Archive for October, 2009

Another tool for business model creation

Tuesday, October 27th, 2009


After noting Rudy van der Blom’s slick tool for aligning elements of a business model (see here) I’d be remiss if I didn’t point brand builders to the more ambitious BMDESIGNER tool now in early beta. BMDESIGNER is affiliated with Alex Osterwalder’s Business Model Generation process.

You can sign up for BMDESIGNER and see some sample business models already created, or do some creating yourself.

Brand models and business models

Why should brand builders concern themselves with business models? The answer is simple: every business model contains a brand model, either implicit or explicit. If the brand model is weak, or flawed, the business will be weak, and/or the processes for creating customers will be flawed. This means that brand builders must be part of the business model team. Otherwise, there’s a good chance that the resulting business model will run into structural customer problems downstream.

What the brand model does

The brand model connects the business model with the customer model, ensuring that business growth will be strategic. The key philosophy behind this process is, “Grow the customer, grow the brand, grow the business.”

The brand model/business model connection—as I see it—is one of value co-creation and collaboration between the business and its customers, where the brand becomes a core tool of innovation.

But, all this is getting waaay ahead of myself. These are all full topics for coming posts.

Image source: BMDESIGNER

The virtues of being a brand platform

Saturday, October 24th, 2009

When a brand becomes a platform its virtues radiate in a hundred directions. They spark more innovations, often in distant quarters, then fold back to raise the platform even higher.

It’s interesting amazing to watch the iPhone make mobile the complex processes that once required a computer and an office.

Here’s a demo of Autodesk’s SketchBook Mobile. It will set you back a hefty $2.99 at the App Store.


A tool to create your business model canvas

Friday, October 23rd, 2009


The “canvas” concept is a very helpful way of assembling and positioning the elements of a business model. Now we have a neat “Business Model Canvas” tool (in Flash) to help us label and move yellow stickies into appropriate categories.

This version is fairly simple. Hopefully it’s a prototype of something more comprehensive, and customizable.

Kudos to Rudy van der Blom for the tool.

NOTE: I just learned of this tool via Twitter (which is good for bubbling things up), but the original date of the tool post is 10 months ago.

Image: Business Model Canvas tool — Je suis Rudy

Hyundai teaches Detroit about brand value

Thursday, October 22nd, 2009

Honda did it. Toyota did it. And now Hyundai is doing it: teaching US auto makers some hard lessons in brand value.

From the Wall Street Journal:

A decade ago, Hyundai acquired Kia, a victim of a mid-1990s shakeout in the Korean auto industry. It also established a new quality-control division charged with boosting reliability by emulating Toyota’s vaunted manufacturing methods. To allay lingering concerns over quality, Hyundai put warranties of 10 years or 100,000 miles on vehicles sold in America.

Their campaign began to show results, and the big breakthrough came in 2004, when Hyundai tied Honda for second place in the prestigious J.D. Power & Co. Initial Quality Survey. Also that year, Hyundai completed its first U.S. assembly plant, near Montgomery, Ala.

In 2006, Hyundai topped the J.D. Power initial quality ratings for non-luxury cars, and this year, in January, its first luxury vehicle, the Genesis, was voted car of the year by a panel of journalists at the Detroit Auto Show.

Brand value

A good measure of brand value is how far a brand advances the customer. This is a long-term process.  Customers are not quarterly. A 10-year horizon seems about right. A Hyundai built to last 10-years is no longer a “car.” It’s a partner. A friend. A member of the family. That’s where brands belong.

Everyone learns these lessons but Detroit

The forthcoming vehicles from China and India will no doubt emulate the proven success of Japanese and Korean imports. Everyone else seems to learn these lessons but Detroit. Why? Unless US automakers quickly figure out how to build customers into their brands, “Detroit” may come to mean “brand wasteland.”


Inside Costco’s “Kirkland Signature” brand

Wednesday, October 21st, 2009


The October, 2009 issue of Costco Connection (Costco’s membership pub) outlines key principles behind Costco’s own “Kirkland Signature” brand. It provides detailed examples of Costco’s brand approach in foods, OTC medicines, linens, laundry soaps and other categories. (Yes, it is a house pub, and subject to a bit of puffery, but the data seems fairly solid to me.)

Why the Kirkland Signature brand is important

Costco’s Kirkland Signature brand is important for two reasons: 1) it’s a brand that operates as an agent of Costco members (customers), rather than as a tool of persuasion; and 2) it’s a retail brand model for disrupting manufacturer “name brands” that have dominated markets for decades. In select categories, the Kirkland Signature brand aims to be as good—and cheaper—than leading manufacturer brands, delivering greater brand value to Costco members.

Currently, around 10% of Costco warehouse products bear the Kirkland Signature label.

The retailer pushes the brand envelope

The Kirkland Signature brand is a case of a retailer pushing the brand envelope for products, instead of defaulting to manufacturers. Costco does this by specifying higher-value products from suppliers. Costco’s approach is not completely unique, but it’s execution is generally first rate, across the vast scale of a leading warehouse chain. You can see their focus on brand quality in how they procure Kirkland Signature tuna and Kirkland Signature shrimp. And stories persist that Kirkland Signature vodka is the spirit equivalent of Grey Goose–at greatly reduced cost.

The Kirkland Signature brand approach

The  Kirkland Signature brand approach focuses on quality and value. Here is how Costco describes it:

Why invest in our own line of private label products? There are several reasons, explains Jim Sinegal, Costco president and chief executive officer. With Kirkland Signature, Costco can:

  • Develop popular items with wide appeal to expand sales volume
  • Control the quality of the product
  • Drive down prices on national brands
  • Control the packaging
  • Achieve pallet efficiencies

“Pallet efficiencies” are key factors in the warehouse world because they help cut costs and save energy in shipping and warehouse operations. And packaging control helps across many operational dimensions (delivering very low shrinkage rates.)

The working rule for the Kirkland Signature brand

At Costco, the working rule for Kirkland Signature brands is that they must be “equal to or better than national brands.” That sets a high bar. A corollary is continuous product improvement, where Costco “buyers” (the rough equivalent of product managers) revisit key quality and price parameters for Kirkland Signature products every 12 to 24 months.

Product testing and quality assurance

As shown in the above links, Costco puts candidate Kirkland Signature products through an extensive regime of product testing. Kirkland Signature standards may be higher than industry norms. For example, some major meat brands have not sold ground beef to Costco because of Costco’s rigorous testing for E. coli bacteria. See this New York Times report and a followup story.

Kirkland Signature: the brand as customer agent

With its focus on high standards the Kirkland Signature brand acts as an agent of Costco members, cruising the world of manufacturers to find (or demand) the best combination of quality and value. This model differs from the traditional brand approach of using the brand as a stylized sales stimulant and/or tool of persuasion. In the Kirkland Signature model, the brand serves a customer agenda, providing a level of brand confidence previously found only in the top-tier of name-brand products.

This approach helps build the brand trust that keeps Costco growing and Costco members paying their annual membership dues. When combined with Costco’s legendary return policy it delivers a brand experience with few peers.

Image: Kirkland Signature logo

How leadership builds a brand

Friday, October 9th, 2009

Strong brands flow from a force of character, and from the “character in action” called leadership. This is especially true in the zero-sum world of sports, where there are only two kinds of brands: brands of winners, and brands of losers.

Creating a brand of winners starts at the top, with team management, and especially coaches.

The head coach shapes the brand. This video link shows how Mike Singletary, tough-minded coach of the San Francisco 49ers, is helping turn a team of losers into a team of winners.

As with brands, this is an incremental process.