Brands Create Customers

At Apple’s most recent earnings call COO Tim Cook began his portion with a short riff on Apple’s vision and character, to reassure analysts that Apple was in no imminent danger of collapse with Steve Jobs away on medical leave.

We are on the face of the earth to make great products

Some of what Cook said was quite profound. He said this about Apple:

We believe that we are on the face of the earth to make great products, and that’s not changing.

Not many companies see themselves–and their challenge–in such an elemental context. What’s amazing is that this is an entirely credible statement coming from Apple. They have the game-changing products and services to back it up.

Could Michael Dell say the same thing about his company, with a straight face? How about Steve Ballmer? Would anyone believe them?

Are there people in Redmond placed on the face of the earth to create the Zune? That could be scary.

The brand as destiny

What Apple taps into here is the brand as destiny. It’s the brand as primordial power, a prime mover of creation, culture and context, and never, ever, an add-on.  It’s akin to Dylan Thomas’s, “The force that through the green fuse drives the flower.”

Great companies know the feeling. The brand is an operating principle that pervades all aspects of the business. It’s a force, and poetry, and something like kaizen.

Tim Cook’s statement at the earnings call

Here’s more of what Tim Cook said when he first spoke during the earnings call. There’s perhaps a wee bit of (excusable) puffery, but the values and the focus seem dead on.

There is extraordinary breadth and depth and tenure among the Apple executive team, and they lead 35,000 employees that I would call wicked smart – and that’s in all areas of the company from engineering to marketing to operations and sales and all the rest. And the values of our company are extremely well entrenched. We believe that we are on the face of the earth to make great products, and that’s not changing.

We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution.

We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.

And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well. And I would just reiterate a point Peter made in his opening comments that I strongly believe that Apple is doing the best work in its history.

Full transcript of the call.

The US Army seems to think so. It is establishing its own air arm, to be more responsive to tactical needs on the ground, where today’s battles are increasingly won or lost. The Army’s focus is on unmanned surveillance aircraft under control of local (Army) officers:

. . . [I]n Iraq, the Army has quietly decided to try going it alone for the important surveillance mission, organizing an all-Army surveillance unit that represents a new move by the service toward self-sufficiency, and away from joint operations.

. . .

The work of the new aviation battalion was initially kept secret, but Army officials involved in its planning say it has been exceptionally active, using remotely piloted surveillance aircraft to call in Apache helicopter strikes with missiles and heavy machine gun fire that have killed more than 3,000 adversaries in the last year and led to the capture of almost 150 insurgent leaders

Brands are about performance, not “essence”

The Army’s air power initiative illustrates the rule that to sustain a brand, you have to deliver the goods. Your iconic “essence” is immaterial. You perform, or a better brand takes your place. Sometimes, customers take matters into their own hands—as in the case of the US Army.

The task force of about 300 people and 25 aircraft is a Rube Goldberg collection of surveillance and communications and attack systems, a mash-up of manned and remotely piloted vehicles, commercial aircraft with high-tech infrared sensors strapped to the fuselage, along with attack helicopters and infantry.

Bottom line: Brands of “essence” never have a chance against brands of innovation.

Photo: Wikipedia

I ended a previous post, How to define the brand mission, by stating that I would compare the brand missions of Google and Microsoft as examples of my approach. This post fulfills that commitment. As a bonus it tosses in Yahoo, since Yahoo is now contemplating an unwelcome buyout bid from Microsoft itself.

What we see in this comparison is one company with a productive brand mission, one company that denies brand value altogether, and one company whose brand mission is so lacking in purpose that it never takes off.

Comparison framework

Please keep in mind that my focus is entirely on the brand mission. As I define it, a company’s brand mission is to create the customers that will drive the business forward. “Creating a customer” is a strategic act that entails a joint venture between company and customer. Each feeds off the initiative and innovation of the other.

Brand Mission Criteria

In comparing and assessing brand missions, these are some of the criteria I consider:

1. What new value does the brand intend to deliver?
2. What kind of customer does the brand aim to create?
3. How will that customer add value back to the brand?
4. How does the brand mission help create a platform for new customer opportunities?
5. Where is the brand leading its customers?
6. How does the brand mission add value over and above the business mission?

Applying the “brand of” test

One way to analyze a company’s brand mission is to ask: What is Company X a “brand of” in the first place? This helps reveal the effective, real world brand mission, not a brand mission that’s tossed up for PR purposes. In my analysis, here’s how these three brands stack up:

1. Google is a brand of Internet opportunity—especially for customers
2. Microsoft is a brand of market power, where the customer is tightly contained
3. Yahoo is a brand of place, where many great things happen—for no particular purpose

Microsoft: business mission trumps brand mission

Microsoft seems to be one of those companies where business mission trumps brand mission. If we define “brand” as a collaboration in value and culture between a company and its customers, it’s reasonable to argue that there is little brand mission at Microsoft. At Microsoft, the customer is targeted for capture and harvest; advancing the customer is not part of the plan. The result is a Microsoft brand that’s frequently viewed with suspicion and distrust.

Microsoft: a brand of market power

To the extent that Microsoft is a “brand of” something, it is a brand of market power. The Microsoft brand mission seems to reduce the marketplace to a Microsoft company town, anchored by a Microsoft company store, where customers are limited to Microsoft’s integrated offerings on Microsoft’s terms and conditions. Is this “bad?” Yes, if you want to stay fresh and grow. This model will eventually grow stale and collapse upon itself.

Microsoft’s goal: make brands irrelevant

Microsoft seems to feel extremely uncomfortable with the concept of brand itself, perhaps because brand responsibilities might interfere with Microsoft’s market power objectives . If Microsoft can force customers into a Microsoft company town where other brands can’t compete, then Microsoft wins “the brand game” by making brands irrelevant. In the absence of effective competition, their “non-brand” wins, no matter what they say or do.

Create customer dependencies, not customers

It appears that Microsoft’s strategy is to create customer dependencies instead of creating customers. Those dependencies translate into market power. The downside is that this strategy typically locks out innovation, and over time alienates customers. In the long run, this strategy is counterproductive. One “payoff” of this strategy is the notable lack of enthusiasm for Microsoft’s most heralded product in years, Microsoft Vista.

Google: a brand mission to unlock Internet value

We’re all familiar with Google’s “Don’t be evil” mantra, but that’s not Google’s brand mission. No, Google’s brand mission is far more disruptive, and revolutionary. It is to unlock the value of the Internet using customers as the key, and as the beneficiaries. That’s pretty Schumpeterian right there. If I were to condense the Google brand mission into one line, it would be this:

Google’s brand mission is to translate Internet capability into customer productivity.

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One of the first steps in building a brand is often one of the hardest: defining the brand mission. This is a strategic brand step that, frankly, can make or break a brand. It involves much more than deciding “who we are” and “what we stand for,” and it certainly demands much more than lofty phrases about brand identity, brand promise and keeping customers happy.

A brand mission is also a far cry from a papered-up “mission statement.” Gaze for a moment at those stalwart fellows in the picture above. Are they reading a mission statement? No, they are on a mission. That’s where your brand belongs.

Most brand missions don’t go far enough

Most brands have a defined “mission.” The problem is that most brand missions don’t go far enough. In broad brush strokes, we can identify three main areas where brand missions often fall short:

1. They don’t provide strategic direction to the business
2. They’re not primary tools to create customers, and customer value
3. They’re framed as corporate communications rather than action steps to drive the company (and its customers) forward

We’ll discuss these elements in the following sections, after we first define the purpose of the brand mission itself.

The purpose of the brand mission: create the customers that will drive the business forward

In general terms, a company’s brand mission is to create the customers that will drive the business forward. Yes, the brand mission is all about creating customers. Defining the brand mission in this context means that the brand team has to set up shop at the core of business. Creating the brand mission involves pulling together a company’s vision, strategic direction, intended product development, and marketing and operations priorities. From these, we then map out the platform strategies for creating brand value and creating customers.

How to approach the brand mission

Defining the brand mission is never an exercise in wordsmithing, although that’s often as far as it gets for many brands. In our approach, here are three new ways to think about the brand mission.

1. In the brand mission process, you dial into yourself so that you and your customers can dial out to a bigger and better universe—and then go there.
2. Brands are company potential X customer potential. That X right there in the middle is the brand mission. (And that’s why brand builders are essential.)
3. The brand mission is a Harley, not a hymnal.

The brand mission pushes the limits of the company

A brand mission should push the limits of the company, because the goal of the brand mission is to take the company (and its customers) into new market spaces where competitors can’t follow. That calls for a strong sense of market direction, opportunity development, value innovation, and customer collaboration.

Effectively, the brand mission combines: company mission + customer mission + business mission. It does so using all the weapons in a company’s strategic, creative, expressive and innovative arsenal.

The brand mission sets the company’s future in motion

Defining the brand mission sets the company’s future in motion. It is casting the die: alea iacta est. In many ways, it’s the defining act of corporate vision, and courage.

Brands need a mission, not a “mission statement”

Companies may be tempted to bypass the brand mission and instead settle for a nice-sounding “mission statement” that’s formally approved then stuck in a drawer. Such brand mission statements can be dangerous, for two reasons. First, they can lull a company into believing that it’s brand mission is solid, when actually it’s vulnerable. Second, making the brand mission a “statement” can reduce the brand to a “paper brand” of words, rather than an active brand of deeds. A paper brand can regress to superficial styling, symbols, slogans and puffed up “personality” attributes. These can give a brand the strategic clout of window dressing, and place it at a competitive disadvantage.

Short and sweet, vital and visceral

The brand mission should be short and sweet, vital and visceral. It’s a way to focus energy, action and innovation within a company, and between a company and its customers.

1. A brand mission doesn’t describe; it activates.
2. It is direct, never delegated.
3. It leads by example.
4. It works as a force from within, not doctrine from above.

Employees and customers should see evidence of the brand mission everywhere. And they should feel it. It’s the shared pulse that carries everyone forward.

A framework for action

What the brand mission delivers to customers is more important than what it says in gold-lettered parchment on the wall. Your brand is what you deliver, not what you promise. The brand mission is a framework for action; it is not meant to be framed.

Generally, the less said, the better.

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In its usual level-headed style The Economist analyzes the basic issues involved in managing risk and brand reputation, especially for global corporations. They address the subject as part of a special report on Corporate Social Responsibility (CSR).

This special report will look in detail at how companies are implementing CSR. It will conclude that, done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue: it is just good business.

Three layers of CSR

The Economist identifies three layers of CSR as it’s currently practiced in large corporations:

1. Philanthropy — beginning with “checks for charities”
2. Risk management — to ensure that screwups (or disasters) don’t occur
3. Strategic opportunities — to use CSR for competitive advantage

Where do brands come in? In level three, of course. Brands and CSR are a perfect strategic fit.

Beyond an antiquated notion of brands

I totally agree with the Economist’s integrated approach to CSR, where it shrugs off superficial feelgood communications and focuses on CSR operations embedded in the business. However, The Economist seems to have an antiquated notion of brands, as if we’re still living in the 1950′s, when brands were static “assets” to be kept polished and squeaky clean lest any “bad press” diminish their value. This defensive and reactive concept of brands prevents the special report from addressing proactive brand strategies that may dramatically raise the bar for both social responsibility and profits.

Brands and social responsibility

“Brands and social responsibility” is an important subject that deserves its own in-depth report. CSR requires new attention to the supply chain, and to the brand chain. It also requires new brand models, and new brand approaches. That’s more than I can manage in this post, so I’ll end with some general comments.

1. A brand is company potential X customer potential. When brands are understood in this context, the arena of “social responsibility” becomes a strategic brand opportunity, rather than a nagging and/or awkward problem.
2. Brands managed as “assets” are dead ends. The purpose of brands is to create customers. This is in itself a socially responsible act.
3. When brands are reduced to perceptions (“how the company is perceived”) they become little more than PR exercises, with a dash of design. This completely ignores a brand’s game-changing potential to create customer value.
4. The brand mission is to grow the customers that will grow the business. In general, the more socially responsible the brand, the more opportunities it creates for customer growth.
5. A brand platform is a social platform. The more socially responsible the brand, the more power it can generate through (and from) its customers.
6. “Asset brands” sit on the shelf, or hide in the vault. They’re eventually bypassed by proactive, socially responsible brands that can run (and grow) with customers.
7. The best way to be “socially responsible” is to embrace those strategies that advance customers, rather than merely aim to empty their wallets.
8. In general, a brand cannot do any more for its customers than it does for its employees. Social responsibility begins at home.
9. Brands stripped of social responsibility are low-performing brands. At the very least, they will be leaving money on the table.
10. The best way for a brand to manage its reputation is to lead customers to higher levels of value. Brands that don’t lead get stuck in the muck.

Photo: Jamison — Flickr

In my perpetual quest to distill the mission and modes of brand building, I’m updating this earlier post. It’s a manifesto (sort-of) for value-based brands.

You’ll notice some major differences between this approach and those of traditional brand practice.

What brands do

Brands create customers. They lead them to new levels of awareness, new shapes of self, new realms of achievement, new forms of being and doing. This is important because your customers are your greatest competitive weapon. How your brands create and grow customers determines the long-term success of your business.

Brands are company potential X customer potential

Brands multiply the potential of your company by the potential of your customers. They are company potential X customer potential: the brand exponential. Brands can raise your customer relationship from a simple two-way street to vibrant avenues of innovation. These can open new markets and leave competitors far behind.

Brands are value-based

Brands are value-based: they deliver value customers can use, in an infinite variety of forms. Brands are much more than traditional signs, symbols, spectacle, messages, gestures and concocted “brand personalities.” Often, these only alienate a business from its customer potential.

Brands are enablers

Your brand is more enabler than meme. It enables customers to go where they want to go, and to do more, and be more, through you. This is a creative nexus that can plumb all human dimensions. A good balance is 80% means, 20% meme. We are now in the third phase of brand evolution: from mark, to media, to means.

Brands free customers to grow

Your brand frees customers to grow, and to take you with them, using the programs and platforms you provide. Your brand strategy is your growth strategy.

Brands break down barriers for customers. They cut across boundaries, leap walls, undercut silos, disrupt hierarchies. The best brands liberate customers to flourish on more creative and more productive levels. Customers can feel the difference—in a heartbeat.

Brand building is a form of innovation

Brands are avenues of value innovation in a creative engagement between companies and their customers. Brand building itself is a form of innovation. Brand builders are customer-side innovators, working closely with innovators on the product side, and with customers themselves. Brand builders innovate in the context of customers, and deep, deep, deep in the context of culture.

Brands aimed at “consumers” head downhill

Brands predicated on passive “consumers” have nowhere to go but down—to the lowest common denominator. They impose a strategic cap on themselves because they position consumers as commodities. They’re a commodity proposition, not a brand proposition. They are no match for brands predicated on customers: proactive partners and co-creators of brand value.

Brands are action-focused

Brands induce action. They are not a glossy coat, a dreamy myth, or a doctrine of belief that locks customers in place. Brands are a system for getting things done.

Brands have a sense of urgency. They flourish in the here and now. They perform, and they’re measured by what they do.

The brand mission

The brand mission can be refined to a simple, three-part directive: Grow the customer, grow the brand, grow the business. That’s what brand builders do. Their job is to grow your customers beyond the reach of competitors.

Why brand builders matter

Brand builders can see a company’s future through its customers’ eyes. There is no greater gift, or source of advantage.

Coda

The best way to make your products fly off the shelf is to give wings to your customers. Your brand is their ticket to fly.

Photo: hawaii — Flickr

Multi-threaded brands will soon be poised to succeed traditional monolithic brands, those top-down, top-heavy icons designed to radiate a company’s “essence.” Multi-threaded brands can out-perform monolithic brands because they multiply the ways that brands can connect with customers, and they greatly multiply the forms of value that a brand can deliver.

What is a multi-threaded brand?

A multi-threaded brand is a brand that’s been “microchunked”* into multiple value streams, which are then customized and delivered to strategic customer segments, with the aim of creating value networks and communities. It is a brand that’s been decentralized, distributed and democratized, becoming the context of a “value net” or a “creation net.” ** Its purpose is to grow customers from the inside out, not to hang over their heads.

Multi-threaded brands are more “social,” and less “corporate.”

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As stated in the name of this blog, the mission of brands is to create customers. Before we can create a customer, however, we first have to design one. In this post I’ll touch on what “creating a customer” means, and then follow with an overview of the customer design process.

In broad brushstrokes, the enterprise of brands is to 1) design the customers who will lead the business forward, and 2) create those customers through the many applications, programs and initiatives in our brand toolkit. And yes, we design our customers to win.

What “creating a customer” really means

When a business makes a sale, it does not automatically “create a customer.” It merely creates a transaction. A transaction is not a customer.

Creating a customer means connecting the customer to his or her passion or potential through the brand, in a way that fosters a mutually beneficial relationship. For brands, creating customers is a multi-tiered process of brand applications, platforms and programs, with specific deliverables across many stages, advancing the customer along strategic pathways, and engaging the customer as an innovation partner. It’s a strategic act of market creation rather than a quick ka-ching, a pimped out package, or a superficial campaign.

Building strong customers

Before we can begin the customer creation process, however, we must design the customer that we intend to create. When we say we want to “build strong brands,” what we really mean is that we want to “build strong customers.” Strong customers are better allies than weak, credulous customers who act like sheep. One of our first design questions, therefore, is “Where do we put the muscles?” We don’t leave customer fitness to chance.

We’ll be designing a “high performance customer”

What we’ll be designing is a “high performance customer.” This is similar to the concept of lead user, except that a high performance customer is more of a “leverager” than a user. He or she can carry your brand down new innovation avenues, or across categories into entirely new markets. For example, Apple, Google and Facebook enable high performance customers by opening their software to third-party applications, resulting in dozens of new mobile apps and desktop applications, new business opportunities, and new avenues for growth.

Do you want an ecosystem that looks like plankton, or Paris?

Everyone wants their brand to be the center of an ecosystem. How you design your customers will determine if your ecosystem looks like plankton, or Paris. If you design your customers to be “consumers,” (or, God forbid, “shoppers”) the creative equivalent of lemmings, you’ll be a brand of lemmings, fated to end at the nearest cliff. It’s a case of value in, value out. If you design a passive customer, or envision your brand playing to an “audience,” you’ll be laying the groundwork for a passive, static brand.

The strategic importance of customer design

Strategically, you want to design customers who will advance beyond the reach of competitors. These are customers who will drive your business forward, returning value back to the brand as they advance themselves—and the brand—to higher levels. In essence, you are designing customers to be one of your most powerful competitive weapons. Not because they’re slavishly “loyal,” but because they’re relentlessly innovative, fueled by your vision and your deliverables.

Develop your customers as you develop your employees

Companies invest huge sums to develop their employees to be creative and productive problem solvers. A company’s brand is its tool to develop customers along the same path. A brand that desires dumb, irrational customers insults its own employees. Eventually it will degenerate into a brand of bureaucracy, where employees are slaves to process and serfs of departmental fiefdoms, slowing innovation to a crawl.

Designing dynamic customers

The brand challenge is to design creative, dynamic customers who will have the drive, cunning and courage to embrace and run with the forthcoming products on our product development roadmap. While the product development team is crafting the next great innovation, the brand team will be designing the customers who will do something totally unique and amazing with it. In this sense, the brand completes the product vision.

Designing “pull” into customers

In the customer design process we design “pull” into our customers of tomorrow, so we won’t have to bear the agony and expense of trying to “push” our products upon them. This design ability relies on a deep ethnographic understanding of customers themselves, plus the brand vision to discern new ways for customers to grow. With our brands we are cultivating an almost rampant customer garden, much more in the style of John Chapman than Jethro Tull.

Developing the holistic customer model

When begin to design our customer we can set aside our Wacom tablets for a while. We’ll need to focus on a larger customer canvas, one with more texture. Brands are holistic expressions of company and customer, and the first design step is to develop a holistic model of our current customer, including what makes him or her “complete. We then map out the customer’s next iteration through the brand. He or she will be a new being with a greater sphere of autonomous action compared to current customers. In this process we’ll design customers for new ways of being and doing, within richer forms of living. All of these will leave current competitors far behind.

In essence, we’ll be designing a “higher order” customer who will be “beyond” future products from our competitors. In other words, we’re designing customers who will shut our competitors out—on the assumption that only our products will be worthy of this customer’s higher-order demands. Does the iPod customers want to buy CD’s? Nope.

The customer template

Typically, we’ll be designing a template of the customer we want as our innovation partner two or three years down the road. “Template” is the key term here. We’re not trying to force fit the customer into a pre-defined mold. We want to create a customer platform of more autonomy, insight and imagination, so our customer can be more proactive through our brand. We leave lots of headroom for independent customer growth. We’re designing a proactive teammate, not a rank “follower.”

Developing customer design criteria

The customer design criteria will vary by business category and customer type. In general, though, we want to maximize the customer freedoms delivered by our brand. The more freedoms the brand delivers, the more the customer can excel, and the greater value the customer can return to the business as a partner in a brand value network. If our company is geared to innovate, a liberation brand model may be appropriate.

Here are some general questions we can ask to help develop specific customer design criteria:

1. What is currently holding our customers back?
2. How can our customers be “un-packaged” from current constraints?
3. What is their immediate pain?
4. What is their strategic pain? Their missed opportunities?
5. What kinds of freedoms do our customers need?
6. How can we make our customers more productive?
7. What new skills, capabilities, values, sensibilities and attitudes do they need?
8. How can our brand become a platform for continuous customer growth?
9. How can our brand advance customers beyond the reach of competitors?
10. How can our brand create the customers who will drive our business forward?

The brand as an engine for customer growth

Since our brand will function as an engine for customer growth, advancing the customer to a point where he/she will be ready for our next level of innovation, we don’t want to leave any potential growth avenues unexplored. Thus, we also develop our brand to advance the customer’s:

1. Personal growth
2. Social growth
3. Economic growth
4. Spiritual growth
5. Creative growth

We need to get a handle on these elements in the design phase because the customer creation process is one of leading, learning and teaming that involves the whole brand, and the whole customer. A brand that aspires to market leadership must first demonstrate customer leadership. And a brand leads from the customer up.

Design the customer that you’d want to be

As a general rule, the customer you’re designing will be more capable, more proactive, and more independent than you are today. In other words, design the customer that you’d want to be. Put yourself in your customer’s shoes, just like they do at Apple.

When you’re designing the whole customer, nothing is off limits. That’s the challenge, and the thrill.