Transformation secrets: Please don’t try to change your brand

Change is on everyone’s mind at this time of year – or more particularly people are preoccupied with resolutions of change. Hopes of transformation fly high. But most of us will lapse from whatever pledges we make, not because we don’t really want to change necessarily but because the habit of what we have done or know well is too comfortable for change to endure.

Companies are no different. As Professor Robert Sull put it so well back in 1999 in a paper titled “Why Good Companies Go Bad”, organisations, just like individuals, tend to snub the transformation they really need to decisively shift their reputation or market share in favour of persisting with established patterns of behaviour that they are comfortable with.

Sull dubbed this phenomenon not just as inertia but as “active inertia”, because companies keep themselves busy with activities that, conciously or not, are often directed away from the transformation they claim to want and towards variations of business as usual.

Professor Sull’s point was that such sustained patterns of behaviour degrade in their value and contribution to the business over time. Ironically, the very pillars that are meant to drive progress and support reputation come to act as anchors to innovation and business change as organisations turn inward. Strategic frames, he pointed out, become blinders; processes turn into routines; relationships devolve into shackles; and values transform into dogmas.

As a result, business change programmes become the corporate equivalent of a fight in a paper bag. Everyone’s told they need to change, but most people are left guessing as to what difference these upheavals will make to the brand’s reputation and/or what they are going to get out of all this change. Preferring the devil they know to the transformation they don’t, they opt for inertia.

You can of course try and fight this tendency to look inward (good luck!) or you can draw on it. One very effective way to do that is to take a serious look at the purpose flag under which you sail. In other words, channel the intense internal energy that most companies generate to reset your aspirations as a brand. Reframe your thinking so that the focus is less on ‘what we’re doing’ and more on ‘why would we want to do that’. Taking the cue from Sull, the key issue for most organisations who recognise a need to move on from where they are competitively is not what they are doing or even what they are changing but what they need to become.

After reading Blue Ocean Strategy many years ago, I made this note: “Uncompetitive companies can sell out, tough it out or invent their way out of where they are.”

The last option daunts many, but it’s really not that difficult. It starts with this sentence: “What if we were …?”

Here are my five simple questions to help overcome active inertia and guide effective transformation.

1.  Who do we most aim to be as a company? (What reputation would most excite us as a culture?)

2.  As a consequence of that, what do we most need to do to gain that reputation? (irrespective of what others are doing or what we ourselves have been doing)

3.  As a consequence of pursuing those actions, what will need to change?

And then the simplest but for many people the most telling questions of all:

4. Of all the major projects the brand has running at the moment, how many of them are helping that transformation?

5. Of all the work that our teams have on their desks at the moment, how much of that is helping that transformation?

So many change programmes start with the need to admit failure or defeat. The intention is to make the case for not doing more of the same. But I have watched such sessions quickly descend into a self-absorbing blame game that stirs those concerned to make bold commitments by way of redemption that, subsequently, wither and die under a number of guises.

Despite the promises and reassurances that many will give, if you are uncompetitive, you are where you are for a reason – and “active inertia” may well be your biggest threat. As Marshall Goldsmith so brilliantly observed about transformation, “What got you here won’t get you there”.

But, just like New Year’s resolutions, looking to just make changes, however well intentioned or sincere, won’t necessarily get you anywhere. All you are doing in many cases is entering a very long, dark tunnel at speed with your fingers crossed.

To really succeed, you need to know what, why and where “there” is for your brand, and you need to be constantly and consistently measuring your progress towards that point of purpose, financially, perceptively and culturally.

Change must be a consequence of seeking to become that brand, not the other way round.

Related articles

• Will they or won’t they?

The Balanced Brand: some preliminary thinking

What is it with me and earthquakes? Last Christmas, I was in Christchurch for the Boxing Day shake. This year, I was there on Friday, and it happened again. They are scary – and it’s interesting how different people are scared about different aspects. For most, the fear of death and injury is prevalent as you’d expect – but almost as distressing for others are the noise, the shaking itself and of course the damage that brings silt to the surface, breaks possessions and puts everyone on edge. To all those in Christchurch, including of course my own immediate and extended family, my prayers and thoughts are with you.

We all live with fears I guess, and they come to the surface at different times. That’s as true for business as it is in our personal lives. Today’s obsession with growth has it seems to me often overshadowed the more important strategic question of what do we want our organisations and our brands to grow into – how will they evolve, and how will the benefits of that evolution be effectively and efficiently spread. How will everyone gain something from the strategic change: customers; shareholders; employers; the community?

Business is so linked these days that effects, both positive and negative, are virtually impossible to contain. So I see this as a deeply commercial question centred around holistric incentives and rewards – financial, social and cultural. One that generates tough questions in the bid to find the best answers.

I think there is an opportunity here for brands to think more sustainably and report more holistically (at least to themselves) about their overall returns – not just what they made as an organisation and/or what they gave back, but what were, are and are projected to be the beneficial returns for everyone that the organisation really cares about of the strategy that was pursued and is being pursued.

We talk a lot about intangibles and in some areas of commercial life I think we go out of our way to report them. Yet at a strategic level so often the ways we assess the wider effectiveness of brands is very narrow indeed. Either that, or the assessments are confined by discipline, which really means that one effect is siloed from another.

The conventional response to the relentless demand for growth is to piledriver pressure down supply chains, internal and external, in the name of efficiency and to look for that to blossom into returns.

But I’ve watched many organisations aggressively pursue a scale based model that has kept the people in marketing and finance very happy. Meanwhile the effects of that pursuit are reflected in cultural climate figures that are through the floor or a growing list of supplier casualties who have applied their expertise elsewhere. The true cost of those losses often goes unreported.

The reverse is also true. I have worked with brands that have such a “family feel” that no-one is prepared to bang the performance drum for fear of changing the mood. The point here though is that a workplace that is that comfortable is at risk of becoming complacent.

Either way, the true quid pro quo is lost or at best overlooked.

As the people of Christchurch have discovered, shake-ups force a re-evaluation of many different priorities – from the very personal to the abstractly international. And no one person or entity can make or direct all the changes required.

As the after-shocks of the current financial stalemate ripple through Western economies, everyone will react to what is happening in different ways. Some will indeed take to the cities and raise their fists in fury at the system. Some will look to consolidate. Some will file for bankruptcy. But some may also see this as an opportunity to re-examine the commercial agendas of their brands in a more sustained and broadly ecosystemic way; to look both closely and broadly at the benefits and dangers of the current path and to plot a path forward that generates the best possible advantages for all concerned.

My theories on this, which are still developing, are very much along the lines of Kaplan and Norton’s Balanced Scorecard. The intention is to find ways to develop, monitor and stimulate what I’m calling, at this point anyway, The Balanced Brand.

Best wishes to you all this Xmas season.

Seen and not herd

What’s the real cost of the sales seasons on the high street?  That’s the question posed and answered by Laurence Green in this well-considered article in The Telegraph. Green quickly hones in on what he sees as two of the biggest enemies of effective branding today: the impulse to discount; and the compulsion to appeal to everyone that manifests itself in communications that stand out from no-one.

What appear at first to be two completely different issues quickly condense into a single problem.

According to Green, discounting comes at a cost that extends far beyond the lost margin. Their effect, he says, is to slowly unstitch everything that the company has been doing to add value in the minds of consumers across the rest of the year. Indeed Green goes so far as to suggest that “resistance to discounting pressure is one of the hallmarks of a strong brand” and backs up that claim by referring to an address by Mark Ritson of MIT Sloan in which the Associate Professor compared The Gap and Abercrombie & Fitch.

The Gap, Ritson says, has lost its way looking to appeal to everyone, and the permanent “on sale” signs are the clearest sign of that. By contrast, Abercrombie & Fitch has held its premium pricing by staying true to its customer target. In retail, and contrary to apparent logic, it’s actually much harder to appeal to everyone than to appeal to specific groups. Ironically, there’s security in having a smaller but – and this is important – very well defined and understood catchment.

Green clearly sees lack of distinction in today’s advertising as an extension of the same problem. In the bid to appeal to everyone, ideas are “steadily sand-papered into sameness”. By way of proof, he asks what chance David Ogilvy’s “Man in the Hathaway Shirt” would have had in today’s highly researched, highly PC environment. It would have been reduced to a catalogue shot, he says, over a full range of apparent concerns.

Fashion permeates so many aspects of life today that it’s hard not to be influenced by it. There are, of course, many positive aspects to fashion – it changes, it challenges, it directs. But it can also restrict. It can also seem to define. And that can make it very hard to break with. Today’s “it” idea can quickly become everyone’s hope for success. And the result is windows that look the same, offers that sound the same, products that pretty much are the same … And when that happens, when many of the offerings on show are “oh so 2011”, distinctualising becomes a lot more difficult.

The sector quickly becomes a crowd. And the crowd quickly becomes a herd.

In today’s hyper-connected, hyper-aware world, it takes a bold brand not to lapse into sale when everyone has a sale, and not to make shouty boring retail ads that sound exactly the same as everyone else’s shouty boring retail ads. But the risk to brands of doing that is of course far higher than the risk of not doing so – and that seems to me to be Green’s point.
Conforming pulls so many brands into a miasma that not only reinforces more of the same destructive behaviours but appears to give them few other options.

No-one I know has started a brand so that they could just blend with every other retailer in the mall or on the street. They did it because they had a passion for the sector, or because they believed in their talent, or because they wanted to make a success of themselves. Mostly they did it because they believed they could compete and win, and they wanted, as part of that, to be recognised for something and to have pride in what they were doing. And yet that miasma is where too many of them end up – because they lose faith in their convictions. They follow what they think is the market, and that decision quickly lapses into taking cues from others around them.

But here’s the thing – you don’t compete by following your competitors. You compete by responding to your customers.

The next time you’re looking to put the “On sale” sign out, ask yourself this. “Why are we doing this?”. If the real answer is because everyone else is, then you are probably not running your brand, you are allowing your brand to be run. And the need to have sales (particularly regular heavily discounted sales) is a symptom of a more pressing problem – you now mean nothing to the people who buy from you, and you haven’t fixed that.

I’m always amazed by the number of people who say they haven’t got time to go through all that “branding stuff”. But there’s a price to pay for not being very clear about your true value proposition, and the two phenomenon that Green describes are part of that price: you follow the crowd; and you throw your net to wide. The true purpose of an effective brand strategy is to give you the clarity you need to compete effectively. Sale after sale after sale is often an admission that, in the absence of such clarity, you are now willing to sell your brand short. Just like so many others around you.

Getting real value from your CSR

This thought-provoking article from McKinsey looks at what really drives value in corporate responsibility. As the authors point out, CSR continues to influence how companies and brands go about their business: carbon footprint, ethical and greener supply chains, volunteer programmes and philanthropy are now all par for the course. We all know that not being involved in such investments can have a negative effect on consumer perceptions, but do the activities themselves add value and if so what are the best ways for companies to make the most of that potential?

“Some investments, of course, produce immediate and quantifiable gains, such as those from recycling or from manufacturing processes that save energy. But often, social investments are expected to yield longer-term benefits as engaged consumers step up their purchases, a broader investor base develops, or new talent flocks to a company’s recruiters … In these more ambiguous cases, how is a manager to know whether stakeholders will indeed respond positively?”

Great question. Personally I’m always suspiscious when someone tells me that there are long term benefits. It can be true of course – it is for branding – but it’s also a very convenient way to fob off accountability. So how can you inject some level of immediacy into your CSR investment?

Let’s start with what you can’t do. What McKinsey’s research clearly shows is that if you are using CSR to hide or ameliorate a lack of quality, then that will actually harm your company’s competitiveness. My take-out from this finding is that CSR is an extension of trust and attention to detail. If you can’t achieve quality with your brand, you can’t expect to play catch-up through your CSR.

There’s also some great advice on how to achieve greater value from your CSR.

1. Your behaviours need to match your words in every aspect. Be straight-up about why you’re engaged in a CSR initiative. In fact, look to directly link your commercial imperatives with your social agenda. That not only makes sense, it shows you are looking to generate social value in your area you know about.

2. Meet your consumers’ true needs. Just as people buy brands to satisfy tangible and intangible needs, so your CSR activities need to deliver an appropriate mix of benefits, and the tangible ones need to be that – grounded, real, measurable and based on a genuine need (not one that you’ve manufactured or would like to address for your own commercial reasons). Better still, find ways not just to get involved, but to actually create programmes that fundamentally address issues and look to do so with others.

One of the ideas that I’ve been thinking about a lot lately, motivated largely by my discussions with Peter Salmon, is that brands probably need to start thinking of their social involvement as part of their innovation programme rather than as something they associate with compliance or stakeholder relations. So, yes, in part that’s about making their products more responsible, but it’s also about looking for ways to apply their knowledge to social problems and then re-injecting those insights back into their product development.

3. Look to create value for all involved, and continue to test that you are doing so. As the authors so rightly point out, “Corporate responsibility acts as a conduit through which companies can demonstrate that they care about their stakeholders. A company should assess its initiatives regularly to ensure that they foster the desired unity between its own goals and those of stakeholders.”

So, are you continuing to be involved in initiatives that your stakeholders care about and that add value for them? If you find yourself involved in an initiative that really strikes a chord with your stakeholders, investigate the business case for becoming more involved. And vice versa.

As products continue to commoditise, there’s little doubt that the intangible aspects that carry more and more of the value in brands are only going to become more valuable. I think at the same time most of us are continuing to grapple with how to do that in responsible and measured ways. McKinsey’s advice in this article further contributes to the resolution of what I see as the elephant in the room for brands and companies looking to lift their emotional margin – “How do we know this is going to be worth it – now and later?”

Passing the feedback test

Conflict resolution is one of those huge opportunities that so often goes begging. Ask yourself how many times you’ve been in, or watched, this scenario unfold. A client is upset with something that’s happened or has voiced concerns about a brand or some element of the service. The immediate, almost instinctive, reaction is to jump to your own defense; to justify in your own mind why things have happened, and to look to foist that justification on the complainant.

You want to clear your name. Of course. No-one wants to be, or even to feel, like they are in the wrong.

Here’s the thing. As my colleague Janelle Barlow puts it so well in her book, “Complaint is a Gift”, if someone bothers to complain, they do so because they feel emotionally engaged enough with what is going on to interact. The opportunity here is that they are giving you feedback and they are looking for, and judging you by, your response.

Every complaint is a test – a test of your commitment to the relationship, a test of your ability to engage, a test of your people’s patience and self-control. And every response is a test too – of your ability to listen, to empathise, to be charming and engaging, and, above all, to represent and do justice to the brand.

I’m just off the phone and the local Trelise Cooper stockist has failed that test – perhaps not in their eyes, but certainly in mine – after concerns were raised about a service aspect. In response to feedback they had received, they did all the righteous justification stuff to a tee – the curt introduction, the “take control” tone, the barely suppressed anger, the disrespectful approach. I was none too impressed.

And designer Trelise Cooper herself will have no idea that this has happened. She wasn’t there – and I can’t imagine that anyone will have told her. In fact, she’s probably hard at work in her office working on ways to increase the value of her brand and her business.

Sometimes purchases don’t work out, sometimes systems don’t work or don’t work fast enough. There are probably very good reasons why, but for a customer they are actually irrelevant. The thing to keep reminding your frontline people is that logic doesn’t actually determine whether your brand passes or fails the feedback test. What counts is how the customer feels at the end of the call or the encounter.

Here’s the scary bit. Those encounters, those tests, can be incredibly short. Just seconds. And in that time, just a few sentences, a breath or two, some very long-lasting decisions can be made. For or against.

No-one’s asking or expecting the people who represent your brand to kow-tow or to blankly agree with every assertion made by every customer. But knowing how to actively listen to concerns, to calm their own emotions and to find ways to turn things round or at least part on amicable terms, agreeing to disagree, is a brand-critical skill.

Everything about communication today encourages impulsiveness, and everything about prudent brand management mandates just the opposite.

On this day, the temptation to have their say seems like it was just too much for the people in one store. I think they should have been focused on running the brand, not running their mouth. The sad, frustrating and sobering thing is the exchange could so easily have worked so powerfully the other way.

Will they or won’t they?

So often it seems to me brand owners hope to bring about change rather than planning to bring about change. They see persuasion as an awareness issue rather than as a behavioural issue – often because they regard their product as the obvious choice that somehow, miraculously will spark a “road to Damascus” moment as soon as consumers encounter it. To that end, they pad out their media schedules with as much presence as their budgets can muster and throw huge amounts of energy and disarming levels of resource into whatever’s trending on social media.

So I was very interested in an article on willpower in the NZ Listener recently that refers to key elements that persuade us to behave differently. It includes some great thinking from David Thomason and the planners at Draft FCB who, like more and more of us in the marketing sector, are looking to the behavioural sciences for clues on ways to shape brands and the behaviours that make brands gel for people.

The article quotes from psychologist Robert Cialdini who decades ago listed 6 key factors that persuade us to make lasting changes:

1. Reciprocity – actions we take based on direct or indirect mutual gain

2. Commitment that can then be carried out consistently – habits, once formed, rapidly become addictive

3. Social “proof” – the power of the crowd to compel the individual

4. Authority – following the bidding of those we perceive as strong, respected or in a leadership role

5. Liking – we’re drawn to, and much more easily persuaded by, people and brands we are inclined towards emotionally

6. Scarcity – making something scarce not only heightens its value, it also elevates its desirability

From this base, Thomason goes on to extrapolate a number of other drivers:

7. The need to display and in doing so to reinforce identity – a phenomenon I often reference as “the handbag of the ego”

8. Framing – the clever use of alternatives to focus buying – usually by making one choice stand out from another as a “bargain”

9. Chunking – breaking big commitments down into small steps

10. Normalising – making activities that had been regarded as unusual or abnormal seem sensible and everyday. As Thomason and his colleague Murray Watt identify in the article, positioning an activity as everyday is actually a highly effective way to overcome inertia and/or indifference.

As the Listener article serves to remind us – brands live in the mind much more powerfully than they do on the shelf, with all the synapsial, behavioural and emotive complications that such perceptions entail. So the key to changing a consumer’s inclination towards a brand, service or action lies in something much more complicated than awareness. It rests on changing their mindset about that brand, service or action.

Most marketers can happily supply plenty of reasons why, in their eyes, customers should change to their brand.

But that’s not the market share-changing question. That question is: why would they change?

Absolute quality loses to perceived quality

This post by James D. Roumeliotis and Violetta Ihalainen of Whitefield Consulting, absolutely challenges my worldview as an unabashed meritocrat, but includes some fascinating points – particularly that absolute (objective) quality is far less important for consumers in their decisions about brands than perceived quality.

As the authors explain, “perceived quality” is your customers’ view of the quality of a product or service both in terms of what they expect and also in comparison with how they perceive the quality of competing offerings. That means “perceived quality is defined as a measure of belief”.

So – if consumers believe you are the best, then you are. Regardless of the measures you may put in place. Regardless of what the critics might say. Or the awards you may have received.

For those of us who believe in the power of intangibles, this makes complete sense on reflection but it also contrasts with how we probably believe quality should work – or tell ourselves it does work. “Why can’t they see that our goods are better?” is a question I get asked a lot.

Quality doesn’t speak for itself. It speaks to each consumer in their own particulat way, and the authors quote the great David Aaker, one of my favourite brand thinkers, to explain why.

According to Aaker, perceived quality is generated by each buyer’s perception of up to seven elements. In evaluating these quality elements, consumers literally make up their mind about whether what you’re saying matches the qualities they’re seeing. Just as importantly, these elements are how they decide to choose your qualities over the qualities of others:

If it’s a product, Aaker says your customers evaluate on:

1. Performance

2. Features

3. Conformity with specifications

4. Reliability

5. Durability

6. Serviceability

7. Fit and finish

If it’s a service, Aaker says your customers make quality decisions based on:

1. Tangibles

2. Reliability

3. Competence

4. Responsiveness

5. Empathy

My sense is that further qualifiers then endorse the feeling of perceived quality through inclination – things like the shopping experience, reputation, overall market presence.

In short, people buy when they believe in the value of what they are getting and their focus is drawn away, through critical factors like perceived quality, from the plethora of options available in the market to the one or two products that ‘feel like them’. The challenge for each of us as marketers is to do that in ways that work quickly and profitably and that engage powerfully.