Archive for June, 2006

A new role for brands—at the core of business

Friday, June 30th, 2006

The time has come to recognize a new role for brands—and the brand team—at the core of business. As shown in the Brand Core Model below, brand building is moving to a crucial position at the strategic center of business operations. At this vital confluence of company, product and customer, the brand team provides the vision and the platforms to create new forms of value, and to create and grow the customers that will drive the business forward.

And that, folks, is a big deal.

Brand Core Model

Creating value at the core

The Brand Core Model illustrates how brands have moved from symbols and slogans at the periphery of business to a value-creating activity at the heart of the enterprise. Brand practice belongs at the company core because the brand logic of creating customers shapes the allied fields of marketing, product development and customer development. From this central position, the brand team emerges as a key player in determining how customers are created, and how customers can be grown into new market opportunities.

Brand as the hub of a value network

Within the brand-centric enterprise, the brand is the core of a value creation process and the hub of a value network, feeding the innovation pipeline within the company, and between the company and its customers. This new brand environment differs radically from that of traditional brands. The brands produced are action-based. They’ve moved beyond the symbols, gestures and identities of conventional brand campaigns. These new brands are digitally enabled platforms and programs of value innovation. They pump value through the company, into the customer, and back again, gaining power and reach via network effects. While old brands beg for attention, these new brands join their customers as allies, directly adding pop and pulse to their lives.

Brands move from periphery to core

For most companies, this will be a dramatic new role for brands and the brand team. It marks the progress of brands from a communication layer on the periphery of business to a value innovation engine at the core.

In this process, brands are finally emerging as a strategic business practice in their own right. They’re no longer a subset of marketing, advertising, design, packaging or communications. Brand strategy can drive the business. Brand practice brings its own vision, platform logic, customer creation process, methodology, tools and resources.

Brands reinvented

From their new locus, brands are situated to reinvent themselves, sloughing off antiquated, top-down approaches for a new fusion of culture, technology and social software. They’re free to morph to customer needs, large or small, from a panorama of the possible to pocket-size, a pin, or a pixel. As we’ve said before: “Brands are tools that enable customers to interoperate with the universe. The genius of brands is that they have no limits. The value of brands is that through them, customers have no limits.”

A new role for the brand team

The Brand Core Model illustrates the central importance of the brand team. Through a collaborative process, the brand team brings together company vision, business priorities, platform logic and freewheeling creativity, all focused on creating and growing customers. The role of the team is to guide and augment value innovation through the company, and then through the customer, insuring that resulting customer growth can return new forms of value back to the business.

Yes, this is a new and different brand team. Instead of creating perceptions, their mission is to create customers. Their patron saint makes high demands, and pays high rewards.

Brand central: how it works

The Brand Core Model illustrates how innovation and value are co-created by groups inside and outside the company, mediated by the brand. The brand provides a collaborative framework for value innovation, cutting across internal divisions and other boundaries, and speeding innovation to market.

Looking at the diagram, here’s how I see things working:

At the intersection of Company and Product, the brand shapes Marketing by defining the platforms and programs that will create and grow the customers to grow the business. Brand platforms and programs become the structure for marketing imagination.

At the intersection of Product and Customer, the brand shapes Innovation in three ways: 1) by providing clear brand platform and customer platform direction to R&D, product development and engineering; 2) by helping develop cost-effective, high-value prototypes, and 3) by enlisting customer initiative and intelligence to augment the innovation process.

At the intersection of Customer and Company, the brand shapes Value by using collaborative methods and value networks to establish an exclusive context of mutual (company/customer) value. This helps synchronize brand platform deliverables with customer platform needs. Because the brand is committed to creating customer freedoms, it does not lead to backwater pools where innovation stagnates in an attempt to contain customers.

At the core—and at the edge

While the new locus of brand is at the core of a company, the brand team operates at the edge. Yep, brands are an edge force. The brand team leads. That means they thrive at the far edge of the customer, leading the customer, along the untamed frontiers of the market. Your brand team is a large part of your edge competence. You want them cracking open new worlds, not tending a hearth. They have a home, to be sure, but like all great explorers they’d rather be hacking the wilds.

Notes:

1. This diagram is hardly etched in pixels, let alone stone. It’s how I currently see things coming together. As I drill into different layers, I’m sure I’ll find inconsistencies that will result in changes to the global model. All comments are much appreciated.

2. For reference, see earlier discussions of brand platforms and the brand team mission here and here.

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Brands as collaborations in context

Monday, June 19th, 2006

The New York Times reviews the changing nature of brands in To Charge Up Customers, Put Customers in Charge. While the notion of “putting customers in charge” is a bit hyperbolic, it’s certainly true that brands are collaborations in context between companies and customers. It’s the company’s job to use the brand to lead customers onward and upward. Instead of dictating the brand to customers and then trying to sell it, it’s a far better practice to team with customers in building the brand.

The brand collaboration process
Companies have lots of leeway in how they set up and manage the brand collaboration process. Basically, you are leading the customer through a shared vision and context. Small companies will do this intuitively, as will companies driven by a particular passion.

In larger companies, structured brand platforms carry collaboration forward.

Collaboration is a form of brand interaction. How you organize the brand interface will determine how much productive input customers will provide. Ideally, you will structure this as a brand API.

Case study: John Fluevog Shoes
One of the companies discussed in the article is the John Fluevog Shoes boutique, which uses customer input in designing new styles:

To date, the company has chosen nearly 300 finalists from the flow of sketches into Vancouver — and introduced 10 shoes based on customer designs. On the day Mr. Fluevog visited Boston, the Newbury Street store was selling five of the most popular customer-inspired models, including the Urban Angel Traffic, a walking shoe (retail price, $179) designed by a customer in Moscow, and the Fellowship Hi Merrilee, a vintage-style pump ($189) designed by a customer in Provo, Utah.

“Some of the ideas from customers are striking, but impossible to make,” Mr. Fluevog said. What tends to work best, he explained, are intriguing twists on design themes that he and his colleagues are already exploring. “But even submissions we can’t make add to the stimulation,” he added. “Our customers get more involved, and we get insights into who they are and what they’re doing. It’s better for both of us.”

Collaboration helps create and grow customers
As the article notes, Fluevog shoes (see photo above) are a hot item among rock stars, fashion models and trend setters. When you actively create and grow your customers through your brand, they can reward your efforts many times over.

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From Sony Style to Sony vending

Monday, June 19th, 2006

The New York Times reports on Sony’s current experiment with vending machines. The machines are programmable robotic sales stations, vending everything from small electronics and Memory Sticks to Sony digital downloads (think music, movies, ebooks). Just tap the touch screen, swipe your credit card, and you’re good to go.

A few months ago I came across a similar Apple iPod vending machine in Macy’s in San Francisco. It was located in the basement, in the walkway leading to Macy’s food court. It was a smaller machine than the one pictured, and if you didn’t look twice, you’d walk right by it, mesmerized by the aromas from Wolfgang Puck’s.

A convenient way to downgrade the brand
My thought then: these machines are a convenient way to downgrade the brand. And I have the same reaction to this initiative by Sony.

Vending machines use a commodity process to sell a branded good. That may be fine for Diet Coke and Snickers, but when your brand has aspirations of engaging customers across multiple life-fronts (memories, images, music) the “vending experience” doesn’t offer much traction.

These particular machines promise to reduce Sony’s cost of sales while providing Sony with its own (robotic) sales force to offer programmed upsell offers without fail. (That’s the reason for the touch screen. It’s there to sell more to you, not to bring you closer to the brand.)

With these machines there is no “service” to speak of, and probably no deals. And returns are a bit problematic.

Why not automatic brand building machines?
What would it take to upgrade these vending machines into automatic brand building machines?

Sony might already have the answer to this question. The company is famous for its robotic expertise, exemplified by its charming robotic dog, Aibo. Why not import some of that charm into these machines? Give them character. Emotions. A voice. Maybe some low-level AI behaviors. Make interacting with them a truly memorable experience.

Raise them from a dumb sales channel into an interactive brand channel.

Do something unique that customers can find nowhere else.

Isn’t that what Sony is all about in the first place?

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The shape of brands to come

Monday, June 19th, 2006

Diagrams and visual models can be extremely helpful in illustrating how brands operate. They can often produce an “aha!” moment by revealing a hidden structure or an unseen customer relationship.

Being able to visualize a brand process, or a brand outcome, helps us craft stronger brand strategies. This is especially important when markets are changing, and legacy brands face threats from all sides.

Lately I’ve been working up a series of models for internal and external brand interactions. On the external side, brand interactions usually take place along four planes:

  1. Company/Customer
  2. Product/Customer
  3. Employee/Customer
  4. Customer/Customer

Rich models can be developed along all four planes, assuming the brand is fully engaged. An integrated model will include all four within a single strategy and program framework.

Here are two initial representations I came up with while trying to develop a generalized “big picture” brand interaction model along Company/Customer lines.

The traditional model
The first model represents the traditional, top-down brand approach, in which the brand attempts to engulf the customer with a set of meanings so profound that the customer becomes a creature of the brand. In many respects, this is still the “ideal” conventional brand model. The brand aims to be “like a God” to the customer, who is positioned as a meek, credulous and faithful “consumer.”


Without going into too much detail, this model has all the weaknesses of the conventional “command and control” brand approach. I’ve discussed those problems here.

The biggest (obvious) drawback of this model is that it constrains the customer. It doesn’t allow the customer to innovate and add value back to the brand—at a time when customer initiatives are increasingly seen as a driving force in brand success.

The interactive model
What would a brand interaction model look like if the brand aimed to create customers who could add value back to the brand? That is, if the brand were “two-way” instead of one-way, with customer intelligence and initiative factored into the model?

I was playing with different representations of Company/Customer interactions when I suddenly realized that the robust “two-way” model might look something like this:

Now that’s interesting. In place of the linear, marketing-induced top-down brand, we might be moving toward a subtle, supple non-linear brand, where the interaction between company and customer is not one of power and domination, but one of fluid intermingling, dynamic balance, and co-operation. Some background on this particular shape.

Who now has the inside track on brands?
And here’s another thought: American and European companies like to believe that their past mastery of brands will save their necks in the future, when competing products from Asia flood Western markets. In this conventional view, the inherent savoir faire of Western brands will still win customers and command price premiums that “Asian commodities” can only dream of.

Maybe that’s true for now, but what culture might have the inside track to the brand model of the future?

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Brands and the kiss of commodities

Friday, June 9th, 2006

Grant McCracken detects an apparent brand shortfall at HP, one that threatens to push the PC maker one step closer to the commodity basement. His assessment makes a lot of sense to me.

Grant cites a new HP ad campaign that promotes HP’s PC’s in the context of some mighty metaphors:

Your personal computer is your backup brain. It’s your life and the life of your business. It’s your astonishing strategy, staggering proposal, dazzling calculation. It’s your autobiography, written in thousands of daily words.

He logically looks for new functions or features in the HP product that would deliver on this buoyant context. Alas, he finds only a leaden “Total Care” package. His response: “That’s it? What happened to ‘Your personal computer is your backup brain…your astonishing strategy, staggering proposal, dazzling calculation, your autobiography’? Until this brand promise is built into the HP PC, the ad is really just talk.”

Yep, the campaign is mostly fluff stuff. When box gets to buyer, HP PC’s really aren’t that different after all.

Where’s the brand?
And what about the HP brand in all this?

It should be front and center, building value and creating customers. But it’s nowhere to be seen, perhaps having been shunted off to a corner cell in a junior accountant’s spreadsheet.

I would argue that HP is confronting the same brand crisis that plagues almost all PC makers. There are too many commodity inputs, and too few value outputs.

Commodity thinking yields commodity products
The crisis has its origin in the commodity provenance of the PC itself. These days PC makers source their products from sub-tier manufacturers as virtual commodities. They use standard or off-the-shelf components, outsource as much production as possible, ruthlessly shave costs, and pit vendor against vendor in cutthroat competition. Once products are ready, PC makers then need to sell these commodity-induced units (that they pay for) as value-induced glories (that you and I pay for.)

Brand kiss—or commodity kiss?
This is where brands come in—or should come in. Brands are value engines, with protean powers. (Any practice with Dionysus as its patron saint is a force to be reckoned with.) It’s up to the brand to translate the blood, sweat and gears of the commoditized production process into a bountiful brand kiss when the buyer opens the box. That’s the customer payoff.

To be kissed by a commodity is not very tasty. It’s, well, like this.

Grant hits the nail on the head when he states that HP’s brand challenge is to “Identify a higher value that [the] consumer cares about, and deliver this value with product and brand development.” Unfortunately, HP still clings to the traditional brand model—the one of top-down “branding” and ad campaigns—and that model is broken.

Needed: a focus on creating customers
It would help HP if they had a more concrete idea of the customer they were trying to create. (That’s the customer that will carry their business forward.) This is where their brand would jump into action with platforms, programs and applications to lead these customers to richer lives—through the product. (HP’s photo-related businesses certainly grasp this point.) The disconnect between the HP PC ad and what the HP product delivers—with the HP brand MIA—tells customers that HP hasn’t totally sorted things out yet.

Photo sources:

hp insignia: ehecatzin, Flickr;
keyboard: PartsnPieces, Flickr
commodity kiss: Dave-F, Flickr

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Trader Joe’s and the power of private labels

Wednesday, June 7th, 2006

If you’re in retail, you can use private label brands for strategic advantage. The key is to make your private labels deliver a brand experience that’s totally tuned to your customers. Trader Joe’s is a classic example of how a retailer can use a private label approach to attract legions of devotees. “The Tao of Trader’s Joe’s” in the June 6 SF Chronicle describes the Trader Joe’s phenomenon and some of the reasons for its success.

The power of private labels
Eighty percent of Trader Joe’s merchandise carries TJ’s private label. The logic: why sell someone else’s brands when you can use your own brand to add value to your merchandise, to strengthen your identity, to deliver more value to customers, and to bolster your bottom line? A private label brand strategy gives you control of the brand experience within the store, at macro and micro levels.

If you’ve been to a Trader Joe’s, you’ve noticed that their brands are low-key, playful and down-to-earth. They’re friendly. Conversational. They don’t slam you with a retina ravage of graphics, nor do they pretend to be Olympian icons. You soon realize that the store and its contents are designed in the context of you. It’s a personal place. The Trader Joe’s brands don’t advertise themselves; they accent you.

In many respects, the pleasure of shopping at Trader Joe’s is that it’s not a supermarket. It is the anti-supermarket.

A contrast of brand experiences
In most supermarkets, the “brand experience” consists of wheeling a large cart through virtual gauntlets of brands up and down freeway-sized aisles. Thousands of brands compete for your attention. Although you are the “shopper,” it’s the brands who act as predators; you are the prey. Typically, the supermarket acts as impartial host in this free-fire zone.

In contrast, Trader Joe’s turns down the brand volume. Their brand voice is chatty, often witty. Even though most TJ stores are small, and often crowded impossibly jam-packed, you amble through them in a spirit of relaxed discovery, eyes alert for anything new that might be tasty, special, healthy and affordable. Finding all four is not that hard.

Private labels and value opportunity
The private label strategy is part of Trader Joe’s brand vision. The Chron cites a quote from Trader Joe’s President Doug Rausch: “We went into private labels because of the value opportunity, so we could put our destiny in our own hands.” Rausch then adds: “Over time, the consumers built confidence in our private label. That made them more likely to try new things in our stores.”

A graphic comparison of the aisle experience at Trader Joe’s and most supermarkets might look like this:


(Graphic made with Gliffy beta as part of ongoing test. Jpg rendition still quirky.)

I previously wrote about Trader Joe’s here.

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Google Spreadsheets

Tuesday, June 6th, 2006

When you have a brand, you can launch a product in deep beta and within hours have enthusiastic early adopters place two videos on the world wide web, showing millions of potential customers how to use your product. At zero cost to you!

If you’re also in the business of advertising, as is Google, this power is mind-blowing.

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Kraft wants your product ideas

Monday, June 5th, 2006

Kraft Foods has initiated an “open innovation” program to solicit new product ideas from the public. Their innovation program site has the details, and a submittal form. You might earn up to $5000, or share in licensing royalties (have your patent lawyer handy). Here’s what they want:

Kraft is accepting ideas under this policy for new products, packaging, and business processes/systems only. We are most interested in ideas that are more that a concept, in
particular new products & packages that are ready to be brought to market (or can be brought to market quickly).

Well, there goes my idea for Anti-oxidant Mac and Cheese.

Kraft seems a wee bit desperate to grab something almost-ready-for-market so they can get it to the shelves ASAP. From their innovation submittal form:

  1. Provide a brief description of your idea or
    technical innovations. Please be sure to tell
    us its unique benefits and what may make
    it valuable to Kraft.
  2. What potential applications might the
    submitted idea or technical innovations
    have?
  3. Is it covered by a patent (provide patent
    number), or has a patent application been
    filed?
  4. Has the idea or technical innovation been
    commercialized? Where and by whom?
    Do you have any consumer research data
    supporting the idea or innovations? If so,
    please tell us about it.

Why is Kraft doing this?
On the surface, this seems like a Hail Mary innovation strategy. It certainly doesn’t give much credit to Kraft’s own R&D efforts, which (a related WSJ article–sub req) tells us, haven’t had a “hit” since DiGiorno pizza 10 years ago.

Product “finishing” and innovation arbitrage
Kraft might also be subtly repositioning itself as a “marketing and branding” company, in which ideas come in from all around the world and Kraft simply does the “finishing” to bring them to market. If so, they might be using this initiative to price-bargain professional “innovation sourcers” who develop innovations and package them to “distributors” such as Kraft. If Kraft can end-run the professional sourcers with a public program, it can avoid having them eat its innovation lunch, so to speak.

(Outside innovation teams present a very real strategic threat to Kraft and other “mass market” producers. They can source patentable products and then auction them ($$$) to the highest bidder. Call it innovation arbitrage.)

Open innovation and brand context
Open innovation can benefit Kraft, but only in the right brand context. A lot will depend on Kraft’s ability to break from the pitfalls of traditional brand practice. Open innovation at Kraft is doomed if Kraft follows the antiquated “branding” approach in which brands are little more than stylized sales stimulants. That approach is what got Kraft into trouble in the first place.

Today’s “targets” are tomorrow’s holes in the ground
Part of Kraft’s problem is that its top-down brand strategy has “targeted” customers instead of creating them. Now that customers have moved on, Kraft’s traditional “targets” are simply holes in the ground.

If your brand programs are focused on creating customers, collaborative innovation can be embedded in your business process. This is a more holistic–and more manageable–approach than blanket innovation appeals.

Thanks to Steve Portigal, who also provides a very worthwhile “open innovation” link to Frank Piller’s site. Frank provides a broader context for Kraft’s innovation initiative.

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