It was a tension-racked Vista Group lunch today, as a vital question was discussed. Would the prestigious group of Wellington business bloggers allow Jim Donovan to remain a member, after he announced his intention to write his final blog post on 28 March? There were conflicting accounts of the decision. One account reported that Donovan’s continuing membership was agreed only by the narrowest of majorities, just one vote. Another said that Donovan had received 100% of the votes. In reality, only one Vista Group member - Wellington mayoral candidate Jack Yan - was there to vote; the other members having pressing business elsewhere. However, Yan said that he had consulted online with the wider membership and was confident his vote had their full backing.
The Vista Group then returned to its more usual fare of business and branding matters. The scheduled topic of the month was “Wellywood! Whose bright idea was that?“ The recent proposal - that a Hollywood look-alike sign celebrating the Wellington film industry be permanently erected on a local hillside - has been almost universally panned by the media and by local citizens, not least Jack Yan. He argued out that not only would the Wellywood sign infringe Hollywood’s registered trademark, it would also be a poor me-too image for Wellington - a weak joke for a fortnight’s film festival, maybe; a permanent sign promoting the city, most definitely not. Branding is about being distinctive. However, Jack’s argument that city identities are becoming more powerful than national ones was rejected by yours truly, who came dressed head-to-toe in black, New Zealand’s national colour. It was a silent, but powerful refutation.
The global Toyota car recall has been extensively covered in the mainstream media. Product recalls are not a new phenomenon in the car industry; even the highest quality marques have them. So why has so much media commentary, particularly in the US, been full of delighted glee at Toyota’s misfortune? Simple - they’ve had 30 years of hearing and telling each other that US car makers (and by implication the US itself) are rubbish, having been resoundingly trounced by Toyota in market share, production methods, quality and general admiration. As Dave Segal wrote in the New York Times last week, “Life … is just high school writ large.” Finally the smart Japanese kid who has beaten you year after year has failed a test. Schadenfreude.
However, if past experience is anything to go by, Toyota can turn disaster into success. In the 1980s, Toyota suffered a massive and widespread quality failure in New Zealand. In a country where cars don’t rust much (for reasons I don’t fully understand), it seemed that the entire Toyota fleet was rotting away, and people referred to their most popular models - Corolla and Corona - as Toyota Corrodas. Branding hell. After a slow start, cash-rich Toyota did something very few other companies could have. It offered a free panel repair/replacement to every Toyota owner with a car less than 5 years old (and didn’t quibble if it was several years older). At the same time, Toyota developed and introduced a virtually rust-proof multi-layer galvanizing process to its body manufacturing, and announced a comprehensive long-term warranty on not just the body, but the entire vehicle. A carefully-conceived, long-term advertising campaign shifted the Toyota brand positioning away from technical promotion to emotional connection. The end-result - Toyota became more local than the locals and one of the most trusted brands in the country.
US automakers should watch out. Toyota may be a bit slow to respond at first, but it has huge resources, and when it sorts itself out, then beware. Toyota will be back, and better than ever.
Mainstream telecommunications companies needs brands that relate to people as individuals; literally, everyone is a potential customer in their own right, even when they’re acting on behalf of their employer. New Zealand’s largest telco recently changed its very corporate look to this sketched asterisk logo and colour palette. I like it; it’s simple, light and human. Corporate rebadging always attracts critics complaining of waste, insincerity, “a child could have done better”, and so on. Rebadging is also a heaven-sent opportunity for those who hate a particular organisation (or large corporations in general) to replay all their historical grievances. Sometimes they’re justified, sometimes they’re not. However, I’m not commenting today on Telecom in general. I just think their rebadging is a good decision, and I look forward to seeing if and how they apply this lighter personality throughout their business.
The boards of Stanley Works (maker of the ubiquitous Stanley Knife which has expanded onto a full range of tools and building security products) and Black & Decker (power tools and work benches) have recommended a merger to their shareholders. Stanley shareholders will own 50.5% of the combined company and Black & Decker shareholders 49.5%. Synergistic opportunities are very clear. These two companies have the same mix of trade, manufacturing and DIY end-users and the same distribution channel partners (especially retail). They can merge accounting, IT, logistics and sales, and do some interesting new promotional bundles. Possible stumbling blocks? How similar are their corporate processes and cultures, their promotional style, the way they do things? However, both companies have previously acquired several complementary product operations without much grief, so I’m not expecting many issues at the operational level. If they focus on the merger rationale (ie. back office, front office and distribution channel synergies), then, off the cuff, this sounds like a very smart move.
This weekend, I finally got round to reading Michael Hill’s book “Toughen Up.” For those who don’t know him (US and UK, I’d guess), Michael Hill is the founder of Michael Hill International, the publicly-listed mid-market jewellery retailer which grew from a single store in small-town Whangarei to a multinational chain spanning New Zealand, Australia, Canada and (recently) the USA. Hill’s story is an inspiration to those who think they’ve left it too late to strike out on their own. Hill didn’t do well at school, and he wasn’t talented enough to pursue a career in music or architecture, his early passions. When he was 17, his parents arranged a job in his uncle’s jewellery store where, learning from his salesman father who also worked there, Hill discovered he was good at selling jewellery. For 23 years, he drifted along, eventually running the store despite his uncle’s disdain and repeated refusals to let Hill buy into the business. Everything changed when Hill’s house burned down. Watching the flames, he had an epiphany, resolving to buy his uncle’s business. When Uncle Arthur again refused Hill’s very generous price, Hill announced he would set up in competition; he was ordered to clear out there and then. The rest, as they say, is history.
Michael Hill’s book (co-written with Claire Harvey and already in its third print) is a deceptively simple read. With a light, self-deprecating and chatty manner, he expounds his business insights through his personal and company history. I found myself nodding vigorously at several points, particularly learning not to fight on too many fronts at the same time, keeping things simple, keeping focused on big goals, and being prepared to make mistakes. Several chapters feel like something I might have written myself when explaining business ideas to staff.
Hill’s narrative is interspersed with adoring short notes from some of his staff; some readers may find that it feels too much like a company indoctrination manual. Even so, persevere. There are some golden nuggets of business wisdom in there. And the title? It goes back to Hill’s house fire epiphany at age 40. Times may be tough now, but there is no better time to start something new.
Seth Godin has a knack for capturing a complex idea in a few words. With his permission, here’s what he has to say on those banes of progress, the trolls:
Lots of things about work are hard. Dealing with trolls is one of them. Trolls are critics who gain perverse pleasure in relentlessly tearing you and your ideas down. Here’s the thing(s):
1. trolls will always be trolling
2. critics rarely create
3. they live in a tiny echo chamber, ignored by everyone except the trolled and the other trolls
4. professionals (that’s you) get paid to ignore them. It’s part of your job.
“Can’t please everyone,” isn’t just an aphorism, it’s the secret of being remarkable.
That last point is critical. I’ve said many times that good strategy requires making choices and meaning it. That includes deciding who you want to please and who not. As my Vista pal Mark Di Somma says, “make enemies.” Sure, you want to listen to others - that’s one way to improve - but it’s very easy to get distracted by naysayers, white ants, and stick-in-the-muds who offer little constructive criticism. If you believe in yourself and what you’re doing, stop being so polite, stop listening to the trolls, stop giving them credence. Do it your way.
How do you solicit customer feedback, how do you track it and manage it, and how do you respond to complaints? Probably, like most companies, it’s a Cinderella business process, conducted out of the spotlight. Some online trading sites (eg. Trade Me) have public buyer and seller ratings. But what if you’re a “real” business, dealing with hundreds or thousands of customers? I’m quite taken with how London shirt maker Charles Tyrwhitt does it. I normally buy shirts in-store when I’m in London, but I’ve started using their online shopping site. Once my order was shipped, I received an email linking me to a online customer feedback service run independently of CT by Feefo. I could rate each product and service, as well as post a comment. I could browse all the other (anonymous) customer feedback (overwhelmingly positive by the way), and see CT’s responses to complaints, which within 24 hours typically apologised for any dissatisfaction, explained what had happened, offered no question refunds if required, promised an immediate followup by email/phone to understand more, and so on.
Showing complaints and replies in public, balanced with all the positive feedback, credibly portrays Charles Tyrwhitt as a concerned and responsive company wanting to look after its customers, and making no bones about it. You can also see the other companies using Feefo, and I expect this has a community endorsement effect. I’ve certainly started looking at what those other Feefo clients have to offer.
Is nothing sacred? Shocking news from the UK that Heineken is shifting production of Newcastle Brown Ale to Tadcaster in Yorkshire. How can Newcastle (pronounced NewCAHsel, not NEWcarsel) Brown Ale not come from Newcastle? (Actually, Gateshead on the opposite bank of the River Tyne). Before the Real Ale movement took off, Newky Brown was the aspirational beer for students, and unusual in those days for being in clear glass bottles. I remember the university rugby club being asked to provide bouncers for the university all-nighter concert at The Hammersmith Palais; our reward was free access to 12 hours of non-stop top rock bands and several crates of Newcastle Brown.
On a more serious note, though, when a brand is so intimately associated with a city, especially a city with such strong personality (accent, soccer team, and setting for many popular TV programs), it does seem like a major risk to move all production away from its original home. Heineken justifies the move on the grounds that Tadcaster already produces NBA for export, and with falling national beer sales, rationalisation is necessary. Understandable, and maybe a brand like NBA can survive such a move, but surely a token mini-brewery could have made a buck while keeping the brand roots valid. I’ll not be surprised if something along those lines happens. Other regional beer brands like Monteith (from New Zealand’s rugged West Coast region) have had to resurrect their traditional homes because their drinkers’ identification of the brand with the place invoked passionate protest.
Further to yesterday’s post on the difference between me-too brands and real alternatives, Michael Gregg reminded me of one campaign where being an alternative is an overt strategy. Rabobank arrived in NZ some years ago focused on rural banking, as a way into the wider NZ banking market. Most banks would simply do full-range banking offers and me-too campaigns. Rabobank entered the retail market with a cunning twist: Rabobank doesn’t want your daily banking; it wants your online savings account. The brand personality is “your significant other bank”, with witty ads suggesting an extramarital affair. The strategy worked brilliantly, enabling Rabobank to quickly capture a significant share of cash savings without the high cost of a branch network.
Every brand should be actively looking to put distance between itself and its competitors. And since true difference of offer is now one of the hardest things to achieve and maintain, the most effective and cost efficient way to do that is through difference of opinion… Difference of opinion is the fastest way to move from being an option to being an alternative.
You don’t want to be an option. Because options are like-minded decisions. An option is “I could do this, or this, or this, or this”… Alternatives are different headspace decisions. Alternative is “because I don’t want/like/agree with A (or what I’ve been led to believe A stands for), I’m choosing B”.
Time and time again, businesses try to appease everyone (especially their own people) by fudging what their brand stands for. They try to offer something for everyone, their sales channels try to sell to everyone, and they wonder why they struggle to survive and make a profit. They’ve fallen into the trap of being an option rather than an alternative. Good brands make it clear what they offer, to whom, and why. Great brands also make it clear what they don’t offer, who they don’t want as customers, and why not.
As promised earlier this week, the Vista Group pondered the plan to abandon its brand by US streetwear brand Freshjive. The consensus: this is either naive or a cynical play on vocalised but rarely actioned customer prejudices; and definitely not smart long term marketing.
I can’t tell you about the other main topic of conversation, or else I’d have to kill you. So instead, I’ll just say that the grilled broadbill was fantastic.
Freshjive is a popular US streetwear brand. However, I hear (via The Huffington Post) that owner Rick Klotz has announced he’s going naked from here on, removing the Freshjive name not only from the outside of his products but also from the labels. I foresee this going one of two ways; either the plain black label will itself become the brand symbol, or else the brandless brand will sink into oblivion as it looses visibility, and the Freshjive name will reappear on the product. Gut feel? While the “no label” label looks good and may work for a while, ultimately the latter scenario will prevail as house labels and others knock off the concept.
Unless this idea is just a stunt, it’s a very risky “bet the business” move. Of course, my Vista Group colleagues, with far more expertise than me on branding and fashion, may have a different opinion when I see them next week.
To reinvent yourself, you have to first understand yourself - as you are now, and as you want to be in future. Regular readers will know that one of my persistent strategic messages is having a clear market offer which drives everything you do.
Last December, Harvard Business Review published an article on business model reinvention by Professor Clay Christiansen et al (unfortunately behind a subscription wall). They produced this neat summary of a business model, which you can use as a guide in your thinking.
I’d add one additional area - Ethos, covering the softer issues of raison d’etre, brand (in the widest sense of the word), culture, organisational style and modus operandi. I know they’re implicitly covered, but I think they need to be highlighted - changing your ethos can be as business-transforming as changing your value proposition, processes, profit model or resources.
PS. You can watch a short video of Prof. Christiansen at the HBR website talking about established organisations changing their business models.
The Age reports that ANZ Bank is in advanced stages of planning a major brand update later this year and that ANZ’s Indonesian subsidiary Panin Bank was the pilot operation for the new look.
According to a briefing paper doing the rounds within ANZ last year, the bank’s brand did not resonate with women. Even the corporate colour of blue was considered “too male” by some respondents to a survey, thus the logic behind the bank’s high-profile sponsorship forays into netball and the Australian Open tennis, and a flower for a logo.
The Age also reports that, surprise surprise, executives are split over the change. I’ve never seen a branding change with unanimous support. Everyone’s an expert; arguments always rage over the new look, colours, logo, fonts and the need for a change at all.
… the M&C Saatchi-designed logo is meant to be a “three-petalled lotus” that represents the “trinity” of Australia, New Zealand and Asia, which are ANZ’s core markets.
Update: In the comments, Rob points us to this article and preview - better than I earlier thought it might look.
I assume the new badge will be something like this (replace Panin with ANZ). Hmmm.
Regular readers will know that I’m an admirer of Toyota, in particular its lean thinking and unity of purpose. This is not unconditional admiration. Toyota can be bureaucratic; its brand marketing is usually uninspired me-too (the NZ emotive campaigns in the ’80s and ’90s being rare exceptions); and its designs are worthy rather than exciting. However, I’m quibbling; that worthiness has helped Toyota climb from humble beginnings to overhaul the once-mighty General Motors as the world’s No. 1 auto-maker.
Toyota is renowned for incredibly flexible and efficient manufacturing, with a ruthless attention to eliminating waste in all its forms (rework, shoddy materials, unnecessary movement, set-up time, inventory, and so on). But, according to a Bloomberg-sourced article appearing in major newspapers, as Toyota started to close on GM over the last decade, Toyota has been more driven by numbers. It started to build inflexible single-purpose manufacturing plants, not training its people properly, and operating these new plants in a very un-Toyota way. Toyota recently reported its first operating losses since 1950, and has suspended production in many plants. Blame can be partly ascribed to the global recession, but that just exaggerated these other problems.
I usually take such journalistic analyses of companies with a large pinch of salt, but this story passes my “gut feel” credibility test. It isn’t a story of a company being stuck in a mindset that no longer works. That’s the GM problem. No, this is a story, if true, of being blinded by success, of losing sight of what made Toyota great.
However, Toyota’s leadership is onto the problem. After the numbers went wrong, Toyota’s honorary chairman and founding family figurehead, Shoichiro Toyoda gave a stinging rebuke to the company’s top 400 executives. The company has a big job on its hands, although not as big as that facing Bill Ford 10 years ago when he took over the helm at the business founded by his great-grandfather. Unlike Chrysler and GM, Ford’s award-winning product range, operational methods and funding management have enabled it to avoid bankruptcy. That precedent did not go unheeded by Toyota’s board. New CEO Akio Toyoda, a car nut like Bill Ford, is the grandson of Kiichiro Toyoda, the founder of Toyota Motor Corporation. He is steeped in the Toyota credo. Expect a back-to-basics Toyota in future, although maybe with a little more excitement added to the mix.
Many years ago, I met the CEO of a mid-size meat company to discuss how he could improve his business - it had always struggled to make much money. Having had the guided tour and talked to the CEO, I had seen a very smart operation. The farmers who supplied the animals were specially selected, as were their breeds, to provide very high quality animals. The killing process was designed to avoid any animal distress (stress toughens the meat). The cutting and packing processes produced excellently presented chef-ready portions. Higher input costs were heightened by small volume; however, their gourmet products should attract premium prices from restaurants, hotels and independent supermarkets in wealthier suburbs. But for some reason, their sales and delivery drivers struggled to sell their product for any premium above the bigger players, who competed primarily on price. They had a good story, so why couldn’t they achieve that higher price?
By pure luck, the small management team - all men - were having dinner together that night, with their wives. I was staying in the small country town overnight, and I was invited to join them. As we got to the pudding course, one of the executives asked me what thoughts I’d had after my short initial visit. This got the attention of everyone round the table. I did the classic consultant trick, and asked them what they thought the problem was.
There was much grumbling about competitors who’d sell at “unfair” prices, “unreasonable” customers not appreciating the value of the product, and “poor” sales skills among the driver reps. After a few minutes of this, one of the women, who’d not said much so far, said very tentatively “The delivery trucks are dirty”. This got blank looks, and the sales director asked incredulously “What’s that got to do with it?” She explained. “The trucks are always filthy outside. You never wash them. You look cheap. Why would anyone pay you any more?” This got some nods. Then another of the women asked “How many of the reps know how to cook?” After some jokes about men and barbecues, she asked rhetorically ” How can you sell a gourmet meat if you don’t know what to do with it?”
You can see where this is going. One the ball was rolling, everyone started suggesting ideas to not only fix the problem but also increase real value to customers. Within a year, the business was transformed. A successful restaurateur joined the board of directors. A consultant chef developed a driver rep training programme, which became compulsory for everyone who worked in the business (their spouses could attend as well). He also developed new cuts and recipes. Customer training days were very popular and earned extra income. Achieved prices went up, as did market share. And the driver reps’ last job every day was to wash their trucks.
They had simplistically accepted their customers’ comments about being “too expensive” without probing deeper. The business was obsessed with product and production, but hadn’t thought to ensure that their sales process was consistent with and enhanced their market offer.
Have you even seen a new product from an long-established maker and thought “Brilliant!” followed immediately by “Why didn’t they think of it ages ago?” because it’s such an obvious thing for them to offer, now that someone’s come up with it. Lego has just announced a new range of kits to build models of great architectural masterpieces, starting with six Frank Lloyd Wright sets including the Guggenheim Museum and the Fallingwater house - both of them astonishing, considering that FLW was born in 1867.
I expect the demand for these Lego products will be from aspiration-minded parents and grandparents, rather than the kids themselves who go for the cartoon-like pirate and space sets. No prizes for guessing who - as usual - does the first assembly “just checking the instructions”, while Junior rolls his eyes from the sidelines!
So what brilliant, blindingly obvious iconic product are you not offering?
I recently criticised web search engine Ask for their dropping of the Jeeves character. John Beverley advises me that Ask Jeeves Inc. was threatened very actively with litigation by The Wodehouse No.3 Trust (acting for the estate of P.G.), and only very recently have come to reasonable commercial terms to license the character. In light of this, I retract my criticism of Ask’s branding actions - the dropping of Jeeves; the impact on their brand was huge, but now I know not of their own making. There is however a valuable lesson here in securing approval to use someone else’s intellectual property before starting to use it. I had wrongly assumed that Ask Jeeves had licensed the character.
IMPORTANT UPDATE: I recently criticised Ask for their dropping of the Jeeves character. John Beverley advises me that Ask Jeeves Inc. was threatened very actively with litigation by The Wodehouse No.3 Trust (acting for the estate of P.G.), and only very recently have come to reasonable commercial terms to license the character. In light of this, I retract my criticism of Ask’s branding actions - the dropping of Jeeves; the impact on their brand was huge, but now I know not of their own making. There is however a valuable lesson here in securing approval to use someone else’s intellectual property before starting to use it. I had wrongly assumed that Ask Jeeves had licensed the character.
There are plenty of strong brands in the Internet business world, despite the naive belief by some in the websphere that branding and marketing aren’t important any more. Before Google took over the search market, one of the more powerful players was a site called Ask Jeeves. It was quite good for its time, but importantly it also had a loyal user base who related to the brand’s personality, based on PG Wodehouse’s fictional comedic character Jeeves the valet. As Google took ever more market share, what did the owners of Ask Jeeves do? The considered response would have been to maintain and strengthen their user loyalty through Jeeves, while working hard to make their product relevant in a world dominated by Google. But no; these guys dropped Jeeves and went for the shorter name Ask (purchased at great cost). They threw away their core brand personality - the one thing that still worked - and alienated their user base. The business almost sank without trace. Good brands can survive failing products, but failing products have no chance without a good brand.
Three years on, and guess what? Ask is bringing Jeeves back. Jeeves could always rescue Bertie Wooster from various blunders, but I suspect this one is beyond even him now.
Update: I forgot to mention that the new, improved product looked very similar to Google, which made the dumping of Jeeves an even more daft strategy.
Today’s Vista Group lunch followed its usual pattern as we jumped from one idea to another in bewildering rapidity:
Will kerning save the world? Every technical elite has its own jargon and in-jokes. Kerning is a graphic-designer term for adjusting the white space between letters. Apparently, the question is a good one to have printed on a T-shirt to wear when talking to art directors at ad agencies.
Didn’t they read what I wrote? We all had recent examples of how some people misread even the shortest communications only taking in words to support their pre-conceived prejudices and assumptions about the writer. Of course, the use of deliberately-provocative headlines can increase that risk.
How does Jack Yan get to be a judge in both the Miss New Zealand AND Miss Sweden beauty pageants? Being a fashion magazine publisher didn’t seem to explain it to the other gentlemen present.
How does Chanel manage to retain its cachet of luxury and exclusiveness, while Pierre Cardin, Yves St Laurent, Gucci et al have cheapened theirs? “Expensive” does not mean “exclusive.”
Does your market offer determine your target market, or does your target market determine your market offer? This is a chicken and egg question. You can go either way.
Does branding only work on cattle? No, was our unanimous conclusion to the idea behind Jonathan Salem Baskin’s book. But we would say that, wouldn’t we?
You’ll have to take my word for it that the transitions were seamless and logical.
Regular readers will know that I’m an admirer of Toyota, in particular its lean thinking and unity of purpose. This is not unconditional admiration. Toyota can be bureaucratic; its brand marketing is usually uninspired me-too (the NZ emotive campaigns in the ’80s and ’90s being rare exceptions); and its designs are worthy rather than exciting. However, I’m quibbling; that worthiness has helped Toyota climb from humble beginnings to overhaul the once-mighty General Motors as the world’s No. 1 auto-maker.
