Brands Create Customers

When brands are built as stylized sales stimulants, as many are, they often wind up as forms of packaging, some basic, some elegant, but all a “wrapper” around the product or company, intended to make the contents more desirable.

Beyond the wrapper

Many brands get the wrapper right, freeze themselves into icons, and then retire for life. Then they wonder why upstart brands in plain brown boxes pass them by.

In building brands you have to look beyond the wrapper. Brands command a canvas that knows no edge. As a brand builder, you use this canvas to connect customers with themselves in new and vastly better places. While fine-tuning the wrapper is important, it’s not the most important part of the brand. That distinction goes to where your brand leads the customer—in that vast and fertile canvas you provide.

A brand is the first step of a movement

A brand is a collective venture for going places. By and large, it’s customers who will advance your brand. They need a vision, platforms, programs, and a direction that is all about them, and just a tad about you. They just want you to lead.

When you build a brand, your goal is to create a movement, a self-sustaining chain reaction that expresses the customer through the brand. It’s this energy from below that drives the brand forward. The immediate physical brand is just the first step, a catalyst for more powerful reactions to come.

The winner is not the wrapper

Movement rules. In brands, the winner is not the wrapper. The winner is the flag.

See Part I here.

When businesses think of brands, they don’t usually consider brands as being part of the innovation process, right there at the cutting edge of value creation. Well, it’s time to change that perception of brands. Truth is, brands themselves can be powerful engines of innovation. They can reprogram a product that does A, B and C into one that does A through M, plus X, Y and Z. They can redefine the context of a business, unlocking new value. They can spring customers to higher levels that competitors can’t reach. Through their own platforms and programs, they can reshape markets, and create new market opportunities.

Yes, brands can do all of these things—when they’re value-based brands.

Brands as innovation engines

In this second installment of our series we’ll explore how value-based brands can contribute to the innovation process, as innovation engines in their own right, with results just as powerful as new products and services.

We will cover:

1. The brand innovation context
2. A definition of brand innovation
3. The innovation charter for the brand team
4. How brands innovate
5. Selected examples

NOTE: Brands primarily innovate in two ways: brand form, and brand value. Brand form is near and dear to every brand builder’s heart, including mine, but our discussion here is on delivered brand value.

The brand innovation context

At Tenaya Group we look upon brands as part of the innovation process. Brand builders are innovators, pure and simple. As we see it, the value that brands can deliver is far too important for brands to be limited to “communications,” symbols, sunny promises and surface sheen. Brands represent a core value connection between companies and their customers. That means brand builders must be able to innovate new forms of brand value that can advance a company and its customers. Brands that don’t innovate are soon overcome by inertia. They stagnate. And then they die.

Our master definition of brand reflects this innovation focus:

“Brands are avenues of value innovation in a creative engagement between companies and their customers.”

In this formulation, “avenues,” “value,” “creative,” and “engagement” are all critical areas where the brand builder can introduce innovative approaches, processes and deliverables.

Defining brand innovation

Our definition of brand innovation is short and sweet: Brand innovation is product potential times customer potential.

The brand builder is the X-factor in the middle. He or she grasps the potential on both sides, then adds the strategic and creative powers to bring them to life, and to make them grow.

It all adds up to what we call “the brand exponential.” Take your product, or your company, and use your brand to raise it to a higher power—through the customer. That’s your only assurance that you’ll be tuned to the markets of tomorrow. Your brand is the exponent.

As a minimum, the product value squared

The value outcome of a simple brand might be the product squared. That’s only a start. We all want to aim much higher than that. In many cases, it’s customers themselves who contribute these exponential powers.

And we never lose sight of our macro view of brands, which keeps us running during the day, and flying at night: “Brands are tools that enable customers to inter-operate 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.”

The brand team as innovation driver

In traditional brands, the brand team is closely tied to marketing and/or corporate communications, outsourcing much of the “creative” work to ad agencies and design firms. While this fits well with the traditional communication model of brands, it does not go far enough for value-based brands.

In value-based brands, the brand team is responsible for innovating brand value. They are, first and foremost, innovators. They’re key members of a company’s innovation team. They still maintain their media and communication roles, and contacts with media and design experts, but their focus is on brand innovation as part of new product development. They work hand-in-glove with engineers, programmers, product managers and customers to create new forms of brand value, and the platforms and programs to deliver them. Their mission is to grow the customer, the product, the brand and the business through new streams of brand value.

The brand team is both “in the trenches” and “over the horizon.” It’s not a job for those who seek routine and simple formulas. (See our brand builder test here for more details.)

(And FYI, being “in the trenches” and “over the horizon” is not a problem. It’s an absolute rush.)

Forms of brand value

Being the fluid, plastic and protean creations that they are, brands can convey value in a multitude of forms. Some forms are more durable than others. Some are much deeper. There can be new shapes and shades of meaning, new tools, new contexts for the product and the customer, new dimensions of product use, new associations that raise the customer to a new plane of action, new communities, and perhaps a new vision that frees customers from the dark of a cave.

What about brands built on make-believe?

What about brands that rely on make-believe, fictions, bells and whistles, fantasies, spectacle and entertainment? They can be, and are, wildly popular, and treasured by their adherents. But do they actually innovate to move customers forward?

There’s certainly comfort value in the well-trod truths they affirm, and spectacle value too: people love a good show. Their downside is that they often try to herd customers by a vigorous plucking of emotional strings. With no brand platform, and few real deliverables, such brands become prisoners of their media campaigns. They’re vulnerable to competitors who play the reality card, and who can offer their customers a taste of freedom that’s real.

How brands innovate on value

There are a number of pathways brands can take to innovate on value. Often these will be specific to a product domain or customer environment. A maker of eyewear will work with different brand value equations than a publisher of newspapers, or a software developer of widgets. A nap-of-the-earth approach will map brand innovations to potential areas (and vectors) of customer growth. Mauborg and Kim and Ulwick have defined useful baseline innovation methodologies.

In a more global context, brand innovations can accomplish the following (often in combination):

1. Free the customer from current constraints of the market
2. Enable the customer to do more with the product
3. Advance the context of the product
4. Advance the context of the customer
5. Through the brand, increase the customer’s proactive powers
6. Leverage brand experience into customer experience
7. Incorporate the customer into the innovation process
8. Leverage the brand platform into a customer platform
9. Unlock the customer’s creative powers
10. Create a community that supports the customer

Examples

Here is a sampling of brands that illustrate aspects of brand innovation:

Linux — A user-driven brand. Includes almost all of the above points.

Harley Davidson — Customers innovated by customizing the bikes as bad boy machines. Eventually, Harley followed, albeit in tepid, corporate fashion. (The “chopper” zeitgeist is a customer phenomenon of liberating the brand.)

iPod — With iTunes, forms a new brand of music that includes many of the points above. Frees customers to enjoy more music and to express themselves through their music by having more personal control over it.

Arm & Hammer — Customers found new uses for baking soda, making their lives easier and making new markets for the maker. In essence, the customers led the brand.

Costco — Increases customer access to quality goods at discount prices, while minimizing customer risk with liberal return policies. Leverages startups. Enabler of small businesses.

Patagonia — Advances context of product and customer to a unified brand of ecology, where product, customer and environment co-operate as one.

Final note

Oh yes, the chap above is Thomas Edison. I picked this image because in it Edison exemplifies the moody, mercurial, in-the-trenches and over-the-horizon “brand builder look.” It’s the countenance of a person immensely unsatisfied with the status quo, and not totally satisfied with what he’s wrought, peering through it for still deeper connections. And Edison was not the first. Albrecht Dürer captured the exact same expression 500 years earlier, here.

Amazon has always had a refreshing brand clarity about its offerings, and now I’ve found one reason why. In its software products and services, at least, Amazon builds brand clarity into its offerings by doing things backwards.

Yes, gloriously backwards, although in the Amazon context that means working backwards from the customer to the development task, before developers write code. In this process, key issues affecting the brand deliverable rise to the surface, where they can be fully addressed in the concept and design phase.

“Working backwards” at Amazon

I know this because “working backwards” is the process that Amazon CTO Werner Vogels has established for his software development teams to follow. In his words:

To ensure that a service meets the needs of the customer (and not more than that) we use a process called “Working Backwards” in which you start with your customer and work your way backwards until you get to the minimum set of technology requirements to satisfy what you try to achieve. The goal is to drive simplicity through a continuous, explicit customer focus.

Werner doesn’t mention “brand” in his description, but the Amazon process is actually brand building from the inside out. The goal of a brand is “to put the customer inside the product.” The Amazon process does exactly that, building brand value in at the core.

Amazon’s “backwards” steps

Here are Amazon’s key “backwards” steps for software development. They’re fairly counterintuitive for developers:

1. Start by writing the press release
2. Write a Frequently Asked Questions document
3. Define the customer experience
4. Write the user manual

Be sure to read Werner’s account of how the development team approaches each of these tasks. When these steps are completed, the real code crunching begins.

To me, taking these steps at project initiation means the project team is building a solid brand foundation.

When we talk about brands it’s important to define the type of brand model we’re discussing. Yes, there are different kinds of brand model. Some are far more productive than others. In fact, using the wrong brand model can be worse than having no brand at all.

The value-based brand model

In this overview I’ll discuss key points about the value-based brand model. In my view, value-based brands constitute the top-tier brand model, standing head and shoulders above all others. As I see it, value-based brands are the only brand model that can unlock the strategic potential of brands. Moreover, they’re the only form of brand that can deliver maximum traction to both companies and customers.

This is a working paper, with more installments to come. Once I’ve assembled all the pieces I’ll produce a finished paper with tighter logic and (hopefully) some helpful diagrams. This is new territory for brands, and any and all comments are welcome.

Value-based brands defined

Let’s start with a definition: Value-based brands deliver value that customers can use. This is value beyond that of the product proper. Their intent is to sink brand roots into the customer base, and to grow the customer in ways that can grow the business. Value-based brands do so by using integrated brand platforms and programs to advance customers to richer forms of living and higher levels of achievement. In short, their job is to make customers become better off through the brand.

The importance of the brand model

As noted above, value-based brands are a distinct brand model. The brand model you chose dictates what your brand can accomplish, tactically and strategically. Here’s how we define “brand model” in our New Brand Glossary:

Brand Model
As critical as the business model. While the business model defines a company’s profit logic, the brand model defines a firm’s customer logic: the structure and meaning of the brand program, its internal and external engines, and how, when, where and why it creates and sustains customer value.

Most current (mainstream) brands employ the communication brand model. While this is the traditional approach, supported by a huge media infrastructure, it has serious shortfalls. In this post we’ll compare that model briefly with the value-based brand model. We’ll provide extended comparisons in later posts. For earlier discussions of how these two models compare, see here and here.

Aren’t all brands “value-based”?

“Wait a second,” you might say. “Aren’t all brands value-based? At least they get attention. And they add some pizzazz to a product.”

The answer is No. Attention and pizzazz is a not a basis for customer value, and neither is glitz, glory, flash and spin. They might blitz a few eyeballs, but they don’t have what it takes to grow and sustain customers.

In fact, many highly visual brands are little more than stylized sales stimulants, not much deeper than a veneer of packaging. Their goal is to deliver a sales pitch, not value. And like most pitches, they tend to be short-term, and emotion-based. Thousands are on display at your local supermarket. (They are one reason we like to say: “If you want to make your products fly off the shelf, give wings to your customers.” Value-based brands are those wings.)

Value-based brands are fueled by organic, customer-generated emotion, rather than artificial campaign-generated emotion. (More on this in a subsequent post. It’s a big issue.)

Building blocks of the brand ecosystem

Value-based brands are the building blocks of the brand ecosystem. Through the value they deliver they create the customers who can add value back to the brand, thereby increasing a company’s competitive advantage. They do this through brand API’s that enable customer brand initiatives, and via brand-centered value networks. In action, they’re collaborations in context between companies and their customers, a blend of the practical and the pragmatic, business realities, strategy, and sheer customer-focused creativity.

Moving customers beyond the reach of competitors

One of the key benefits of value-based brands is that they initiate a customer ramp-up, or an upward spiral, that moves customers beyond the reach of competitors. They do this in a way that positions customers to adopt the next sequence of a company’s planned innovations. In other words, value-based brands are both a customer defense and a strategic innovation driver. Their job is to push the customer curve so that creative companies can feed their innovations into robust markets. (Brands have many more resources to push the customer curve than bare products on their own.)

Not your typical media-based brand

Value based brands are not your typical media-based brand. They are in-sourced, rather than outsourced. Instead of being whipped up as campaign creations, they’re working brands that link a company and its customers through many levels of interaction, in a nap-of-the-earth earth process that creates shared value for both parties. Their streams of interaction take the place of classic media campaigns.

Why brands as communications fall short

Communication-based brands restrict themselves to messages and message elements, aimed at persuading customers to perceive a company and its products in a certain way. They are forms of persuasion rather than instruments of building customer value. They deliver little of substance. In fact, their one-way broadcast model keeps customers at arm’s length and actually inhibits customer collaboration.

Simple brand identities don’t leverage brand value

Some brands may exist as simple, one-dimensional marks: a name, symbol or logo that affirm an identity, with no programs or platforms to add value. These are typically under-leveraged brands; without a brand value strategy, they certainly don’t do much to leverage their customers.

Please note that there is nothing “wrong” with these non-value approaches cited above. They’re the basis for most brands today. They can all be made to “work,” if enough money is spent. They just can’t create the kinds of strategic customers that value-based brands can generate.

Value-based brand strategy

Value-based brands are designed to create strategic customer value. They enable customers to do more with their lives through the brand, and in the process add value back to the brand and the company through innovation, collaboration, social networks or new market creation. The value-based brand approach recognizes that your customer is your greatest competitive weapon. The operative strategy is: “Grow the customer, grow the brand, grow the business.” By “grow” I mean strategic nurturing through brand leadership.

Value-based brands are holistic

A value-based brand strategy is holistic, aimed at giving full expression to the whole company, and aimed at developing the whole customer. It works on two levels. First, it addresses customer potential: what the customer might be in a different/better/higher context, as conceived by the most creative minds at the company (i.e., the brand team.) For example, Starbucks amps the context of coffee drinking and delivers more brand value than Folgers. Starbucks has elevated you and me beyond the reach of Folgers, forever.

Value-based brands take the long view

Second, value-based brands work across time. The customer of the value-based brand is not just today’s “buyer.” He or she is also the customer you will want three, five, seven and 10 years out. That customer will be a more proactive piece of work than the customer of today. You can create him/her with value-based brand strategies, or you can leave the process to chance (and to your competitors.)

Cultivate brand hacks

The key to the holistic approach is to open your brand to customer initiative and participation, to tap into customer intelligence and sensibilities. These help grow and diversify the brand organically, where the rubber meets the road. Value-based brands do this by recognizing that half of brand value is produced by customers. Thus, they rigorously cultivate brand hacks, to evolve their brand at the edge to meet changing market conditions.

More to come

I’ll be adding more installments to this series in the next few weeks. Among them: value-based brands and innovation strategy, the new role of the brand team, and how to build a value-based brand.

Part II is here.

If you want your brand to innovate, you need to make it hackable. You have to cultivate brand hacks. Make your brand so your customers can grab it, bend it, and extend it, adding their initiative and intelligence to develop new forms of brand value.

Brands, culture and customers

Donna Bogatin has a nice post on how customers “configure culture” by altering product offerings—or inventing their own products—to meet their needs.

Donna cites a Radar Research report that lists these elements as typical of “configurable culture:”

1. Instantaneous
2. Editable
3. Global
4. Networked
5. Multi-sensory
6. Interoperable
7. Archival
8. Customizable
9. Hackable

These are also the qualities of a brand on the move.

Use brand API’s to cultivate brand hacks

The easiest way to cultivate brand hacks is to invite customers into your brand via brand API’s. Brand API’s are interactive application program interfaces. They provide convenient latch points for customers to grab onto brands and proactively shape the brand to their needs, in the process advancing themselves through the brand. The best brand API’s help convert customer initiative into brand initiative, through better brand content, context and value.

Make this process a team effort where your brand is a method for solving shared problems. Shape it as a partnership where you and your customers are on the same page because you’re writing it together.

Hack the context to create new value

When you develop your brand as a platform for brand hacks, the hacks you aim for are new contexts for your brand and your business. In other words, brand hacks are ways that customers can extend the scope of your business, by finding new applications and contexts of value. Through brand hacks, customers become your allies in innovation. And innovating a new context can be just as valuable as innovating a new product—and sometimes more so.

Brands are code

We should never forget that brands are code. The more brand programmers you can enlist, the more avenues your brand can explore.

Home Depot has announced the creation of Orange Works, a new innovation and design venture with Arnell Group to design home products featuring sleek design and enhanced functionality. The products will appear under new Home Depot brands, such as Home Hero (TM). The idea is to boost sales at Home Depot stores with a line of nifty products that you might see in an Ideo link, or in Kevin Kelly’s Cool Tools.

Home Depot retail certainly needs a shot in the arm. Sales have been falling.

Design chic in a warehouse?

There’s some precedent for adding a high-style line to otherwise utilitarian offerings. Target has done well with a design line by Michael Graves, which has helped differentiate Target from the bleakscape of Wal-Mart. But Target is an accessible venue from the get go. Home Depot stores are impersonal navigational nightmares. Venturing into a warehouse designed for forklifts to look for objects of design would seem rather daunting, if not implausible.

Innovative home products with design chic would be much more accessible at Home Depot’s Expo Design Centers, where they would fit right in with the stylish kitchens, bathrooms, lighting, appliances, and the like. Unfortunately, the Expo centers don’t have the traffic of the Home Depot warehouses.

Towards an “Apple Store” of home products

The real solution would be neither A or B above. It’s for Home Depot to reinvent home product retail by creating a new venue for high-design, high-functionality home products. This would be an “Apple Store” of home products, expertly designed for customer interaction, showcasing the best-designed tools and home products that any mall tripper might be expected to buy. (No forklifts allowed.) It would also be a premier “gift store for guys.”

Arnell Group could certainly handle the design end. The key issue is whether Home Depot would be ready to take this next step up in retail.