Brands Create Customers

The amazing success of Apple’s category-creating iPad raises some important brand strategy questions for high technology companies. What makes a “next-generation” product that creates its own category? Can traditional brand methods power a next-generation product leap? Or do we need a “next-generation” brand approach, with a new form of brand and brand strategy? Lastly, does Apple’s impressive brand achievement (Mac, MacBook, iPod, iTunes, iPhone, iPad) suggest a new brand strategy template?

These are critical times for brands in the digital era

These are critical times for brands in the digital era, as brand strategy and innovation strategy converge. Brands can no longer be treated as add-ons after the fact. They need to be baked in from the get-go, as methods of creating new customer value through the innovation process. As such, brand strategies can help power a sustainable first mover advantage. Brands late to the party can be reduced to peripheral players, on the outside looking in. Luckily, we can observe a “next generation” and “new category” transition first hand with the emergence of the iPad. The “Post-PC” iPad can teach us valuable brand lessons.

Is the iPad a next-generation product?

We can begin by asking, “Is the iPad a next-generation product?”  Writing in reference to the iPad as a “Post PC” device, Horace Dediu identifies key factors in  next-generation computer transitions, based on the historical computing transitions of Mainframe > Minicomputer > Personal Computer > Tablet.

He concludes:

I would suggest that the definition of a new generation of computing is that the new products rely on new input/output methods and allow a new population of non-expert users to use the product more cheaply and simply.

Consequences of moving from one product generation to the next

Dediu then enumerates the consequences of moving from one product generation to the next:

1. Consumption increases
2. Skill required decreases
3. Support required decreases
4. There are new applications and use cases
5. The economics are not favorable for incumbents
6. The economics are favorable for new entrants
7. The older generation slowly fades through diminished growth but never disappears.

It would seem that the touch-screen digital tablet exemplified by the iPad certainly marks a next-generation product.

The iPad as a “Post-PC” product

Steve Jobs likes to claim that the iPad represents a “Post-PC” product, a new category beyond the reach of conventional PC approaches (not to mention traditional PC companies.). He contends that tablet manufacturers locked in conventional “PC” modalities—trivial hardware features coupled with an outsourced operating system— can’t match the seamless user experience that the iPad delivers. Apple develops the operating system, user interface, tablet device, key apps and processor for the iPad, enabling a high level of system integration and fluid, intuitive operation.

You can see Jobs drive home these points in the first 10 minutes of his keynote at the iPad 2 launch event.

Competing brands stumble, and can’t keep up

Some of Jobs’ comments are hype, to be sure, but the fact remains that the iPad has seemingly created a category unto itself in the year since it’s initial launch. Competitors aren’t keeping up.

Some examples:

1. The Motorola XOOM has recently been released, but isn’t complete.
2. The 10 in. Samsung Galaxy Tab is being re-designed.
3. The BlackBerry PlayBook has yet to ship, amid marketing turmoil.
4. The HP TouchPad (Palm WebOS) has yet to ship. April?
5. The Microsoft tablet won’t arrive until late 2012.
6. The ViewSonic tablet with two OSes seems cobbled together.

The biggest (apparent) loser is Microsoft, the iconic PC company. Microsoft invented the “tablet PC” a decade ago, and got nowhere with it. When the new Microsoft tablet arrives in late 2012 it will probably be competing against a third (or fourth) generation of competitors, including the iPad.

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In this and follow-up posts I’ll propose that the best way to develop brands is to design, structure and deploy them as customer-focused applications. Yes, you should create your entire brand as an application. “An application of what?” you might ask? In a nutshell, your brand is an application of your vision and values. You apply it in a brilliantly crafted program of wisdom, culture, street smarts and tools to advance your customers to richer realms of living, far beyond the reach of competitors. Your brand becomes an application for your customers to succeed, and to take you with them. Their success is your success.

Brands are customer-focused applications for getting things done

It’s always been apparent to me that brands are really customer-focused applications–for helping customers get things done–far more than they’re calculated  sets of  symbols, slogans and stories to influence how customers think or feel. (I began writing about personal brand applications way back in 2007.) As I see it, we develop brands to help customers achieve outcomes that they can’t achieve through products and services alone. Thus, a “brand”  is much more than an identity, a stylized sales stimulant, a promise or a reputation. It’s a deliverable that acts as a supra-product method of creating value, limited only by the brand imagination of the company.

Notably, the brand is a form of innovation rather than a belief system or persuasion package. Critically, it’s an interactive application, too, one that enables the brand to team with customers in the value creation process. As I’ll discuss  below, brand  applications are essential building blocks for brand  platforms, and for building strategic brand experiences.

What (exactly) is a brand application?

A brand application is a method (a series of steps, guidelines, interfaces, interactions, innovations and revelations) to advance customers to richer realms of living. It may accompany products and services, or it may be a framework for them. The brand is the operative vision and value stream. It lays out where the company is going, and the rewards for joining in. The brand journey marks the path.

The goal of the application approach is to make customers better off in a way that ultimately disrupts competitors. As part of the application approach we create customers (here and here) through value innovation in ways that competitors can’t match. Our customers win, and so do we.

For strategic purposes the entire brand can be developed as a unified, customer-focused application (as I propose). Within the brand itself, however, there will be many discrete brand applications. These function like brand programs. Customer service is a brand application. A warranty is a brand application. Note, though, that customer service at Zappos is the whole brand as an application.

Brands gain strategic power as applications

Brands gain strategic power when they’re developed as applications. In traditional brand approaches brands are typically a form of communications. They emerge as calculated messages and meanings to promote sales and customer loyalty. In contrast, the brand-as-application is a comprehensive, collaborative, multi-threaded and multifaceted means of helping customers change their world in reality, not “in the mind.” As an application, the brand emerges as a strategic means of action, a change agent and deliverable on par with products and services. As applications brands stand to be far more productive than a brand “essence” showcased as a glorious–yet static–identity.

Your entire brand is an application—inside and outside the company

One of the strengths of the brand application approach is that your brand becomes a coherent and consistent method of value creation inside and outside the company. You are one company, one application, one brand. The brand becomes your operating mode rather than a media construct. As an application it fuses strategic vision, employee creativity, quality, productivity, and desired customer outcomes. Brand applications lay the foundation for a company “Way” of unique vision and values. Conversely, when the brand becomes “image” instead of application, we wind up with sad examples like BP.

A big difference in brand approach

When we develop brands as applications we take a dramatically different approach than used for conventional brands. Here are the main differences:

1. Brands are agents of transformation, a means to change the world. They’re not sets of “meanings” to program customer behavior.
2. The brand goal is to innovate so we can advance customers into richer realms of living where our brand gains market advantage.
3. Our brand is part of our innovation strategy. It’s a method for creating value through customers.  Brand strategy becomes innovation strategy.
4. The brand team joins the innovation team. They pump brand intelligence into new products and services ab ovo.
5. Customers become strategic innovation partners, not just “buyers.” They are valued for their insights, intelligence and initiative far more than for their “loyalty.”
6. There is less need for brand symbols, slogans and stories, and no need for brand magic and miracles. Applications create new realities–an infinitely better result.
7. There is little need to “position” the brand. The application goal is to position customers to win–in new market spaces where customers and company can prosper. The application is self-positioning.
8. The era of the brand icon is over. Icons don’t innovate. Applications do.
9. There is less need for ad agencies. There is more need for app agencies.
10. The brand ceiling leaps skyward. It becomes: Company Potential  X Customer Potential. New brand avenues abound.

Innovative brands already use the application approach

The good news is that many of today’s innovative brands (young and old) already grasp what brands can accomplish as applications. In many respects their brands largely function as end-to-end applications as they focus on delivering market-leading customer experiences. They build their brands outward from their vision, values and core operating principles. Their brands begin as internal applications (operating policies and programs) to produce distinctive  products and  services. Extending brand applications to customers is a natural  follow-through of what makes the company tick. In the larger scheme of things, the brands of Starbucks, Trader Joe’s, FedEx, Costco, Nordstrom and Zappos function as applications. They advance their customers beyond the reach of competitors. They are more focused, more coherent, more disciplined  and more distinctive because of it. And customers can tell the  difference.

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Many eyes in the brand world will be focused on Nokia tomorrow (February 11) when new Nokia CEO Stephen Elop announces a long-awaited turnaround plan for the struggling mobile phone giant. The event in London is a big deal because, quite frankly, the Nokia brand is on the brink. In smartphone market share and profits Nokia has been battered and bruised by iPhone and Android. Its brand has been hammered, too, virtually knocked off the map in the US.

A big announcement to address some big brand questions

From a brand perspective, the February 11 announcement will hopefully answer a multitude of pressing brand questions: What’s Nokia’s new brand vision? What’s the new brand strategy? How will Nokia lead its customers in ways that Apple and Google can’t match? Will the brand be energized to deliver a full suite of customer value, as a complete customer experience, or will it be downsized to the brand of a supplier? The latter would signal a major step down for a visionary market leader.

This was a brand problem from the get go

In my view Nokia needs a sweeping brand reformation because its many problems (and they’re very serious problems) stem from a gradual but deep dereliction of brand. Nokia’s troubles were a brand problem from the get go. There was no overriding brand vision to overcome the device-centric silo-ism that fragmented and smothered Nokia’s own forces of innovation. Without that vision to orient R&D to strategic customer outcomes, market opportunities were missed and massive development budgets accomplished little.

Mindset problems are brand problems

A common critique of Nokia is that it suffered from an insular, “prove it to me” mindset that shot down new ideas and thwarted initiative and change, enabling Apple and Google to run away with the smartphone market. I would argue that mindset problems are brand problems. They’re a “way” of preserving operational status quo. They can pull the plug on brand vision, and they can cripple the holistic view of the customer that products need to innovate successfully. A common result is products that frustrate users.

Elop: Nokia must now fight “a war of ecosystems”

Elop has laid out Nokia’s challenge in his fiercely blunt “burning platform” memo to employees. (Well worth reading in its entirety.) After citing the painful details of how Nokia lost its market leadership to the iPhone, Android and other competitors, Elop concludes:

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, e-commerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem. [emphasis added]

So that’s Nokia’s newly defined task: how to build, catalyze or join an ecosystem. I find it a bit strange, though, that customers are not included in the ecosystems described. To me, customers are the most important part.

The brand as prime mover of the ecosystem

In the February 11 meeting I’d be looking for a more customer-focused concept of ecosystem to emerge, one with fewer elements than Elop lists, and one with deeper brand relationships. As I see it, the customer is the focus of the ecosystem, and the brand is the prime ecosystem mover. It’s brand vision and values that give the ecosystem meaning and direction, and make the ecosystem productive. And I would make it one ecosystem, not many. A multitude of ecosystems creates potential conflicts and might even generate debilitating intra-ecosystem rivalries.

Keep the ecosystem simple

The Apple iPhone ecosystem is hugely successful and not complicated. It exists for the benefit of customers, to make the purchase and use of iPhones as easy and delightful as possible.  Apart from the wonderfully designed iPhone and iOS, the ecosystem is iTunes, the App Store, Apple retail stores, the developers who craft the apps, the apps, Apple customer service, and iPhone customers who provide feedback. Much of the ecosystem is embedded in the iPhone itself. The moving parts of the ecosystem are kept to a minimum. It’s through the focus and quality of the ecosystem that everything “just works.”

An alliance with Microsoft?

The latest rumors are that Nokia will announce an alliance with Microsoft to feature  Windows Phone 7 mobile OS on Nokia smartphones. This would be a sea change for Nokia, which has heretofore produced both devices and software, and desired to own the full user experience. The Nokia brand has been the Nokia handset running custom Nokia software. Nokia’s Symbian OS is used worldwide, and its new MeeGo OS was slated for upcoming smartphones.

A prediction on what to expect on February 11

Horace Dediu of the highly respected Asymco blog has ventured his predictions of what the February 11 announcement might bring.

1. There will be a multiple OS strategy
2. The US market will be the first to see a new non-Nokia OS. I would guess Windows Phone with AT&T.
3. Low end devices will remain with Symbian due to price considerations for the chipsets, components.
4. MeeGo will be phased out in phone products but development will continue for tablets

This may seem like a radical departure, but in many ways it’s not. Nokia has nothing to lose in the US as its platforms have zero traction. By maintaining Symbian for low end devices, they can still aim for differentiation where Nokia feels it still has distribution and cost leverage. This strategy will also allow speed in time to market.

I would add that in the US a Nokia/Microsoft mobile phone alliance might be considered  in last place behind iPhone, Android, RIM’s new Blackberry touchscreen OS and the new HP/Palm webOS phones and tablets.

Where does all this leave the Nokia brand?

Where does all this leave the Nokia brand? There are some serious brand implications in the above February 11 scenarios. Here are some key questions that the Nokia meeting will need to address:

1. An agreement to use Windows Phone OS means that as a brand Nokia no longer owns the complete user experience. It’s now shared with Microsoft, at least in US smartphones. Doesn’t this diminish Nokia’s brand stature?
2. A Nokia handset running a Microsoft OS is hardly a “Nokia smartphone.” It’s half Nokia, half Microsoft. Who owns the brand voice? Whose vision will lead customers?
3. By giving up the smartphone OS Nokia apparently downgrades itself to a device supplier. As such, it’s no different than HTC, Samsung, LG, etc.  Doesn’t this weaken Nokia’s potential hold on customers?
4. If Nokia adopts Windows Phone OS for its smartphones, Nokia becomes dependent on Microsoft for smartphone OS innovation. The Nokia brand could be compromised if Microsoft fails to innovate as fast as iPhone and Android, to name only the top two competitors. How does the Nokia brand handle this?
5. If Microsoft makes the OS and Nokia makes the device, who directs and manages the ecosystem? Whose ecosystem is it? For that matter, whose customer is it?

In a previous post, Brand lessons from the BP oil disaster, I framed my discussion by asking: Did BP fail its brand; or did the brand fail BP? In this post I’ll explore these two failure modes in greater depth. A brand failure like BP’s might arise from using the wrong brand model, which no amount of execution can save, or by employing a correct brand model but failing to implement it properly, especially at the management level.

What caused the BP brand to go off track?

I’m looking for causal factors that might explain why the BP brand went off track, resulting in the blowout disaster and massive pollution. Future hearings, investigations and court cases should provide us with much more data than available now. This is a preliminary snapshot, nothing more. My goal is to posit some basic brand rules applicable to all brands, in whatever business or organization. I’m using BP as a provisional case study.

(And to those who might argue, “You know, you really can’t separate brand strategy, brand model and brand execution” I’d say I agree philosophically, but I’m forcing such a separation here for analysis purposes.)

How can a brand “fail the company?”

The brand itself can fail the company when it’s the wrong brand approach for the business. This is a brand model/brand strategy issue, as I see it, in which a brand can fail the company in two ways. The first is when the brand model can’t advance the company and its customers beyond the reach of competitors. The brand doesn’t create competitive advantage, and the business suffers as a result. In the second (and far more serious) case, the brand fails to optimize internal operations, and in so doing actually increases business risk. The result may be a quality breakdown, or even a business breakdown. In both the first and second cases, a company has the wrong brand model for the job.

The perils of an “image campaign”

My “sense” is that brands most often fail the company when the brand is positioned as a stylized sales stimulant, in an “image campaign” of advertising and promotion. The resulting brand isn’t part of the meat and bones of the business. When stressed the core business can founder, with notable weak points being innovation and quality.

Signs that a brand might fail the company

Here are some specific signs (as I see them) where a brand might be in danger of failing the company:

1. The “brand” is defined as a media campaign that promotes the brand identity. It exists as part of the company’s persuasion and promotion package. (E.g., “Beyond Petroleum.”)
2. The brand doesn’t state what it values, and why. (And the brand is no guide to what’s right and what’s wrong inside the company.)
3. The brand makes no commitments.
4. The brand doesn’t define a clear chain of accountability.
5. The brand is largely decoupled from day-to-day operations. As a brand, it’s mostly symbols and slogans. It is not a working brand.
6. The brand relies heavily on myths and make believe, further divorcing it from day-to-day realities. (The brand also plays little role in innovation, quality and value creation.)
7. There’s nothing visceral in the brand for employees (and customers). It has a “Wizard of Oz” feel to it. Lots of smoke and mirrors, and a very big curtain.

How can a company “fail the brand?”

Let’s now look at the other side of the question: How can a company “fail the brand?” Here we assume a brand that’s properly structured within an effective brand strategy. The brand is OK, but the company prevents it from achieving its objectives.

Signs where a company is in danger of failing its brand

Here are some specific signs (as I see them) where a company might be in danger of failing its brand:

1. Management believes that the brand’s sole purpose is to make the company look good. The brand has no internal value beyond the “image appeal” it can generate externally.
2. Management positions itself above the brand. It doesn’t exemplify brand values in its actions, nor does it lead the brand by example.
3. No one in management is accountable to the brand. (Or accountable to brand values.)
4. The brand does not fuel the corporate culture. It’s decoupled from business decisions.
5. The brand is treated as a form of communication, rather than a method of optimizing operations. It’s kept as a messaging layer.
6. The brand team (if there is one) has no authority. It’s marginalized into a feel-good adjunct of marketing and corporate PR.
7. Management treats the brand as a financial “asset.” In this accounting mode the brand loses its position as a core value-set and tool for best practices.

And in BP’s case, perhaps “both”

In my previous post on BP (link above) I suggested that, based on preliminary indications, BP’s brand failure in the Deepwater Horizon blowout was probably a combination of both failure modes: a brand that failed the company, and BP management that failed the brand. Maybe more of the first than the second,. In time more facts will help clarify what actually transpired prior to the blowout, and may reveal other brand issues as well.

Photo credit: Fibonacci Blue — Flickr

In an example of brand innovation Google Labs has released App Inventor for Android, a desktop (browser) application intended to make creating Android apps fast and easy. According to Google, no programming knowledge is required. One simply drags and drops blocks of pre-packaged code into a composing screen, and the app is generated.

At this point the App Inventor is fairly rudimentary, and the demo apps appear somewhat simple. Wait a few months, however, and we all might be surprised with the apps that  result. One observer calls App Inventor “a game changer.”

An excellent example of brand innovation

I see App Inventor as an excellent example of brand innovation. With App Inventor Google is putting more power in the hands of Android users. It’s enabling them to do more of what they want with Android, shaping apps to their personal or particular needs. These will be apps in the pure context of the customer, and as such they can build significant brand depth. They’re also at the edge of the brand ecosystem, and that gives the brand new territory to enter and explore. That’s what personal brand applications are all about.

Personal Apps or Corporate Apps?

Google provides an example of a personal Android app in the video below, but there’s nothing stopping businesses from developing their own Android apps for sales, marketing or operations. A delivery business might find use for such an app, because one of the functions is geo-location. And if the Android OS powers the (rumored) Google tablet, these apps may work on the Google tablet, too. That could open up more possibilities.

Types of applications possible

Quoting from Google Labs:

	Because App Inventor provides access to a GPS-location sensor, you can build apps that know where you are. You can build an app to help you remember where you parked your car, an app that shows the location of your friends or colleagues at a concert or conference, or your own custom tour app of your school, workplace, or a museum.
	You can write apps that use the phone features of an Android phone. You can write an app that periodically texts “missing you” to your loved ones, or an app “No Text While Driving” that responds to all texts automatically with “sorry, I’m driving and will contact you later”. You can even have the app read the incoming texts aloud to you (though this might lure you into responding).

App Inventor in education

App Inventor may have important educational uses. See the video here from the University of San Francisco.

Google video and demo app

Here is an introductory video from Google showing the app development process and a completed app:

One thing fairly certain about brands is that brands that live in the past eventually stay there. Brands innovate, or die. In other words, your brand is not your legacy. Your brand is your tomorrow. It’s your brand innovation that writes your future. Backward-facing brands are kaput.

Apple’s brand story: wildfire innovation

Apple understands this principle and innovates like wildfire, advancing its customers to new realms of value: iPod, iPhone and now iPad. Each step forward explodes the limitations of legacy approaches. In their place Apple enables new ways of being and doing, in new contexts where customers are better-off. That’s what brands are supposed to do.

Microsoft: chained to a legacy brand

In contrast to Apple’s ardent innovation, Microsoft is chained to a legacy brand, its brand of market power stemming from the desktop monopoly that Microsoft forged in the 1990′s. Microsoft drags this legacy everywhere, like an anchor, in a vain hope of installing the past on the future.

Unfortunately, Microsoft can’t make its old brand form fit the new multi-platform world. The Microsoft brand, initially a liberating force in corporate America, now creeps like a pall. It’s heritage hangs likes a curse. There’s brand failure everywhere, most recently with the Microsoft Kin, a highly-touted mobile phone scrapped just two months after launch.

These failures weigh heavily on Microsoft employees, the makers of Microsoft’s future. Their comments on the Kin debacle in Mini-Microsoft describe a backward-facing brand in full dysfunction.

A brand application is a way for brands  to solve important problems for customers, just like a software application. The most popular brand applications these days are “apps” on portable media devices, such as smartphones. What we have in the photo above is a slightly different kind of application. It’s an innovative, inexpensive add-on unit from MIT that can perform simple, accurate eye tests using a smartphone. The unit could help people in remote areas obtain the prescriptions and the eyeglasses they need.

The unit is designed to be dead simple to use, accurate, and cheap. Here’s the full announcement from MIT.

If the device works as intended, this is a brand application that can change the world. It can help give sight to millions of sight-impaired, a tremendous boost to their lives and local productivity.

So, whose brand is this?

Whose brand is this? Well, it could be yours (assuming you work out a deal with MIT). If you want to do some good in the world, this is the kind of brand application just waiting to be picked up by a sponsor or foundation. It’s meant to be used, not sold. A company doesn’t have to be in the eyewear or ophthalmology business to adopt this device (or something similar) as a brand application. Nokia could do it. So could Google. Or Starbucks. Or Toyota. Or any other brand with global reach.

Your brand isn’t what you sell—it’s what you value.

A first step in brand strategy is to understand that your brand isn’t what you sell. Your brand is what you value. (This is a liberating realization.) You can show the world what you value through the brand applications that carry your name. Brand applications can make a tremendous difference in the world. Can they also open up cross-market and new market opportunities for the brand? Of course. Brand applications are strategic tools.

Show people what you value as a brand and they will value you. The app that carries your name could be anything. What’s important is what it does, and how that makes a difference.

Another potential brand application

I previously described a potential cheap, simple and direct brand application here.

Photo credit: MIT Media Relations

Patent information sites like Patently Apple (which covers Apple’s patent and trademark activity) remind us that patents often point toward larger strategies, or sets of strategies, beyond the details of the patent itself. Such patent-fueled strategies can have powerful downstream effects on competing brands in the same or adjacent markets. That’s why every brand sharpens its competitive analysis at the substrate (patent) level. My rule of thumb (erring on the conservative side) is that “Today’s patents are tomorrow’s brand strategies.” From a brand perspective, a patent can mark a potential path toward a new kind of customer, in a new customer platform, in a new market.

For the patent illustrated above, see Patently Apple’s full discussion here. The comments are informative.

Which way does this patent point?

While a site like Patently Apple is no substitute for in-depth competitive analysis, it may sometimes reveal the strategic brand intent behind new patent activity. In reviewing a patent, one might ask these questions: What new kind of customer could this patent create? What’s the intended platform? What customer dots does it connect? Can it lead to a new level of customer experience?  Could it change the current customer context and in so doing change the game for current market players? What new market(s) might it create?

It’s the customer inside the patent that counts

From a brand perspective, it’s the (latent) customer inside the patent that counts. In the best of worlds, a patent would  be conceived and executed within a strategy of brand innovation, so that the patent protects a unique domain of customer creation. In effect, the patent is the legal launch of a new kind of customer.

It also should be noted that sometimes the latent customer inside a patent may not be apparent to the patent applicant. This leaves the door open for competitors with better customer vision.

Mapping patents to a customer canvas

The real challenge in a brand analysis of patents comes in mapping patents to a forward-focused customer canvas, one containing different models of newly-empowered customers that the patent(s) might create. It’s always exciting when a patent points toward a new kind of customer beyond the conventional marketing model, where the patent itself is but one tiny step in a far-reaching roadmap—or better yet, brand journey.

Image source: Patently Apple