As companies grow and evolve, they 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 a company finds itself 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 is 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 will spend vast sums of money to reinvent themselves with ambitious marketing plans before taking the most important first step– knowing exactly what it is they are seeking to build upon–their brand’s foundation. This substructure is not built on physical materials, product features and the like, but fashioned by circumstances 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 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. Some call it “brand essence”, others prefer “core brand values”. Whatever one calls it, it is the thing that creates pull and influence to its most relevant and differentiated trait. The brand’s foundation is 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 in 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 brand 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. 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. Given the presence of power laws, the only positions worth owning in most 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.
A current example of an iconic brand at a strategic inflection point is the number three Wendy’s Hamburgers. Seemingly, Wendy’s has lost its ability 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 creative advertising ideas. However, within the DNA of this established brand lies the essence of opportunity for Wendy’s to reinvent itself through a bigger vision about serving customers with experiences they really love and care about. In many ways, brands are not loyal to customers, not the other way around. In my opinion, Wendy’s has the power to be really remarkable and change the rules of the game.
Another is Starbucks, once the wholly grail of brand discipline, it now struggles to find its unique footing in a category it invented. Starbucks is now sorting out its past accomplishments to see which ones will still work in the ever-changing game of staying relevant. Long before it was present to Starbucks management however, the founder sees the writing on the wall and takes bold action to delve deeper into the goo of brand essence as the source of inspiration and connection to what made the thing so special in the first place.
Both Wendy’s and Starbucks are powerful leading brands faced with the challenges of new growth and increasing pressures to pay back greater investment returns to their shareholders… thus the strategic inflection point mentioned at the top of the post.
It is important to remember that, during times of self-defining challenge, the core brand values must be strong enough to protect from the urge to allow ubiquitous marketing to be the default button to creating market leadership. To pull through the inflection points, the brand must continue to influence customers in ways that are in alignment with the experiences they value. Enlightened brand stewards who recognize the intrinsic limitations of their brand’s reach, as well as the wealth of opportunities that lie within their grasp, do so from an intuitive understanding of their brand’s deeper meaning, and craft their brand’s verbal and visual expression from that perspective.
