Todays post is taken from an excellent article on Tom Asacker’s website.
“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.”
Since the beginning of business, successful brands have gone through three phases of evolution: mystery, model and method.
Mystery is the “I wonder…” phase: “I wonder… will people purchase an automobile if I can get the price down to ‘x’?” The next phase is the model phase—a messy, imperfect process: “Let me try to produce an automobile for ‘x.'”
Once the model phase has proven out the mystery (“Wow! They WILL buy it”), successful brands quickly move into the methods phase: “How can I produce enough automobiles at the target price to fulfill demand, and make a profit while doing so?”
Some, like Henry Ford, are driven by insights regarding a market opportunity. Others, like Michael Dell, are simply trying to stay ahead of the competition and remain profitable. Either way, a brand is born.
The problems arise when successful brands move to the madness phase, as they refine their method to the point of marketplace indifference.
Donald Sull put it this way in Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them:
“Over time, unchanging relationships can turn into shackles that limit an organization’s flexibility and lock it into active inertia. Established relationships with customers can prevent firms from responding effectively to changes in technology, regulations, or consumer preferences.”
As we witness the demise of one great brand after another in today’s tumultuous marketplace, it may appear that the realities of building a strong brand have changed. In fact, the problem is that many successful executives simply can’t see the changing marketplace forest through their brand trees.
Henry Ford was guilty of such myopia in his day. He was so convinced that his low-cost, mass production method caused the masses to buy his automobiles, that he was blinded by hubris to the mysteries of the changing marketplace.
Henry’s response to multiple requests for a different color automobile: “You can have any color you want as long as it’s black.” Black was an integral part of Henry’s refined method, because black paint apparently dried faster than other paint colors. This enabled Henry to keep his manufacturing costs and market price where he believed they had to be to cause people to buy.
We all know what happened next: Alfred P. Sloan and General Motors entered the picture. While Ford moved to the madness phase with further refinement of his scientific methods, GM vigilantly mulled over a new mystery: “I wonder if customers will pay more for a red or blue automobile?”
The answer was a resounding “Yes!” After implementing the methods to profitably support that answer, GM rapidly rose to become Ford’s archrival. This is a simplified version of historical events, of course. However, we see this pattern played out over and over again in the annals of brand evolution.
In the late 19th and early 20th centuries, when the mysteries of brand creation were abundant and fairly obvious, entrepreneurs like Henry Heinz asked questions like this: “I wonder if people will buy my relish if I place it in a glass jar so people can see that it’s full? And if they will, I’ll quickly develop a profit-making method for producing, labeling and promoting it.”
Brands of those days—soap powder, flour, grain foods, condiments and so on—became symbols of quality and consistency. Like all successful brands, they were products of their time, place and culture.
Fast-forward a half-century to the boom decade after World War II. In the 1950s, the average grocer carried about 2,000 products, compared with the tens of thousands in today’s supermarket. And most of those products were heavily advertised, branded products. The more successful the brand, the more shelf space it took up.
By publicizing their USPs to a fairly homogeneous market on network television, companies were able to convince consumers to buy their secret brand formulas—thus perpetuating this advertising-driven consumption cycle. It was a very effective method for that time: if you repeated your message often enough, a large number of people would believe you.
It was around that time that models were being developed to answer the mystery, “I wonder… what do people want to eat and how do they want to eat it?” One successful model was the MacDonald brothers’ quick-food restaurant in California. But rather than take their discoveries and evolve their model into a large, profit-making method, Dick and Mac let Ray Kroc do it.
Kroc figured out the expansion method, including exactly how long to cook a hamburger; exactly how to hire people; exactly how to set up and manage stores; and so on. A brand was born. And what has happened to the once-great McDonald’s brand in the US since the mid-1950s? They’ve skillfully refined their method to the point of mediocrity and customer indifference.
And so did Motorola in the mid 1990s. While Motorola was refining its method to get to 3.4 defects per million opportunities in its cell phone manufacturing process, a Finnish company with virtually no technology marketing expertise in the US was answering a new customer mystery: “I wonder if people will buy cell phones if they look more like fashion accessories.”
Nokia not only answered that question but also went on to become one of the world’s dominant brands in digital technologies, including mobile phones, telecommunications networks, wireless data solutions and multimedia terminals.
Are you beginning to see the pattern?
All 20th century brand successes evolve from mystery to method, and many have since moved into and out of the madness phase: from Henry Ford with the assembly line, to P & G with brand management and TV advertising, to Sears with its retail method, to the legacy airlines with the madness of their high-cost method artificially preserved with government support.
Even Howard Schultz’s method (Starbucks), which scaled the affirmative answer to the mystery he conceived on a business trip (“I wonder if people in Seattle will buy coffee from a Milan-inspired espresso bar?”), may be moving toward madness. Time will tell.
The 21st century is an unprecedented time of marketplace mysteries (albeit not quite as apparent as in the early 20th century): “I wonder how people want to buy music.” “I wonder how consumers want to interact with Web-based advertising.” “I wonder what people want to listen to on free radio.” “I wonder how consumers want to purchase financial services?” “I wonder….”
But instead of developing models to explore the mysteries, most established brands are moving into the madness phase as they place more and more emphasis and pressure on their worn-out methods. Successful brands will continue to come and go. But the great ones will discover answers to and methods to leverage the new marketplace mysteries of their time. Will you?