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Some Thoughts Regarding Competition, Branding, and Your Organization
Posted in Growth
Posted by Oren Harari in January of 2004
I presented the following notes to a client. The discussion and application that emerged is one that will be further developed in my upcoming book.
1. Consider these facts:
- “Roughly one company in ten is able to sustain the kind of growth that translates into an above-average increase in shareholder returns over more than a few years.” Clayton Christensen
- Between 1955 and 1995, only 5% of the 50 largest
- Of the 1980 Fortune 500 list, less than 50% have survived. Of the largest companies in the world in 1960, only 20% have survived. Economist.
- Every industry is facing the acceleration of what I call “the commoditization of everything”: dwindling barriers to entry, more competition (often from unanticipated sources), higher customer expectations, increased customer perception that what vendors are offering is basically good but the same, price pressures (down), lower margins, more difficulty in maintaining customer loyalty. Rich Karlgaard of Forbes magazine calls it “The Cheap Decade”. I would also call it “The Good Enough Decade.”
2. What does this tell us?
- Real growth and sustainable competitive advantage is not guaranteed for any organization, regardless of its current size, stature or financials.
- Great leaders view complacency as a dread disease, and instead confront these realities with a sense of urgency.
- A critical issue for any company: how do we sustain (indeed, accelerate) competitive advantage, client loyalty, and financial success? Where must we go now? What do we keep? What do we do now that we must enhance further? What do we challenge? What do we eliminate? What do we change? What do we prioritize?
3. Branding is a path towards addressing these critical competitive issues. A few comments about branding:
- Branding is about deliberately forging a clear and compelling identity in the marketplace, one that clearly differentiates us from competitors (as perceived by clients), one that matters to clients, and one that yields impressive financial metrics --- profitability being the key metric.
- Having a well-recognized brand is no longer sufficient (Levi-Strauss, Kodak, McDonald’s), but when the brand meets the above criteria (
- As an organization gets larger and more complex, and as its growth challenges become more acute (it’s far easier to grow a $10 million company by 20% annually than a $100 million company), these issues and criteria become extremely important—or else the only way that the company can grow is via serial acquisition, a strategy which has a poor track record. Branding is about growth and prosperity.
- Most companies talk about branding, but because branding is obviously much more than logos and marketing pizzazz, it is not surprising that few companies succeed in the difficult work that branding requires.
4. To apply these issues to your company (and to begin developing a “Your Company brand”), consider two concepts: “company promise” and “customer experience”:
- First, think of 5 Ps: Great companies are those that integrate products, people, pricing, and place in order to generate a promise to the marketplace. By “promise”, I don’t mean the commitments that your company currently makes to your customers regarding service and deliverables; that’s a given. “Promise” is the implicit assurance that a customer will be guaranteed a special “experience” from working with your company’s representatives or from using your company’s products, and the client knows it. (Think about what loyal Toyota customers implicitly know they will receive if they buy any Toyota vehicle, be it a Camry, a Prius, or a Sequoia; think about what loyal Pixar or Starbucks customers implicitly know they will receive).
5. Four factors that generate a great promise/experience, which leads to brand equity:
A. Most important: “Value”, as in: creating new value for the customer.
- Unique, different
- Distinctly better
- Special
- Bold, breaks new ground
- Compelling, exciting
- Simple, clear
- Matters: Customers believe it makes their lives easier, better, more efficient, more effective, more productive, more meaningful, more fun-- in a way that nobody else does, or in a way that is head and shoulders above what anyone else does. In other words, “value” goes beyond traditional mission statements or buzzwords like “excellence” or “quality”.
B. “Soul”, as in: truly embedded in the company’s persona:
- Who we are
- What we stand for
- How we are (towards clients, plus what we expect from clients)
- Businesses we seek, businesses we turn away
- “Picture” and “Persona” that we all rally round, with zeal and zest.
C. “Integrity”, as in: walking the talk in execution:
- Foundation for strategic, operational, budgetary and personnel decisions.
- Live it, own it, we’re “true” to it
- Delivery of company promise and client experience guaranteed.
D. “Legacy”, as in:
- What noble impact does our company have on our marketplace?
- What mark does our company leave?
- How do we change the world?
Further issues for any company to consider as it addresses the above issues:
6. Corporate size can be of great help in matters of scale, scope, reach, synergy, reach, market share, initial attractiveness to larger clients.
But remember: Size is not a brand, nor is it on its own a predictor of competitive success or prosperity (see data in #1, also consider Pixar vs. Disney, or Nokia vs. Motorola). To some extent, your customers may care about the tangible size of your company (how many offices? How many assets? etc.). But ultimately, they care more about the size of your company’s intangibles, e.g.: how fast do you respond, how well do you know me (client), how personalized are your products and efforts, how efficient and precise and accurate are you, how big is your knowledge base that you can harness on my behalf, how proactive are you in anticipating what I will need tomorrow, how innovative are your solution-sets, how cool and worthwhile are your products, etc. And once again: can you do this in a way nobody else can? Therefore, any organization should be sure that as it gets bigger tangibly, it gets even bigger intangibly.
7. Trying to be all things to all people is a slippery slope, a.k.a. dangerous (Sears vs. Target, GM vs. BMW).
No company can be great in everything. “One stop shopping” is often a myth. Jan Carlzon (SAS Airlines): “The secret of good business is knowing the bad business to turn away.” Branding (and competitive success) is about focused superiority.
8. Especially when offering diverse products and services to diverse clients, this discussion is critical (think about the focused approach at
9. Especially as a company grows, this discussion is critical.
- Internally: do we all know and subscribe to where we’re going and how we’ll get there? It’s the “glue” that binds us as the company becomes more complex and dispersed.
- Externally: it’s critical in focusing masses of people and resources towards a compelling promise and experience.
- Financially: it’s critical in defining how we see future growth and prosperity.
10. As organizational leaders bring their own ingenuity, knowledge and passion into this branding process, they would be wise to be data-based as well, for example:
A. Strategic listening to understand today’s customers. This is about working backwards to understand what has made the organization successful, from the customer’s perspective.
- Why do customers come to us?
- Why do they stay?
- Why do they love us? Trust us?
- Why do they recommend us?
- Why do they boost their “share of customer”?
- Why don’t they do the above?
- Strategic listening is not a questionnaire or a survey. It’s an intimate probing and analysis.
B. Strategic pathing to understand tomorrow’s customers. This is about working forward to predict tomorrow’s market and customer needs today.
- What are the emerging trends and data points that define tomorrow’s competition, customer expectations and needs, technologies, products, demographics, political realities, capital realities, etc., and how do we prepare, confront and capitalize on them today?
- How do we use this data to lead today’s customers into arenas they may not have thought about or asked for; i.e., how do we serve tomorrow’s customers today? And how do we do it in a way that nobody else can?
- In other words, how do we use all these data to be first and be exceptional in whatever we offer the marketplace?
11. Leadership
- The role of leaders becomes crucial in defining a path for branding that results in competitive success. Leaders are critical for role-modeling the promises and expectations, and for mobilizing people throughout the organization to release what doesn’t work, to get excited about the future, and to strive for extraordinary (often new) goals. Remember, branding is not window-dressing for yesterday’s successes. Branding is forward looking. It offers your organization a window and path towards bigger, exciting and immense potentials in the future.