, the notion of separate creative buckets becomes harder to defend. It’s time to be less defensive and get on offense, applying higher level creativity to more difficult problems of client advocacy, focused communication, and customer call to action.