As brands grow and evolve, they will face defining moments of change and find themselves at a strategic crossroads. This challenging moment has been called a “strategic inflection point” by Andrew Grove, the former Intel CEO who wrote the modern classic “Only the Paranoid Survive”.
The idea here is that these are times when brand owners find themselves faced with a great self-defining challenge, which can only be met by answering, in some introspective detail, these types of questions:
1. What is most important to us right now that serves our customers?
2. Where–and what–do we hope to be in three, five, ten years into the future?
3. What do we do when we get there?
4. How we will measure our success along the way?
Sometimes the strategic direction is clear, other times it’s far from apparent even to those at the top of the organization. In the mad rush to manage change, to create powerful brands and brand images, companies spend tons of money reinventing themselves with ambitious marketing and advertising plans long before taking the most important first step — knowing exactly what it is they are seeking to build upon — their brand’s foundation.
This substructure of a brand’s foundation is not built on physical materials, product features and the like, but fashioned from the intangible, dynamic forces that are nearly impossible to define and quantify, yet hold the keys to greater brand meaning and understanding. The intuitive process of brand re-alignment and re-definition is often under-valued by metrics obsessed financial managers.
Every brand foundation has at its core a visceral substance that gives it strength. It is the brand’s white hot center of competitive advantage. You have to understand it, before you can grow it in new directions.
Some call it “brand essence”, others prefer “core brand values”. Whatever you call it, it’s the thing that creates pull and influence to its most relevant and differentiated trait. The brand’s foundation is a genetic code wherein all its future potential is found, and where its limits are defined. It is vital to have an established point of view about the brand’s foundation to define it in the present moment of change as well as determine the direction for the future.
Who shares the brandscape?
Of course, brands do not exist in a vacuum. The same passion, purpose, and vision that drives one brand may be exactly those of a competitor. Every category has multiple players, winners and losers.
In brand building, it is important to remember that the biggest winner is not the brand that’s first in the marketplace, but the brand that’s first in people’s minds. Jack Welch, legendary CEO of GE, clearly understood the power of market leadership when he told his business heads early in his tenure to fix, sell or close any GE division that was not number one or two in its category.
According to author Marty Neumeier, in his whitepaper branding book ZAG, brands conform to “power laws”– laws that explain why success attracts success. In the world of power laws, market share hierarchies are controlled by customers who collectively determine the success order of competitors in a category.
Assuming this is so, given the presence of these power laws, the only positions worth owning in most product categories are numbers one and two. At number three and below, it makes more sense to create a new space rather than spend marketing dollars battling the top incumbents for a share of their pie. Better to make your own.
Brands at the crossroads.
An example of an iconic brand at a strategic inflection point is the number three Wendy’s Hamburgers. Seemingly, Wendy’s has struggled to leverage the aforementioned “power laws” to its competitive advantage. As it struggles to define and express a value proposition customers really care about, it has seemingly become a ship without a rudder, victimized by the currents and forces of its own numerous creative advertising campaigns. Wendy’s is an also-ran brand that no longer represents a compelling selling idea that would enable it to lead a market segment.
However, it’s within the DNA of this iconic fast food brand that the very essence of opportunity to reinvent itself through a bigger vision about serving customers with experiences they really love and care about will be found.
Right now there is a gigantic group of consumers who no longer see fast food as a good value considering the health risks associated with those foods. Wendy’s could make a strategic decision to lead these consumers who are seeking healthy alternatives (beyond 1000 calories salads) in the fast food category. In my opinion, Wendy’s has the power to be really remarkable by changing the rules of the fast food game.
Another is Starbucks, after struggling to regain its unique footing in a category it invented, the founder sees the writing on the wall and takes bold action to delve deeper into the goo of its brand essence as the source of inspiration and connection to what made the brand so special in the first place. The result has seen a dramatic pull back from the brink.
Both Wendy’s and Starbucks are powerful leading brands faced with the challenges of new growth and increasing pressure to pay back greater investment returns to their shareholders… thus the strategic inflection point mentioned at the top of the post.
One made the successful shift to reinvent, while the other lingers in the no man’s land of its number three position.
It’s important to remember, during times of a self-defining challenge, the brand’s core values must be strong enough to protect it from the urge to allow ubiquitous marketing and advertising to be the default button to gaining market leadership. To pull through these inflection points, enlightened brand management must recognize the intrinsic limitations of their brand’s reach, as well as the wealth of opportunities that lie within their grasp.
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