Archive for September, 2011

The fate of mainstream brands

Friday, September 30th, 2011

Mainstream brands are “mainstream” because they prefer inertia over edge. Their fate is dull flow; where they are is where they’re going. Being weak at the edge means they don’t carve new territories or new markets. And frankly, fresh is not their forte.

They’re good for barges, but not to drink.


Photo credit: The West End — Flickr

Behind The Sartorialist brand (in a world where a teen fashion blogger gets the pub)

Thursday, September 29th, 2011

The Talks has an interesting interview with Scott Schuman, creator of the immensely popular street fashion blog The Sartorialist. The interview covers the business of fashion blogs, and how a street fashion blog like The Sartorialist can succeed amid entrenched fashion magazines. Schuman makes a case for focus and integrity, and controlling the entire site experience using his own photography.

Fashion brands are fragile; fashion brands must be agile

Alas, fashion brands are fragile. Therefore, fashion brands must be agile. A fascinating part of the interview concerns Tavi Gevinson, a teenage fashion blogger (Style Rookie) whose meteoric rise and huge following gets her invited to Fashion Week “with the fashion world at her feet.” Can a teen like her steal the fashion blogging mantle from Schuman? Schuman thinks not. He sees her as just a kid “who can talk about art and stuff only in an abstract way.” In fact, he sees detects a bit of print magazine “conspiracy” behind her amazing success, as if to push serious fashion blogs to the sidelines.

Be sure to read the 60+ comments to the interview. Some readers think Scott’s remarks are right on; others are highly critical. There is a bit of brand flak, too.

For more on Tavi Gevinson’s zero-to-hero success see here and here. At 15 she’s now also editor-in-chief of teen lifestyle site Rookie.

Fashion is the difference of different

I can see why Scott Schuman might be a bit peeved at the sudden fashion media success of teen Tavi G. He has put in years of work to build the leading brand of fashion blogs. As that brand he is the show. Fashion blog = The Sartorialist. For a brand in Scott’s position, anyone who threatens to steal the show threatens you, even if they’re a teenybopper in a different part of the market. The problem is that the “show” is also about culture and context, and it’s often dynamic and changing. Fashion is the difference of different. It’s bringing a different context more than just bringing a different “look.” Cultural innovation pulls the thread. (Go watch Coco Before Chanel to see what I mean.) Truth is, in many respects—and at this point—Tavi can be a bigger difference than The Sartorialist because she’s a better story. She’s a human story in contrast to the largely aesthetic story of a cool street fashion shoot. If The Sartorialist were a brand of street culture—and not just street fashion—our brand story here may well be quite different.


How a company’s board of directors can damage the company’s brand

Monday, September 26th, 2011

Can a company’s board of directors damage the company’s brand, even if the board has no stipulated brand responsibilities? I think the answer is “yes” if the board fails to execute wisely in two critical areas. First, if the board hires a CEO unable to articulate a brand vision that advances the company beyond competitors. If  the brand vision fails everyone fails: customers, employees, partners, shareholders. Second, the board can damage the brand if the board’s own actions become so controversial and/or questionable as to taint brand credibility and trust.

Types of brand damage that can occur

As I see it, the types of brand damage that can be caused by a poorly performing board of directors can include:

  1. Loss of customer confidence if board decisions make the brand appear weak, unfocused, or without clear direction. The brand assumes an element of risk.
  2. Loss of employee confidence if board decisions appear reactive and non-strategic, or if the board-appointed CEO can’t articulate a coherent brand vision of what the compan stands for, where it’s headed, and especially “Why?”
  3. Loss of investor confidence if a pattern of board decisions points to lack of unity at the top, internal politics over strategy, and/or a designated CEO who seems ill-equipped to meet expected challenges. As investors sell shares the brand loses asset value, and may approach break-up value (sold for parts).
  4. Board missteps may lead to difficulty recruiting top CEO candidates because no executive wants to work for a company with an unsteady board. Consequently, the brand may be starved of executive leadership.
  5. Board missteps may lead to loss of confidence by channel partners if the company’s brand pales in comparison to brands of competitors. Competitors are quick to seize on any apparent band weakness.

The HP board and the HP brand

Available evidence suggests that the board of directors of HP would seem to meet the two brand-negative conditions noted in the opening paragraph. The Hp board has appointed CEO’s who turned out to be a bad fit for HP, and the board’s own missteps have compounded HP’s problems. HP’s recent CEO’s have been at the flashpoint of turmoil and controversy, and so has the HP board itself, most notably in its internal spying and pretexting scandal of 2006. This week the board named Meg Whitman as HP’s seventh CEO since 1999. Ms. Whitman replaces Leo Apotheker, whose fit with HP was questioned 11 months ago when he replaced Mark Hurd. Hurd had lost the confidence of the board after a highly publicized battle over sexual harassment allegations and expense report irregularities. The board’s actions in terminating and suing Hurd also drew criticism.

Brands are designed to be seamless vessels of seamless value, but at HP seamless transitions appear to be the exception rather than the rule.

A board described as “nearly dysfunctional”

From the New York Times, on the day prior to the Meg Whitman announcement:

The mystery isn’t why Hewlett-Packard is likely to part ways with its chief executive, Léo Apotheker, after just a year in the job. It’s why he was hired in the first place.

The answer, say many involved in the process, lies squarely with the troubled Hewlett-Packard board. “It has got to be the worst board in the history of business,” Tom Perkins, a former H.P. director and a Silicon Valley legend, told me.

Interviews with several current and former directors and people close to them involved in the search that resulted in the hiring of Mr. Apotheker reveal a board that, while composed of many accomplished individuals, as a group was rife with animosities, suspicion, distrust, personal ambitions and jockeying for power that rendered it nearly dysfunctional.

A board that didn’t interview the CEO that it named

As noted in the previous link, the HP board unanimously voted to appoint Apotheker as  CEO  in September, 2010, but only the four board members on the search committee had interviewed him. The remaining eight board members had no interest in meeting him for a face-to-face interview. This is disturbing from a brand perspective. One might ask: What was the board thinking? This was a candidate for the highest position at HP, a man who would define and execute  HP’s vision, values and strategy going forward. Certainly he was a man critical to the success of the HP brand. How can you not look him in the eye, size him up, plumb his vision and values, measure him against the challenges confronting HP, and determine first hand if he is fit to be a successor to the esteemed William Hewlett and David Packard?

“Jarring strategy shifts” and a stock price plunge

Eleven months after the HP board unanimously agreed on Apotheker’s appointment, the CEO was sent packing. Apparently, Apotheker had no clue of his impending termination. The HP stock price had plunged a stunning 47% during his short tenure, during which he had proposed “jarring strategy shifts.” These included:

  1. Proposing to sell or spin off HP’s core PC  business—which accounted for a third of HP’s revenue—without any plan in place at the time of announcement. This raised numerous strategy questions, sent investors reeling, and sent the stock price downward.
  2. First touting HP’s entry into fast-growing tablet market using WebOS software (from Mark Hurd’s $1.2 billion Palm acquisition), and then several months later abruptly cancelling it, and proposing to exit the WebOS line of business.
  3. Announcing the acquisition of software company Autonomy for $10.3 billion, without clearly defining how the acquisition would contribute to HP’s market growth and revenue. In addition, the price paid for Autonomy was questioned as being too high.

Saving HP from a brand of confusion

HP is a brand of . . . what? Brands provide clarity of company purpose. When brands are mismanaged the result can be a brand of confusion, where the company may struggle to fit a category, but falls short of a brand that can command a context. HP is an established brand and certainly not “broken,” but Apotheker’s recent announcements raised more questions than answers—and brands are answers. Apotheker’s legacy to incoming CEO Whitman is a gnawing sense of confusion regarding HP’s new direction. What’s the new context of HP? Is HP pulling out of consumer markets? How does Autonomy take HP to the next level? And how do proposed radical changes translate to the bottom line?  What’s the vision, and the plan? As her first order of business Whitman needs to erase any potential brand confusion from the minds of employees, customers and investors.




The difference between a brand and a label

Monday, September 19th, 2011

What’s the difference between a brand and a label? Here’s a short answer that works for me.

What’s the difference between a brand and a label?

A brand leads, while a label follows you around.



Brand rule for banks: Run the bank as a brand, or run the bank to the ground

Sunday, September 18th, 2011

In 2011 it’s distressing to see yet another headline of bank brand failure, where a bank’s brand trust has been compromised. This time it’s an alleged “rogue” trader who rang up a staggering loss of $2.3 billion for UBS bank of Switzerland. If there’s one brand rule for banks it’s this: Run the bank as a brand, or run the bank to the ground. When brand principles don’t drive bank operating practices, the bank itself is at risk. (A later news update is here.)

Brands succeed when brand principles drive business operations

As I’ve noted previously, brands succeed when brand principles drive business operations. To my mind, the leading brand principle is simple: “The closer you look, the better we look.” This is especially true for banks, proverbial  brands of integrity and trust. Traditionally banks have been stalwart brands of fiscal prudence: solid, reliable and properly cautious. They were brands we could bank on. What made bank brands work was the absolute integrity of bank operations. This was an integrity we could see, feel and trust, from our first step through the massive front doors to the guarded tellers and vaults within. In a bank nothing was left to chance. Bank practices and procedures included layers of sign-ins, sign-offs and sign-outs, double-checks from peers, scrutiny from higher-ups, and a general skeptical gaze.

At least that was the nominal rule until the massive brand failures of banks in the credit crisis and economic collapse of 2008-2010, well documented here. That was ostensibly a “lesson learned.” Bank brands are still recovering.

Brands are built from the inside out. And they die from the inside out.

Brands are built from the inside out. And they die from the inside out. Again, this is especially true for banks. Brands of trust are fragile creatures, even within granite walls and steel vaults. For the bank, brand values are key. They must be baked into every step of bank operations. Brand values are a systematic discipline.  This can be challenge for investment banks with profit-focused trading desks like UBS—and others before it (e.g., the brand flame-out that was Barings)—but the bank really has no choice. Again, it’s either run the bank as a brand, or, ultimately, run it into the ground.

The UBS brand: on the outside looking in

From the reports cited it would appear that the UBS brand suffers from being a brand on the outside looking in, rather than a core driver of UBS operating principles and priorities. The rogue trading in question apparently went undetected for three years, way back to 2008.

Here are key quotes from the first article cited above on the UBS brand failure:

The incident raises questions about the bank’s management and risk policies at a time when it is trying to rebuild its operations and bolster its flagging client base. The case could also bolster the efforts of regulators who have been pushing in some countries to separate trading from private banking and other less risky businesses. …


“It’s a shock, a real negative surprise,” said Panagiotis Spiliopoulos, head of research at the private bank Vontobel in Zurich. “People thought that after the bank had been revamped following the 2008 crisis, it was set up in a way that could avoid this kind of event.”

Shares of UBS dropped more than 8 percent on Thursday, while the broader European banking sector was up.


“The question that will be posed is how could this happen given the fact that all banks have committed to reduce proprietary trading,” said Rainer Skierka, an analyst a Sarasin, another private Swiss bank, referring to the practice of firms trading with their own money. “The next question is how the supervisor’s line of control works.”

Brands mitigate risk—when they’re brands of operation

A key value of brands is that they mitigate risk–when they’re brands of operation. Brands mitigate risk by institutionalizing brand values throughout company policies and practices. Brand principles become operating principles, endorsed and enforced. The stronger the brand the less risk a company incurs. A disciplined and systematic brand culture takes root. The brand aims to mitigate risk because it knows that an operating brand breakdown, such as that at failed banks in 2008-2010, or at energy giant BP in the Gulf of Mexico  (see here and here), may lead to catastrophe.

At banks the bottom line is trust

At UBS, and at all banks, the bottom line is trust. No trust, no business. UBS is widely known for its wealth management operations for high net worth individuals. Some of these individuals are worth more than $2 billion UBS just lost. The question now becomes whether doing business with UBS is worth the risk. That is a brand question UBS must answer.

END NOTE: Should investment banks get a brand pass?

One might argue that UBS is primarily an investment bank, and is therefore not a candidate for a prudent, risk-averse brand operation befitting a traditional retail bank, the kind that handles checking and savings accounts for everyday citizens. The investment bank culture, it might be argued, is a high-risk trading culture where big bets are made and big losses tolerated if bigger wins come in. In other words, the trading operation is a brand of risk rather than a brand of prudence. It’s a “casino” more than a “bank.”

Two key factors work against this argument. First, UBS management has tried to institute stricter operating controls following UBS’s near-fatal collapse in the credit meltdown of 2008–2009. Obviously, they need to do more. Second, the prevalence of an undisciplined trading culture argues that it be segregated from normal  banking operations, with the latter fully insulated from the risks of big bets. Such “ring-fencing” proposals are now under government consideration.

If banks can’t manage their brands, regulators will

From the Financial Times: Suspect trades reinforce ringfencing argument

UBS’s maverick transactions have caused too little damage to strain the bank’s stability, though a $2bn write-off could trigger a third-quarter group loss. But the ease with which deluded or dishonest traders can evidently still dodge internal risk limits will reinforce distrust of an investment banking sector where bad legitimate bets are a far greater systemic problem.

Brands are systemic solutions. If banks can’t manage their brands and solve such problems for the social good, regulators undoubtedly will.