Growth is great but what happens when you haven't planned for that growth? The BrandExtract team discusses how companies can manage brands at risk of becoming too big to handle.
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Challenges Facing Major Brands
Chris: Hello and welcome again to another edition of "Solving for B°" Today, we're talking about managing a brand. More specifically, we're going to be talking about how to keep your brand manageable in the face of expansion and growth. We'll also talk about what you can do if your brand has already overextended itself. To help me address this topic, I'm joined by brand strategist, Leslie Rainwater, Chairman, Jonathan Fisher, and President and CEO, Bo Bothe.
Thanks for stopping in today, guys. So let's talk a little bit about some of the challenges that big multifaceted brands like GE face.
Jonathan: Corporations have been around a long time and have scaled over the years through acquisition, expansion of product, or service or market. Eventually, what happens
They can lose their positioning in the marketplace! Not to mention that they have occasionally competing services and conflicting strategies between products or services within those markets if they aren't careful.
So at its core, managing a brand that's sprawling can be a real challenge. It’s made more complex based on whether they are a house of brands or a branded house – depending on their strategy for how they grew in that process.
Chris: Can you talk a little bit about the difference between a house of brands and a branded house?
Jonathan: Well, in a house of brands, you have many brands under the roof, independent brands that take a Proctor and Gamble model. You've got a Windex and then you've got many other cleaning products or household products and so on. And they're all independent brands versus if you take a branded house approach – the Revlon model for example, where everything is a Revlon product.
Brands that Spread Themselves Too Thin
Chris: Are there specific examples that we can point to of a brand spreading itself too thin? There are multiple ways that a brand can become unmanageable.
Bo: Well, Chris, we opened with GE, right? And those of us that are older remember GE as a manufacturer of appliances. Over time, they became a financial company. And with GE, their financing for those products actually overran the size and profit for the company that actually made things.
Now GE is in its third iteration as a company working in industries like energy and aeronautics among other things. But it’s selling off divisions. What was the GE brand?
And I remember, was it, “We bring good things to life?” When I grew up, I associated that with light because of light bulbs, because GE light bulbs were a big deal. Those things all impact the way you think about a brand, whether business to consumer or business to business.
Those kinds of things look at the brand. The recent troubles that Starbucks had from a legal standpoint, if you look all the way back to there, what Starbucks has effectively become is the McDonald's of today. It's a drive-thru coffee place. I want some sugary expensive drink. When the brand was created, it was created as the third place and their website talks about that.
As these organizations become global, there are more and more stores, more and more people to have to train, and more and more people to have to influence. Sometimes they start to make decisions.
They were a real estate play for a long time, and probably still are. But the reality is their spaces became smaller, and less comfortable to sit in.
Jonathan: Yeah. There are a couple of Starbucks near me that I frequent regularly, and I think they had maybe three tables. I mean they're skinny. There's not enough space. Sometimes the lines are out the door, so I hardly associate the brand as a place to hang out anymore.
Leslie: To expand on that, not to pick on Starbucks, but they also, if you'll remember, decided to go into serving food and they started to expand out to that. Their brand got a little unmanageable and people didn't look at them for that.
They would look at them as a place to go and have a coffee. That wasn't successful and they had to pull back a little bit.
Jonathan: I think they've even lost the cause marketing, with all they used to be about the sustainable organic beans from farmers around the world and globe.
They've even drifted away from that. So you've got this fraying of the brand at its edges and its physical spaces, its commoditization, its service delivery and what it stands for. I think that's a really good example of a brand that got too big and lost its way.
Bo: But I think that speaks to one of the things we've talked about – the maturing market. What does the market expect from the brand over time and does that change its mission?
Does it change why they exist and why somebody spends money on a specific brand? Whether it be a consumer brand like coffee, or it's a drill bit, or it's a widget that goes into something. As companies grow, their products hit the market, people respond or react to those products. Over time, those things change, right? They make adjustments and it changes the company.
Adjusting Your Brand
Chris: Is it advisable to adjust your brand strategy, adjust your brand based on markets that are maturing and evolving? As a business owner, I'm thinking, well, this is who I am. No matter what happens, I have to stay true to my core values. Is it advisable to maybe adjust your stance on different things? What's our stance on that?
Bo: Man, that's a great question. IBM, International Business Machines. They made computers. Now, those computers were punch cards, then effectively that brand switched to artificial intelligence and consulting.
So they haven't deliberately come out and said, “Here's what changed about our brand,” but they've definitely morphed. They've been able to maintain that, “We're very smart, we're behind everything you do. We're in what you do, we're making good decisions.”
They've maintained that part of their brand. Does it change their mission? I don't know. Possibly. Maybe their mission was to bring information to people, or maybe their mission was to connect with people. I haven't really studied their mission statement, which would be a good thing to do.
Leslie: But to your point though, when they were originally in computers and doing things like that, the market subsequently became more crowded and computers became a commodity.
They kept getting cheaper and cheaper, but what people still needed and that they discovered was they needed the solutions. They needed to figure out how to put all this together.
How do I make it run? So to jump in front of the market or to respond to that was really smart and they kept their brand, but they just shifted a little bit.
Bo: If the purpose of their information was to process information as opposed to make computers, well that's a pretty broad shift. I mean you can change your services around that. I haven't studied that brand very much, but from an ethos standpoint, I would assume that that's probably what they've done.
Jonathan: Sometimes you might have a more tactical or more narrowly defined brand position in the marketplace when you're starting out your business. And I think you find that as you evolve and scale, sometimes you have to take a strategic perspective; a slightly broader purpose to connect the world, for example, or to provide information through the expediency of technology.
Okay, I'm still manufacturing the hardware and the software and the consulting around it, but it's really around the benefit of the product, which is the information delivery more so than the product itself.
So is it an evolution? Probably a little bit of a reset. I think where companies get into trouble is where they start and they stop and they completely shift. That used to be the sign of death during the Dot Com industry, working with a lot of startups that would constantly shift right and left. You knew they weren't going to survive, you just knew it. And you could tell it really quickly.
Is it Jim Collins' "SMaC list"? It's basically that recipe for success. And you can tell when the brand is just evolving a little bit, that recipe for success is there from the start. You tinker with it a little bit, but you don't throw it out.
Chris: Right. So it sounds like it's something that we need to consider early on because Jonathan, you mentioned if your mission or your core values are too tactically focused, then you run the risk of pigeonholing yourself.
And then having to take that step back and say, “Well really, we're this.” It takes some foresight when you're developing your brand to say, “We're not making XYZ widget, we're really trying to solve this problem from a higher level.”
Jonathan: To Bo's point around Starbucks, they drifted off from being the place to be. Therefore, they had operational issues with running contrary to having enough room. “I need you to move. You're not buying anything so please leave.” Starbucks was no longer the place to be. That's an example of what happens when that scale and that scope creep starts to come into the brand and you don't manage it effectively.
Chris: Good point!
Cause and Effect: Brand to Sales
Chris: So we've talked a little bit about a company spreading itself too thin. We've also just touched on changing as markets mature and evolve. One other thing, and if we go back to our GE example - If GE Aeronautics is doing poorly or the market's going down, is that going to affect, to Bo's point, the appliance sales?
Bo: It depends a little bit on how the brand is set up. Jonathan talked about brand architecture. In GE's case, as they've bought and sold, divested, added different pieces, I think originally it hurt them. And there's always the financial drag, right?
If there is a large business division providing a certain amount of revenue that's low margin to the bottom line, it affects the stock price. But from a brand presence standpoint, GE now is known for being in and out of different types of businesses.
So as long as those businesses are managed appropriately, and if one is failing, it gets rid of it. That was a Jack Welch mainstay. They've started to make adjustments based on that approach.
If you're a Starbucks and all of your brand, every one of your locations is repeatable, being able to sell the same experience at every one of the locations, that's going to impact if one has a big egregious problem.
That's going to impact the overall brand. There are benefits to having a house of brands or a branded house, or to
Designing the Right Brand Architecture
Chris: So what dictates what type of brand architecture you should put together? Is it industry? Is
Jonathan: I always started with corporate goals and vision. I mean, where does the company want to go and what is their strategy for getting there?
If they plan to be highly diversified and at some point sell off those business units, then having brands that can travel with the units is going to be more advantageous.
If you're trying to sell off a service and it's not branded, you've lost an equity value in that process. If they're carving business units out, they may be planning on doing spinouts, in which case if you have a branded house and you want to do a spin out, then you've got to create a whole new brand. That is more costly and time-consuming than if you'd had a house of brands
Preventing Your Brand from Becoming Unmanageable
Chris: That's a good segue because we talked about some of the potential pitfalls. What are some of the ways to avoid those pitfalls or keep your brand from becoming unmanageable? It sounds like you need to look before you leap. Really considering everything. It's why you can't go into a branding exercise flippantly, right? You need to think about it from all angles.
Bo: You talk about look before you leap, then you look at cause and effect. If I have to brand, if I decide that I'm going to have two different brands under one roof, then I have to manage those brands. And what's the cost of those brands? How are those brands going to play? What kind of confusion does that cause for investors, or what kind of confusion does it cause for teammates internally? I think the second or the third piece to that could be to push down the message, but also drive bottom-up leadership.
Bo: I'm reading right now, Extreme Ownership, by Willink and Babin, Navy Seals applied
They say that if you're going to have a brand that’s going to flourish and grow, make sure that there's not one person making all the decisions. When you've got a location, a manufacturing facility in some far-flung place in the world, and they have to call you to call another person to call another person to make a decision, they're not going to be effective.
But also if there's a disconnect in the purpose, the mission; how we're going to deliver the product from a financial and operational standpoint, and from an ethos standpoint. Those things can get in the way of that brand actually growing. So decentralizing command is a big part of that.
Jonathan: I’d add one more thing if you use the example of how we do positioning for brands and creating a brand pyramid. It's essentially a litmus test as much as it is a filter for what fits and doesn't fit within the brand's strategy and messaging, and hierarchy.
So if you have that figured out on the front end, then you can pretty easily start to test your ideas to see whether they're going to work within or outside of those parameters. And if they're going to work outside the parameters, what's it going to do to that model, more or less? It starts with a little fencing, where you could refer to it in its simplest form.
Bo: Leslie and I just worked with a client to redo their mission and values and help them define a purpose statement. The reality was they had gotten into four wholly different industries.
Now, the things that they did for those industries were very consistent. The technologies they used and the different experiences they had to put together for the different industries that they serve were great, but the organization was definitely focused on one industry.
They were definitely geared up to deliver for that industry. They just happened to be able to deliver the same types of technology in different places. So it fundamentally changed what their mission statement was.
But the purpose of the organization never changed. What they did at the end of the day as engineers, as developers, as manufacturers, as technology people, was the same. But it wasn't articulated appropriately for the new business that they were in.
So getting everybody on the same page becomes a critical component to managing a brand that has become large and, to what it can deliver and to where it delivers.
Jonathan: The mistake that I see often when we get called in to help a company with a reset or a refresh is they somehow lose sight of those original strategies. They got put in a drawer, like a piece of paper, and were never discussed again.
They're not constantly top of mind. And for a brand to thrive, it has to be constantly top of mind, communicated internally and externally on a daily basis. Those filters and those fences are part of keeping the brand under manageable control.
Leslie: Another facet of that is you start thinking through your strategy; that you constantly need to check with the market. So it pays to go back and talk to your customers as you grow your brands. Ask those questions and ensure you're doing your litmus test.
When we do positioning, very often we want to talk to employees. Where are they? What do they understand about your brand? If we did this, how would they feel about it? Or would they be interested in this service or how would it impact?
So always keeping up with your research and understanding how you're impacting both your internal and external audiences is very critical.
Bo: Yeah. As your company grows, you can't assume that you should do the same thing all the time. You can't assume that everybody knows what you do. You can't assume that it's just going to all roll into what you expect it to roll into.
Even small companies like ours, as people change, as business morphs, as your customers give you feedback, as you adjust your service offering, you as the leader can be stuck seeing the same company but not seeing what the company really has become. And that causes
Again, looking at research, getting the data, seeing things regularly, taking a step back, and constantly breaking the mold of what you think you're doing.
You may find that it's the same company, but it's good for that leader, every six to 12 months, to take a big step back and go, what are we really today? And are we on purpose, or are we on
Jonathan: I had a conversation this morning with a company that's thinking about launching a new brand, and they're going to spend easily seven figures to do it. I started asking them a handful of questions that they couldn't answer.
So suddenly they were like, maybe we need to put this on pause. We're not sure this is the right fit for us. We thought it was because it seemed really good. Everybody else is doing it. We thought we should do it too. It looked really lucrative. We know we could make money on it. We've got deals that we can put into it.
But they hadn't taken really nearly enough time to think through what the implications of launching a completely separate brand would do to their organization.
The Role of Communication
Chris: You guys have all talked about and touched on it, but we always talk about the brand being a living, breathing thing. We have to always monitor. If you have a pet, for example, as he gets older, his needs are going to be different. Maybe it's hip problems or cataracts. As a brand gets older, you've got to tend to this living, breathing thing.
So one theme that I've heard throughout this episode is that communication is key. Is it simply internal communication or external? Is external communication important as well? You want everyone to be on the same page, but you do need to also signal to the market who you are, what you are-
Jonathan: And why.
Chris: Right! And is there a level of transparency that needs to come with, "hey, we've become this," or "we're doing this? "
Bo: Yeah, I think one of the variables that people are having to deal with more frequently is the speed of the change that's happening. It used to be that IBM could be the best at business machines for 40 years, and then when the market starts to shift to manpower and people thinking through issues, they've got 20 years to think through that problem.
Today, you might have a month, you might have a year. The technology, the tools, the people – they’re all changing.
To Jonathan's point, it exacerbates what he walked into today; that clients don't have the time to sit back and think. All of their competitors are all of a sudden offering this new thing, and it just happens.
I think a leader's ability to step back, look at that, figure out a way to communicate why change matters to the market, to the product, to the service, to the company, to its employees, to its customers, is even more critical today. It's just happening faster. It's always been a part of it. It's just happening faster.
Leslie: It also means that there's an organic process, right? Wherever you are and the messaging that you have constantly
Jonathan: There's a tendency to want to maximize your investment on that product service that you created. They'll want to ride that investment wave for as long as they can, not realizing that the competitors leapfrogged them while they sat there and coasted for a couple of years. So they have their rose-colored glasses on thinking that their brand is doing really well –all the while falling farther and farther behind in the market. We see that a lot through the voice of the customer interviews and the gap analysis that we do.
Chris: Yeah. Well, guys, I think that about covers this episode. Thanks for your time. I appreciate the insight. This has been really educational, so thanks!